The Court of Justice of the European Union may soon set up a separate Adwords court as yet another case on use of 3rd party brands as online links, this time on referral from the Netherlands, comes across its desk. Jonathan Mayner reports on the Portakabin/Primakabin judgement.
Topic: Online advertising
Who: Portakabin Limited, Portakabin BV – v – Primakabin BV
When: July 2010
Law stated as at: 27 July 2010
The Court of Justice for the European Union (the CJEU) has issued another ruling in a case dealing with the use of Google AdWords and claims of trade mark infringement. The ruling is consistent with the court's rulings in Google France and subsequent cases in relation to the question of whether or not use of a trade mark as a keyword constitutes infringing use of the trade mark in question. The ruling does provide some guidance for national courts when determining whether a defence is available to an advertiser where use of a trade mark as a keyword is in relation to the resale of genuine goods originating from the trade mark owner.
Google Inc operates a system called AdWords through which advertisers can pay Google to have their advertisements displayed within the Google search engine in response to the input by an internet user of selected keywords as search terms. These advertisements or sponsored links are typically displayed above or alongside the natural search results generated by the user's search terms and are distinguishable from the natural results by their placement and formatting.
Typically these sponsored links comprise a short commercial message and a link to the advertiser's website. Some businesses have adopted a strategy of selecting as keywords prominent company and brand names in their market in a bid to increase traffic to and sales through their websites. As many of these company and brand names are trade marks, this has led to a number of claims of trade mark infringement in jurisdictions around the European Community, and a number of references to the CJEU for clarification as to the meaning of certain provisions of Community trade mark law in light of the emerging practice of using trade marks as keywords.
Portakabin Limited (Portakabin) manufactured and supplied temporary and mobile buildings and had registered the word PORTAKABIN as a Benelux trade mark in relation to metal and non-metal buildings, parts and building materials. Primakabin Limited (Primakabin) also manufactured and supplied temporary and mobile buildings, although the company additionally sold and leased second-hand units, some of its own manufacture and some made by others, including Portakabin. The used Portakabin units offered for sale by Primakabin had originally been put onto the market by Portakabin or with Portakabin's consent.
As part of Primakabin's online advertising strategy, the company selected the word "portakabin" as a Google AdWord, along with the following misspellings of it: "portacabin", "portokabin" and "portocabin".
Portakabin brought an action in the Dutch court seeking an injunction to prevent Primakabin from using these keywords, which it claimed were similar to its PORTAKABIN trade mark and therefore infringed their registered trade mark rights.
Following a number of appeals through the Dutch courts, a number of questions were referred to the CJEU. Primarily dealing with how the defences to trade mark infringement under Articles 6 and 7 of the Trade Mark Directive (the Directive) applied.
Article 6 of the Directive allows third parties to use a trade mark in the course of trade where it is necessary to indicate the intended purpose of a product or service (Article 6(1)(c)), and also states that trade mark owners cannot prevent third parties from using in the course of trade indications as to the kind, quality, intended purpose, value, or other characteristics of goods or services (Article 6(1)(b)). These exceptions to a trade mark owner's rights are subject to the requirement that any third party seeking to rely on them makes use of a sign identical or similar to a trade mark in accordance with honest practices in industrial or commercial matters.
Article 7 allows a third party to use a trade mark in relation to goods which have been put in the market in the Community by or with the consent of the trade mark owner, for example where genuine goods deriving from the trade mark owner are offered for resale (Article 7(1)). In such a scenario, the rights afforded by the trade mark are said to be exhausted. The trade mark owner however may be able to prevent such use where they have legitimate reasons to oppose further commercialisation of the goods, particularly where the condition of the goods is changed or impaired after they have been put on the market.
The CJEU's ruling
Does use of trade marks as AdWords amount to an infringement under Article 5 of the Directive?
Consistent with its rulings in the Google France, BergSpechte and Eis.de (Banabay) cases, the court held that use of trade marks as keywords is only infringing use if the content of the sponsored link does not enable the average internet user to easily ascertain whether or not the goods or services being advertised are those of the trade mark owner or the advertiser. As always, it will be for the national courts to decide whether or not an advertiser has done enough to distinguish their goods and services from those of the trade mark owner. To access Marketinglaw's previous report on the Google France case and its implications for advertisers, please click here.
Use of indications as to characteristics of goods or services (Article 6)
The court held that it was theoretically possible that an advertiser could avail themselves of an Article 6 defence where they are found to have been using a trade mark as a keyword in breach of Article 5 (i.e. by not making it sufficiently clear that they goods and services being offered where their own and not those of the trade mark owner).
However, the court deemed that a defence that the trade mark was being used as an indication of characteristics or intended purposes of goods or services would rarely succeed as keywords are not generally used to make such indications. Indeed a sign which is merely descriptive of goods or services would likely not be capable of registration as a trade mark in the first place, and so would not be likely to lead to a keyword / trade mark dispute. Moreover the requirement under Article 6 that any such defence would only succeed if the advertiser was using the trade mark in accordance with honest practices would be difficult to satisfy where the advertiser had already been found in breach of Article 5.
Second-hand goods and exhaustion of trade mark rights (Article 7)
The court was more positive about the chances of mounting a successful defence under Article 7 in relation to the resale of genuine goods originally put onto the market by the trade mark owner, unless the trade mark owner could provide a legitimate reason to prevent the resale.
Such a legitimate reason may be that use of the keyword gives the impression that the reseller and the trade mark owner are linked, or that the use of the keyword is seriously detrimental to the trade mark's reputation. In considering some specific allegations made in respect of Primakabin's activities, the court provided some practical advice for national courts should they be called upon to deliberate on the merit of an Article 7 defence, summarised below:
- A national court cannot hold that there is a serious detriment to a trade mark's reputation, simply because the trade mark is used in combination with words which indicate that the goods are being resold, such as "used" or "second-hand". This seeks to ensure that participants in markets for used and second-hand goods are not unduly restricted in their activities by trade mark law.
- A national court must find that a trade mark owner has a legitimate reason to oppose the use of the trade mark in relation to the resale of their goods where the trade mark owner's trade mark or other branding is removed from the goods and replaced with the advertiser's or reseller's own mark. This seems fairly obvious and does not necessarily afford trade mark owners any new protection (in the UK at least) as trade mark owners would likely have a cause of action in respect of this sort of behaviour under the law of reverse passing-off.
- A national court cannot prohibit a specialist second-hand dealer of trade marked goods from using that trade mark to advertise its activities where those activities occur alongside the resale of other second-hand goods, unless those other second-hand goods (because of the volume, presentation or poor quality of the goods in question) are likely to seriously damage the reputation of the trade mark in question.
Why this matters:
These cases continue to be very important for brand owners and advertisers. This particular ruling provides further comfort for businesses who use trade marks as keywords as part of their online advertising strategy. It affirms the findings in Google France and other rulings that the use of a trade mark as a keyword will only constitute trade mark infringement if the underlying sponsored link does not sufficiently distinguish the goods and services of the advertiser from those of the owner of the trade mark used as a keyword.
The court's findings in relation to possible defences under Articles 6 and 7 of the Directive are however of limited value to most advertisers. The Article 6 defence regarding use of a trade mark to indicate characteristics of goods will only likely apply in very rare circumstances, and where it does apply it will be difficult to satisfy the requirement that use of the trade mark in question was in accordance with honest commercial practice.
The Article 7 defences are really only of use to participants in markets for second-hand goods. The guidance that the court has given on this issue indicates that second-hand dealers should be careful about the impression that their website or other features of their business create and whether such impressions reflect adversely on the reputation of trade marked goods.
The AdWords-related reference to the CJEU from the UK in the case of Interflora & others v Marks & Spencer plc is still pending. Following a hearing in April, the High Court decided to maintain its reference to the CJEU, albeit with some amendments, in order to seek further clarification from the CJEU on these matters. The AdWords saga continues.