Asianajotoimisto Juridia

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15.01.2012

The CJEU clarified its stance regarding online advertising via keywords

The Court of Justice of the European Union (“CJEU”) passed down a preliminary ruling in a matter concerning the use of a competitor’s trademark as a keyword for a search engine service (Case C-323/09 Interflora v. Marks & Spencer). This preliminary ruling solidifies the earlier stance taken by the CJEU regarding the matter (e.g. Joined Cases C-236/08 to C-238/08 Google France SARL and Google Inc. as well as Case C-558/08 Portakabin). The preliminary ruling also touches upon protection afforded to widely recognised trademarks.

Marks & Spencer had chosen as one of its keywords for the Google AdWords referencing service e.g. the word “interflora”, which Interflora had protected as its mark for a flower delivery service as both a national and community trademark. When internet users entered the said word as a search term, an M & S advertisement concerning a flower delivery service offered by M & S appeared under the heading “sponsored links”. The sign selected as a keyword did not appear in the advertisement itself.

As the CJEU has set out in its previous rulings in cases related to keyword advertising, the proprietor of a trademark is entitled to prohibit the use of its trademark as described above only in cases where the said use is liable to have an adverse effect on one of the functions of the trademark.

The function of indicating origin

In accordance with its earlier rulings, the CJEU stated that the trademark’s function of indicating origin is adversely affected if the advertisement does not enable reasonably well-informed and reasonably observant internet users, or enables them only with difficulty, to ascertain whether the goods or services referred to by the advertisement originate from the proprietor of the trademark or an undertaking economically connected to it or whether they originate from a third party. Therefore the question of whether the function of indicating origin is adversely affected depends e.g. on the manner in which that advertisement is presented.

The advertising function

The CJEU distinguished between the trademark’s advertising and investment functions in its ruling. The CJEU posited that, with regard to the advertising function, the use of a trademark identical with another person’s trademark in a referencing service such as AdWords does not have an adverse effect on that function of the trademark. The CJEU further stated that the proprietor of the trademark may be obliged to intensify its advertising in order to maintain or enhance its profile with consumers, e.g. by paying a higher price than the competitor to ensure that its advertisement appears before that of the competitor. However, the CJEU concluded that internet advertising on the basis of keywords corresponding to trademarks constitutes a practice whose aim is to offer internet users alternatives to the goods or services of the proprietors of trademarks, which is why it should be considered to constitute a practice inherent in competition.

The investment function

The CJEU made a distinction between the advertising and investment functions of a trademark although it states that the trademark’s investment function may partially overlap with the advertising function.

According to the preliminary ruling passed down by the CJEU, when the use of a third party of a sign identical with the trademark in relation to goods of services identical with those for which the mark is registered constitutes a substantial interference with the proprietor’s use of its trademark to acquire or preserve a reputation capable of attracting consumers and retaining their loyalty, the third party’s use must be regarded as adversely affecting the trademark’s investment function.

Protection of widely recognised trademarks

As for the protection of widely recognised trademarks, the CJEU stated that the proprietor of a trademark is entitled to prevent a competitor from advertising on the basis of a keyword corresponding to that trademark, which the competitor has, without the proprietor’s consent, selected in an internet referencing service, where the competitor thereby takes unfair advantage of the distinctive character or repute of the trademark (free-riding) or where the advertising is detrimental to that distinctive character (dilution) or to that repute (tarnishment).

The CJEU posited, however, that if advertisements put forward – without offering a mere imitation of the goods or services of the proprietor of that trademark, without causing dilution or tarnishment and without, moreover, adversely affecting the functions of the trademark – an alternative to the goods and services of the proprietor, it must be concluded that such use falls, as a rule, within the ambit of fair competition and is thus not without so called “due cause”.

Suvi-Tuulia Leppäkorpi
Associate

 

 

 

 

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