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ISP-Liability & Media Law

Apr.27.2009

Other sections of this issue:
Privacy & Data Protection
| ISP-Liability & Media Law | Contracts & E-Commerce |
Electronic Communications & IT



Brussels Court of Appeal rules on the legality of Adwords advertising in litigation between eBay and Ralph Lauren

The Brussels Court of Appeal has reversed a decision that had held eBay liable for a violation of Ralph Lauren’s trademarks by purchasing Adword hyperlinks from Google.

Introduction
Online auction website eBay regularly uses the Adwords system from search engine Google to inform potential purchasers of the array of products that can be purchased on the eBay website. In Belgium for instance, internet users using the search engine Google to search the internet on the words "Ralph Lauren" and "Polo Sport" would see, in the right part of the computer screen, a number of 'sponsored links' to the eBay website.

The question was raised before the Belgian courts whether eBay's behavior constituted a trademark infringement vis-à-vis the Polo/Lauren company, owning several trademarks including "Ralph Lauren" and "Polo Sport".

In a decision issued on January 24, 2008, eBay was convicted by the Brussels Court of First Instance. eBay then appealed before the Brussels Court of Appeal. In a decision of February 11, 2009, the Brussels Court of Appeal reversed the conviction and argued that eBay did not commit any trademark infringement.

The Court of Appeal's decision
The Brussels Court of Appeal examined eBay's alleged trademark infringement under two separate angles.

First, it had to decide whether eBay committed a trademark infringement under the Belgian pendant of Article 5.5 of the Trademark Directive 89/104/EEC (which concerns the use of a sign for purposes other than to distinguish products or services.

The Court did not find a trademark infringement under Article 5.5 f the Trademark Directive. It held that "in an internet user makes a research on Google by using the terms 'Ralph Lauren' or 'Polo Sport', he has the intention of finding web pages containing those products… It is therefore established, in the case at hand, that the use by eBay of the Ralph Lauren and Polo Sport trademarks has the essential function of identifying the goods sold on its site and distinguishing them from the other goods sold on this site.

The mere fact that the consumer is warned that such brand products are likely to be purchased on eBay does not imply that he believes that eBay is the seller, especially since the relevant public, which is used to this type of transactions, knows that eBay is only an intermediary and that the sale takes place directly between the seller and the buyer. In any case, nothing prohibits a third party user of the trademark, such as an intermediary or provider of related goods and services, from using it to distinguish the product, provided it does not affect the essential function of the trademark. Under no circumstances can the consumer believe that such use is intended to distinguish the eBay company itself from another company.

It does not matter that the internet user is not immediately sent to the page where Ralph Lauren and Polo Sport brand products are offered, since it is enough for him to retype the same keyword in the search field inserted in the Clothing & Accessories page to be sent to the specific page. It cannot be deduced from this mere circumstance that eBay intended as a priority to advertise its own company. In fact, eBay declared to be ready, without any prejudicial acknowledgment, to send the internet user directly to the specific ads, without going through the general page of the corresponding category, and the Court records this.

Equally, it is not because eBay buys as AdWords keywords reproducing well-known trademarks that we must deduce that it intended as a priority to advertise its site by using the advertising function of these trademarks. Since well-known brand products are offered for sale on the eBay site, eBay may legitimately buy the corresponding AdWords, which allows it to inform the internet users of the possibility to buy these products through it. eBay may also legitimately choose itself the AdWords, since it has all the sales statistics and therefore is in the best position to know the needs of the buyers"

Second, the Brussels Court of Appeal had to decide whether eBay committed a trademark infringement under the Belgian pendant of Article 6.1.b of the Trademark Directive 89/104/EEC, by using the Polo/Lauren trademarks in a manner which did not correspond to fair trade practices. Polo/Lauren's line of arguing was apparently that eBay could not use its trademarks in the framework of the Adwords system, knowing that many of the goods offered via eBay would be counterfeit goods. The Court did not take a decision on the merits on this point, but simply concluded that on the basis of the evidence provided to it, there was no showing of any use of Polo/Lauren's trademarks contrary to fair trade practices. The Court of Appeal specifically considered that Polo/Lauren merely alleged the presence of counterfeit goods on the eBay website without effectively proving this.

Conclusion
This decision constitutes an important landmark in the judicial Adwords saga and a significant victory for platform operators using the Adwords system to advertise goods or services offered via their platforms. In principle, they cannot be held liable on the basis of trademark law for such advertisements under Article 5.5 of the Trademark Directive.

However, it seems that the Brussels Court of Appeal has not had its last say on the topic. As a matter of fact, the outcome of the case might have been different had Polo/Lauren been able to submit sufficient evidence that the platform of the operators concerned was effectively (massively) used to sell counterfeit products. In such a case, using the Adwords system might have constituted an act of unfair trading - in which case a trademark infringement could be found.

In addition, several questions on the liability of users of the Adwords system have now been referred to the European Court of Justice. It seems from the formulation of the reference for a preliminary ruling that the discussion before the European Court of Justice will be more elaborate than the one having taken place before the Brussels Court of Appeal. This referral is addressed in a separate contribution.

References: Brussels Court of Appeal, 11 february 2009, 2008/AR/719

For more information, contact: Christoph De Preter.


ECJ asked to evaluate trademark law aspects of Google’s Adwords system

In the Adwords saga, the Dutch Supreme court has submitted a large number of questions to the European Court of Justice (ECJ) which aim at assessing whether and under which conditions users of Google's Adwords system can be held liable for trademark infringement for establishing sponsored hyperlinks.

Introduction
The Dutch Supreme Court (the 'Hoge Raad') has filed a reference for a preliminary ruling with the European Court of Justice (ECJ) in a litigation between the companies Portakabin and Primakabin.

The questions asked in the referral
The Dutch Supreme Court has made a relatively extensive referral to the ECJ.

Interestingly, the first questions address the issue whether the use of a trademark in the Adwords system constitutes at all a trademark use within the meaning of Article 5.1.a of the Trademark Directive 89/104/EEC. In that regard, the Supreme Court makes a distinction whether the hyperlinks that arise out of the Adwords linking are apparent (appearing as 'sponsored links') or are integrated into the ordinary search results. Also, the Supreme Courts makes a distinction as to whether the advertiser using the Adwords system actually sells the goods or services commercialized under the underlying trademark or not, and whether the actual trademark is used or a 'typo' variant thereof.

The fifth question submitted to the ECJ actually concerns a hypothesis already addressed by the Brussels Court of Appeal (see our other contribution in this newsletter), namely whether, even if the Adwords system would not constitute trademark use, there could still be a trademark infringement under Article 5.5 of the Trademark Directive.

The complete wording of the referral is as follows:

  1. (a) Where a trader in certain goods or services ('the advertiser') avails himself of the possibility of submitting to the provider of an internet search engine an adword [when advertising via the internet, it is possible to pay to use 'adwords' on search engines such as Google. When such an adword is keyed into the search engine, a reference to the advertiser's website appears either in the list of webpages found, or as an advertisement on the right-hand side of the page showing the results of the search, under the heading 'Sponsored links'] which is identical to a trade mark registered by another person ('the proprietor') in respect of similar goods or services, and the adword submitted - without this being visible to the search engine user - results in the internet user who enters that word finding a reference to the advertiser's website in the search engine provider's list of search results, is the advertiser 'using' the registered trade mark within the meaning of Article 5(1)(a) of Directive 89/104/EEC? 1
    (b) Does it make a difference in that regard whether the reference is displayed in the ordinary list of webpages found; or in an advertising section identified as such?
    (c) Does it make a difference in that regard whether, even within the reference notification on the search engine provider's webpage, the advertiser is actually offering goods or services that are identical to the goods or services covered by the registered trade mark; or whether the advertiser is in fact offering goods or services which are identical to the goods or services covered by the registered trade mark on a webpage of his own, which internet users (as referred to in Question 1(a)) can access via a hyperlink in the reference on the search engine provider's webpage?
  2. If and in so far as the answer to Question 1 is in the affirmative, can Article 6 of Directive 89/104, in particular Article 6(1)(b) and (c), result in the proprietor being precluded from prohibiting the use described in Question 1 and, if so, under what circumstances?
  3. In so far as the answer to Question 1 is in the affirmative, is Article 7 of Directive 89/104 applicable where an offer by the advertiser, as indicated in Question 1, relates to goods which have been marketed in the European Community under the proprietor's trade mark referred to in Question 1 or with his permission?
  4. Do the answers to the foregoing questions apply also in the case of adwords, as referred to in Question 1, submitted by the advertiser, in which the trade mark is deliberately reproduced with minor spelling mistakes, making searches by the internet-using public more effective, assuming that the trade mark is reproduced correctly on the advertiser's website?
  5. If and in so far as the answers to the foregoing questions mean that the trade mark is not being used within the meaning of Article 5(1) of Directive 89/104, are the Member States entitled, in relation to the use of adwords such as those at issue in this case, simply to grant protection - under Article 5(5) of that directive, in accordance with provisions in force in those States relating to the protection against the use of a sign other than for the purposes of distinguishing goods or services - against use of that sign which, in the opinion of the courts of those Member States, without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark, or do Community-law parameters associated with the answers to the foregoing questions apply to national courts?

Conclusion: The ECJ will finally have the opportunity to have the last word in the Adwords saga. The Dutch Supreme Court has had the merit of asking very broadly formulated questions in its referral, so that the ECJ will be able to provide complete guidance. It remains to be seen whether national case law, such as the Brussels Court of Appeal's decision in the eBay / Polo-Lauren case, will be consistent with the ECJ's findings.

References: Reference for a preliminary ruling from the Hoge Raad der Nederlanden lodged on 17 December 2008 - Portakabin Limited and Portakabin BV v Primakabin BV

(Case C-558/08), www.curia.eu

For more information, contact: Christoph De Preter.

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