1. New developments for trademarks online – ECJ rules on AdWords and Provider Liability Fordham IP Conference 2011 Prof. Dr. Peter Ruess, LL.M. IP (GWU)

2. Facts: Search engines de facto the key to being online Advertising finances search engines Advertising should target recipient efficiently Since June 4, 2009: available in 190 countries Google modified trademark policy in Sept. 2010: No more take-down of trademark adwords on request. II. Keyword / AdWord Advertising 2 February 2011: Microsoft announced that its Bing search engine is to adopt a Google-like trade mark policy, starting March 3 2011. Advertisers on Bing will be able to purchase keywords relating to trademark terms, while Microsofts adCenter will no longer review trademark keyword complaints.

3. ECJ Case Law: AdWords Preliminary references to the Court of Justice, Art. 234 Lisbon Treaty: 3

4. ECJ Case Law: AdWords 4 Key decisions: France: Louis Vuitton (Case C-236/08 to C-238/08), 23 March 2010 Austria Bergspechte / treckking.at (Case C-278/08), 23 March 2010 Germany Bananabay (Case C-91/09), 26 March 2010 The Netherlands Portakabin (Case C-558/08), 8 July 2010 NEW! UK Interflora (Case C-323/09), from UK High Court of Justice Advocate General Opinion, 24 March 2011

5. ECJ Decision: Louis Vuitton, 23 March 2010 1. Adwords are use in commerce by advertiser, who may be held liable. 2. Google enjoys host provider privilege and is not liable. 3.ECJ seems to favour notice and take down procedure previously used for eBay cases: Article 14 of Directive 2000/31/EC […] must be interpreted as meaning that the rule laid down therein applies to an internet referencing service provider [which] has not played an active role of such a kind as to give it knowledge of, or control over, the data stored. If it has not played such a role, that service provider cannot be held liable for the data which it has stored at the request of an advertiser, unless, having obtained knowledge of the unlawful nature of those data or of that advertisers activities, it failed to act expeditiously to remove or to disable access to the data concerned. 5

6. ECJ Decision: Bananabay, 26 March 2010 1.T he use of another's trade mark as a keyword in a "keyword advertising (here: Google AdWords) is classified as a ´use´ within the meaning of the provision of Article 5(1)(a) of Directive 89/104/EEC. 2.The proprietor of a mark is only entitled to prohibit an advertisement, if a function of the trade mark could be affected (with reference to ECJ Decision: Louis Vuitton). 3.Operative part of the order: Article 5 (1)(a) of Directive 89/104/EEC […] must be interpreted as meaning that the proprietor of a trade mark is entitled to prohibit an advertiser from advertising, on the basis of a keyword identical with that trade mark which that advertiser has, without the consent of the proprietor, selected in connection with an internet referencing service, goods or services identical with those for which that mark is registered in the case where that advertisement does not enable an average internet user, or enables that user only with difficulty to ascertain whether the goods or services referred to therein originate from the proprietor of the trade mark or an undertaking economically connected to it or, on the contrary, originate from a third party. 6

7. ECJ Decision: Portakabin, 8 July 2010 1.Display of a link to the website of a reseller of goods covered by the trade mark is allowed in principle. 2.References to ECJ Decision: Bananabay 3.Operative part of the order: 2. Article 6 of Directive 89/104, […] must be interpreted as meaning that, where use by advertisers of signs identical with, or similar to, trade marks as keywords for an internet referencing service is liable to be prohibited pursuant to Article 5 of that directive, those advertisers cannot, in general, rely on the exception provided for in Article 6(1) in order to avoid such a prohibition. It is, however, for the national court to determine, in the light of the particular circumstances of the case, whether or not there was, in fact, a use, within the terms of Article 6(1), which could be regarded as having been made in accordance with honest practices in industrial or commercial matters. 7

8. ECJ Decision: Portakabin, 8 July 2010 Operative part of the order: 3. Article 7 of Directive 89/104, […] must be interpreted as meaning that a trade mark proprietor is not entitled to prohibit an advertiser from advertising on the basis of a sign identical with, or similar to, that trade mark, which that advertiser chose as a keyword for an internet referencing service without the consent of that proprietor the resale of goods manufactured and placed on the market in the European Economic Area by that proprietor or with his consent, unless there is a legitimate reason, within the meaning of Article 7(2), which justifies him opposing that advertising, such as use of that sign which gives the impression that the reseller and the trade mark proprietor are economically linked or use which is seriously detrimental to the reputation of the mark. 8

9. ECJ Case Law : Interflora vs Marks & Spenser - Advocate General Opinion ( 24 March 2011) : Regarding keyword-advertising as use within the meaning of the provision of Article 5(1)(a) of Directive 89/104/EEC: identical to the ECJ Decision Bananabay with references to ECJ Decisions Google and Google France (Joined Cases C-236/08 to C-238/08) An error concerning the origin of goods or services arises when the competitors sponsored link is liable to lead some members of the public to believe that the competitor is a member of the trade mark proprietors commercial network when it is not. As a result of this the trade mark proprietor has the right to prohibit the use of the keyword in advertising by the competitor in question. The fact that the internet search engine operator does not permit trade mark proprietors in the relevant geographical area to block the selection of signs identical to their trade marks as keywords by other parties is as such immaterial in so far as the liability of the advertiser using of the keywords is concerned. 9

10. ECJ Case Law : Interflora vs Marks & Spenser - Advocate General Opinion ( 24 March 2011) The use of a sign as a keyword in an internet referencing service in relation to goods or services identical to those covered by an identical trade mark with a reputation also falls within the scope of Article 5(2) of Directive 89/104 and Article 9(1)(c) of Regulation No 40/94 and it can be forbidden by the trade mark owner when (a) the ad shown as a result of the internet user having typed as a search term the keyword identical with a trade mark with a reputation mentions or displays that trade mark; and (b) the trade mark – is either used therein as a generic term covering a class or category of goods or services; – or the advertiser attempts thereby to benefit from its power of attraction, its reputation or its prestige, and to exploit the marketing effort expended by the proprietor of that mark in order to create and maintain the image of that mark. 10

11. ECJ Case Law: AdWords 11 Guidelines of the ECJ: Use of a trademark as a keyword is defined by use of trade mark law, by the advertiser – the visibility of the AdWords is therefore not essential. Google has not infringed trade mark law by allowing advertisers to purchase keywords corresponding to their competitors trade marks. However, it has prohibited advertisers from using such keywords when arranging for Google to display any ads which do not allow internet users easily to establish from which undertaking the goods or services covered by the ad in question originate. Basically, the trade mark owner can prevent such use, if identical / similar goods and services are advertised, for the average visitor it is not clear whether the goods / services originate from him or trademark owner, or whether economic connection with third parties exist.

12. III. Discussion 12 Open questions: Trademark owners may see a victory in the ECJ verdicts, but what is it worth? Procedural difficulties in going after small timers? How long / to which extent can Google escape liability? […]

13. Thank you very much for your attention! Your feedback is appreciated: peter.ruess@ism.depeter.ruess@ism.de or ruess@arnold-ruess.com © Prof. Dr. Peter Ruess 2011 The information and opinions contained in this document are not intended to be a comprehensive study, nor to provide legal advice, and should not be relied on or treated as a substitute for specific advice concerning individual situations. 13