Google AdWords: Making Money by Riding on the Coattails -or- an Inventive Business Model

Making Money by Riding on the
Coattails of the Reputation of the
Trademarks of Others -or-
an Inventive Business Model That
Happens to Reveal the Flaws of the
Traditional Perception of Trademark Use?

Masaryk University , Maximilian Schubert
Brno, 07.04.2011

Freitag, 08. April 2011 1

AdWords:
Riding on Coattails -or-
an Inventive Business Model

Masaryk University , Maximilian Schubert
Brno, 07.04.2011


Content

‣ Introduction
‣ Explanation & Differentiation
‣ 2007 - 2011; Many Changes...
‣ Ongoing Legal Discussion
‣ Trademark Use - Art 5
‣ Liability Exemption - Art 14
‣ The ECJ Rulings
‣ Trademark Issues
‣ Liability Exemption
‣ Summary & Outlook


Content

‣ Introduction
‣ 2007 - 2011; Many Changes...
‣ The ECJ Rulings


Keyword
Agenda Buying as a response to search engine SPAM:

ToGo.com (2001)

Hargittai, The Role of Expertise in Navigating Links of Influence, in Turow/Tsui (Hrsg), The Hyperlinked Society: Questioning Connections in
the Digital Age, Michigan Press (2008) 85ff.


Simplified scheme of Search Engine Advertising

User



User

User enters query:
hotel edinburgh scotsman



User

User enters query:

846,000
relevant pages Index
Search
engine
(Page) Rank Ranking



User

User enters query:

846,000
Search
engine
(Page) Rank Ranking

Search Engine Results Page (SERP)



User Advertiser

User enters query:

846,000
Search Ad-
engine Words
(Page) Rank Ranking




Advertiser books following ‘keywords’
User Advertiser
- hotel
- edinburgh
User enters query: - scotsman
hotel edinburgh scotsman Keyword Options: “broad match”
Local target: Austria, Vienna
Bid: EUR 0,15 per click

846,000
Search Ad-
engine Words
(Page) Rank Ranking



1. Differentiation: Top-Ad v. Side-Ad



‣ Top-Ad



‣ Top-Ad
‣ Side-Ad



‣ Top-Ad
‣ Side-Ad
‣ “organic” Search Results


illustrative!

‣ Top-Ad
‣ Side-Ad
‣ “organic” Search Results
Google Golden Triangle - Eyetracking how people view search results I Eyetools
http://eyetools.com/research_google_eyetracking_heatmap.html (18.03.2010).


2. Differentiation: Adv- v. Adv+

Does the text-ad bear the protected sign?




No: “Adv-”

“Adv-” = sign booked as keyword & sign not shown in the text of the ad.




No: “Adv-” Yes: “Adv+”

“Adv-” = sign booked as keyword & sign not shown in the text of the ad.
“Adv+” = sign booked as keyword & sign shown in the text of the ad.


3. Differentiation: Keyword Options

liberal restrictive
bei Wein & Co Wien
Spirituosen
Keyword
Wein & Co Options
Flaschenwein
billiger Wein



high tolerance
ads shown often
‘high’ costs
liberal restrictive
bei Wein & Co Wien
Spirituosen
rd
Wein & Co wo ns
ey tio
K p
O
Flaschenwein
billiger Wein



low tolerance
few ads shown
‘low’ costs
liberal restrictive
bei Wein & Co Wien
Spirituosen
Ke
yw
Op or
Wein & Co tio d
ns
Flaschenwein
billiger Wein


4. Differentiation:
Agenda Buying’ v. ‘Keyword Advertising’
‘Keyword

Search Engine Marketing

(organic)
Search Results

‣ Search Engine Marketing is the umbrella term, also including Search Engine Optimisation.


4. Differentiation:
‘Keyword

Search Engine Marketing Keyword Advertising:
Top- & Side Ads

Top-Ad

(organic) (organic) Side-
Search Results Search Results Ad

‣ Keyword Advertising is the display of ads besides the search results. [1]

1: Fain/Pedersen, Sponsored Search: a Brief Histroy, http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.92.987&rep=rep1&type=pdf (29.04.2010).


4. Differentiation:
‘Keyword

Search Engine Marketing Keyword Advertising: Keyword Buying:
Top- & Side Ads Ads in the Search Results

Top-Ad Top-Ad

(organic) (organic) Side- (organic) Side-
Search Results Search Results Ad Search Results Ad

‣ Keyword Advertising is the display of ads besides the search results. [1]

‣ Keyword Buying is an artificial word-creation in German to distinguish advertising inside
the ‘organic’ search results from regular keyword advertising.

1: Fain/Pedersen, Sponsored Search: a Brief Histroy, http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.92.987&rep=rep1&type=pdf (29.04.2010).


‘Keyword Advertising’ ≠ ‘Keyword META TAG’
Agenda


‘Keyword Advertising’ ≠ ‘Keyword META TAG’
Agenda

‣ Because the aim for different effects.
‣ Because Google said so.
‣ Because evolution/development just keeps moving on.


Differentiations & terms

‘Top Ad’ v. ‘Side Ad’

‘Adv+’ v. ‘Adv-’

Keyword Options

‘Keyword Buying’ v. ‘Keyword Advertising’

‘Keyword Advertising’ ≠’Keyword META TAG’


Content

‣ Introduction
‣ 2007 - 2011; Many Changes...
‣ The ECJ Rulings


2007 - 2010; Any Changes?

‣ Ongoing developments:

‣ Tailored Advertising (Location, Language, etc.)
‣ Personalised Search: Search results influenced by previous searches
‣ Advertising in an augmented reality environment (continuous flow of
information), advertising on mobile devices (smaller screens)
‣ Demise of the browser address line

‣ Google Suggest (‘Did you mean?’)
‣ Ongoing Changes of Google’s Trademark Policy (‘No Deceptive Implications’)
‣ Slight “Facelifts” to the design of the results page (SERP)


Change:
Agenda e.g. ‘Google Suggest’

‣ Users don’t type in the complete search query as Google already
offers suggestions while the user is typing.


Change:
Agenda e.g. “Google Suggest”

‣ The “Google Suggest” function can lead to a significant shift in demand.

“Grunderwerbsteuer”: real estate transfer tax
[Stefens, Google Suggest rulez the SERP, http://seo.de/2253/google-suggest-rulez-the-serps/ (22.02.2010)]


Change:
Agenda e.g. “Google Suggest”

‣ The “Google Suggest” ... a way of addressing customers even before
they have fully articulated what they are actually searching for?

Example, not a real screen-shot!


Google AdWords Trademark Policy as of 07/04/2011
“text and keyword” “investigation if ad-text is investigation if reseller or
9 countries confusing” informative website
e.g. China, N. Korea EU & EFTA the rest ...

Google AdWords Trademark Complaint

Search Engines Result Page

Use as keyword to trigger the ad Use in text of the ad


Change:
Agenda e.g. Facelift of the Labelling of Top-Ads


Change:

- 2007


Change:

- 2007 2007 - 2010


Change:

- 2007 2007 - 2010 2010 - 2011


Change:

- 2007 2007 - 2010 2010 - 2011 2011 -


Content

‣ Introduction
‣ 2007 - 2011; Many Changes...
‣ The ECJ Rulings
‣Trademark Issues


Liability for ads on Google AdWords

Liability arising from trademark law

Advertiser
Liability arising from unfair competition?
...


Liability for ads on Google AdWords

Liability for infrigements of its customers?

Advertiser
Liability arising from unfair competition?
...


Key Questions of Trademark Law

1: Does the use of the trademark in the course of Keyword
Advertising lead to any assumption of origin or quality?

2: Are the rights of a trademark owner infringed if a trademark
or a sign similar to it is used in the course of Keyword
Advertising to direct the attention of users at an (identical or
similar) product of a third party?


SHOP EXAMPLE
Agenda

Placing a “home brand” (here: CLEVER) right next to a “loss leader” (premium
brand; here: PRIL) is a common practice within retail business to monetize a third
party trade mark value.

[Goldman, Brand Spillovers, Santa Clara Univ. Legal Studies Research Paper No. 09-01; Harvard Journal of Law and Technology, Vol. 22,
2008. Available at SSRN: http://ssrn.com/abstract=1324822 (30.03.2009)]


SHOP EXAMPLE
Agenda

Even if the shop only makes a small profit from selling the “premium product” or
even a small loss, a certain proportion of the customers will decide to buy the
“home brand”, thereby creating considerable profit.



SHOP EXAMPLE
Agenda

Shelf M01 Shelf M01




SHOP EXAMPLE
Agenda

Level 2 Level 2
Shelf M01 Shelf M01




SHOP EXAMPLE
Agenda

Position No.:
..., 251, 301, ...
(steps of 50)

Level 2 Level 2
Shelf M01 Shelf M01




SHOP EXAMPLE
Agenda

Position No.:
..., 251, 301, ...
(steps of 50)

Level 2 Level 2
Shelf M01 Shelf M01

Summary: Stores are regularly allowed to utilize the reputation of a trademark to
support the sale of their own products and thereby create profit.
For search engines it has long been questionable whether advertisements on the
same page as the search results should be seen as infringing.



SHOP EXAMPLE
Agenda



Key Questions of the Law of Unfair Competition

Should the display of ads in the course of Keyword
Advertising be seen as an unfair “interception of
customers” [Abfangen von Kunden]

Is there a likeliness of an image transfer and/or is Google
riding on the coat-tails of the good reputation of the trade
mark?


Agenda
Interception of customers, exploitation of the repuation
‣ It is not per se “unfair” to address potential customers.
‣ It is only “unfair” to purposely address customers of a competitor in
very close proximity to their shops. (“presumptive customer”)

‣ Austrian case law:
‣ Reklamezettel: Addressing a customer and a shop assistant
‣ Stiftsparkplatz: Payment of bribes to a bus driver

‣ Interception possible e.g. eCommerce-Websites (e.g. Amazon, eBay).
‣ Perceived as irritating by users

‣ Exploitation of a reputation: requirement of the transfer of the
reputation

[OGH, 16.01.1996, 4 Ob 4/96 -Kärntnerring-Garage- ÖBl 1996, 180; OGH 13.10.1970, 4 Ob 343/70 -Reklamezettelverteilen- ÖBl 1971, 41; OGH, 10.05.1996, 4
Ob 2244/96w -Stiftsparkplatz- ÖBl 1997, 61; OGH, 12.07.2005, 4 Ob 131/05a -whirlpool- MMR 2005, 446. ]


Agenda
“Doorway”-analogy
‣ Definition of a doorway: A (non-fitting) analogy?
‣ Popular analogies: “city centre”, “shopping mall” and “supermarket”?
‣ Possibility to present similar goods in a alphabetical order?

http://wikimapia.org/10344546/Burlington-Square-Mall


Agenda
“Doorway”-analogy
‣ Definition of a doorway: A (non-fitting) analogy?
‣ Popular analogies: “city centre”, “shopping mall” and “supermarket”?
‣ Possibility to present similar goods in a alphabetical order?

TM 1 TM 2

http://wikimapia.org/10344546/Burlington-Square-Mall


Content

‣ Introduction
‣ 2007 - 2011; Many Changes...
‣ The ECJ Rulings


Art 5 (1) Directive 89/104/EEC (‘Trademark Dir’) - Basics

The proprietor shall be entitled to prevent all third parties not
having his consent from using in the course of trade:

(a) any sign which is identical with the trade mark in relation
to goods or services which are identical with those for which
the trade mark is registered;

(b) any sign where, because of its identity with, or similarity
to, the trade mark and the identity or similarity of the goods
or services covered by the trade mark and the sign, there
exists a likelihood of confusion on the part of the public,
which includes the likelihood of association between the sign
and the trade mark.

Art 5 (1) Directive 89/104/EEC


Art 5 (1) Directive 89/104/EEC - Basics

The proprietor is entitled to prevent all third parties who do not
have his/her consent from using any sign in the course of trade if:

lit a. identical + identical = !
lit b. identical
/similar
sign
+ identical
/similar
goods
+ likeliness of
confusion = !


Art 5 (1) Directive 89/104/EEC - Basics

The proprietor is entitled to prevent all third parties who do not
have his/her consent from using any sign in the course of trade if:

TM
lit a. identical + identical = infringed

TM
lit b. identical
/similar + identical
/similar + likeliness of
confusion = infringed
sign goods



...[T]he proprietor shall be entitled to prevent all third parties
not having his consent from using in the course of trade any
sign which is identical with, or similar to, the trade mark in
relation to goods or services which are not similar to those
for which the trade mark is registered, where the latter has a
reputation in the Member State and where use of that sign
without due cause takes unfair advantage of, or is
detrimental to, the distinctive character or the repute of the
trade mark.

identical
/similar + different + detrimental
use = !
sign product



Content

‣ Introduction
‣ 2007 - 2011; Many Changes...
‣ The ECJ Rulings
‣Trademark Issues


Art 14 Directive 2000/31/EC - Liability Exemption

‘Hosting’ 1. Where an information society service is provided
that consists of the storage of information provided by a
recipient of the service, [...] the service provider is not liable
for the information stored at the request of a recipient of the
service, on condition that:

(a) the provider does not have actual knowledge of illegal
activity or information and, as regards claims for damages, is
not aware of facts or circumstances from which the illegal
activity or information is apparent; or

(b) the provider, upon obtaining such knowledge or
awareness, acts expeditiously to remove or to disable access
to the information.

Art 14 Directive 2000/31/EC


Art 14 Directive 2000/31/EC - Liability Exemption

The service provider is not liable for the information stored at
the request of a recipient of the service if:
‣ No actual knowledge of illegal activity
‣ Illegal activity or information is not apparent
‣ Upon obtaining knowledge acts expeditiously to remove
or to disable access.

Art 14 Directive 2000/31/EC


Content

‣ Introduction
‣ 2007 - 2011; Many Changes...
‣ The ECJ Rulings
‣Trademark Issues


Keyword Advertising Decisions by the ECJ

Preliminary Rulings:
‣ Joint cases C‑236/08, C‑237/08 and C‑238/08, Google France v Louis Vuitton
Malletier, Google France v Viaticum Luteciel, Google France v CNRRH Pierre‑Alexis
Thonet Bruno Raboin Tiger, a franchisee of Unicis, 23.03.2010.
‣ Case C-278/08, Die BergSpechte Outdoor Reisen und Alpinschule Edi Koblmüller
GmbH v Günter Guni and trekking.at Reisen GmbH, 25.03.2010.
‣ Case C-C-91/09, Eis.de v BBY Vertriebsgesellschaft mbH, 26.03.2010.
‣ Case C‑558/08, Portakabin Ltd, Portakabin BV v Primakabin BV, 08.07.2010.

Opinion of the General Advocate:
‣ Opinion of Advocate General Poiares Maduro delivered on 22 September 2009 on
the joint cases C‑236/08, C‑237/08 and C‑238/08, Google France v Louis Vuitton
Malletier, Google France v Viaticum Luteciel, Google France v CNRRH Pierre‑Alexis
Thonet Bruno Raboin Tiger, a franchisee of Unicis
‣ Opinion of Advocate General Jääskinen delivered on 24 March 2011 on the case
Case C‑323/09, Interflora Inc Interflora British Unit v Marks & Spencer plc Flowers
Direct Online Limited


Content

‣ Introduction
‣ 2007 - 2011; Many Changes...
‣ The ECJ Rulings


Google France - Art 5 (1) (a)

By application of Article 5(1)(a) of Directive 89/104 [...] the
proprietor of a trade mark is entitled to prohibit a third party
from using [a sign identical with that trade mark]

- without the proprietor’s consent,

- when that use is in the course of trade,

- in relation to goods or services which are identical with, or
similar to, those for which that trade mark is registered

- and affects, or is liable to affect, the functions of the trade
mark.

lit a. identical

sign
+ identical

goods
+ functions
affected = !
ECJ, 23.03.2010, joint cases C-236/08 - C 238/08, Google France, MarkenR 2010, 174, par 49


O2 - Art 5 (1) (b)

The proprietor of a registered mark may prevent the use of a
sign by a third party which is identical with, or similar to, his
mark under Article 5(1)(b) of Directive 89/104 only if the
following four conditions are satisfied:
- that use must be in the course of trade;
- it must be without the consent of the proprietor of the mark;
- it must be in respect of goods or services which are
identical with, or similar to, those for which the mark is
registered, and
- it must affect or be liable to affect the essential function of
the trade mark, which is to guarantee to consumers the
origin of the goods or services, by reason of a likelihood of
confusion on the part of the public.

lit b. identical
/similar
sign
+ identical
/similar
goods
+ ess. func.
affected = !
ECJ, 12.06.2008, C‑533/06, O2 Holdings and O2, ECR I‑4231, par 57.


Comparison:
Likeliness of Confusion - Essential Functions Affected
[39] Art 5 (1) lit. b: [...] whether there is a likelihood of
likeliness of
confusion confusion when internet users are shown, on the basis of a
keyword similar to a mark, a third party’s ad which...

... does not enable normally informed and reasonably
attentive internet users, or enables them only with difficulty,
to ascertain whether the goods or services referred to by the
ad originate from the proprietor of the trade mark or an
undertaking economically connected to it or, on the contrary,
originate from a third party.

[35] Art 5 (1) lit a. The function of indicating the origin of the
ess. funct.
affected mark is adversely affected if the ad...


ECJ, 25.03.2010, C-278/08, Bergspechte, MarkenR 2010, 171.


Comparison:
likeliness of
confusion


ess. funct.
affected

ECJ, 25.03.2010, C-278/08, Bergspechte, MarkenR 2010, 171, par 39, 35.


Comparison:





Comparison:
[39] [...] whether there is a likelihood of confusion when
internet users are shown, on the basis of a keyword similar to
a mark, a third party’s ad which...




Comparison:


ess. funct.
affected = likeliness of
confusion



Comparison:


ess. funct.
affected = likeliness of
confusion

The criteria for adversely affecting the essential TM-function
and the likeliness of confusion are identical.



Art 5 (1) Directive 89/104/EEC - Comparison
pre Google France
lit b. identical
confusion = !


"
Art 5 (1) Directive 89/104/EEC - Comparison
pre Google France
lit b. identical
confusion = !
post Google France
lit a. identical + identical + functions
affected = !
lit b. identical
/similar + ess. funct.
affected = !
sign goods


Art 5 Directive 89/104/EEC - Summary

HIGH
LEVEL OF PROTECTION

Art 5 (2) detrimental
use

Art 5 (1) lit a. functions ‣ Function of Origin
affected ‣ Advertising Function

Art 5 (1) lit b. likeliness of
confusion ‣ Function of Origin

LOW


Content

‣ Introduction
‣ 2007 - 2011; Many Changes...
‣ The ECJ Rulings
‣ Function of Indicating Origin
‣ Advertising Function


ECJ Google France - Trademark Functions
According to Article 5(1)(a) of Directive 89/104 the proprietor
of a trade mark is entitled to prohibit a third party from using,
that sign if that use affects, or is liable to affect, the functions
of the trade mark.

Those functions include not only the essential function of the
trade mark, the function of indicating origin, but also its other
functions, in particular that of guaranteeing the quality of the
goods or services in question and those of communication,
investment or advertising.

Function of Origin
TM Functions
Advertising Function

ECJ, 23.03.2010, joint cases C-236/08 - C 238/08, Google France, MarkenR 2010, 174, par 49, 77.


ECJ Google France - ‘Function of Indicating Origin’
Function of Origin

The essential function of a trade mark is to guarantee the
identity of the origin of the marked goods or service to the
consumer or end user by enabling him to distinguish the
goods or service from others which have another origin.

The question whether that function is adversely affected by
keyword advertising depends in particular on the manner in
which that ad is presented.

National courts have to assess, on a case-by-case basis,
whether the facts of the dispute before them indicate adverse
effects, or a risk thereof, on the function of indicating origin.

ECJ, 23.03.2010, joint cases C-236/08 - C 238/08, Google France, MarkenR 2010, 174, par 82, 83, 88.


Function of Origin

Function of Indicating Origin is adversely affected if:

‣ the ad suggests that there is an economic link between that
third party and the proprietor of the trade mark.

‣ the ad, while not suggesting the existence of an economic
link, is vague to such an extent on the origin of the goods
or services at issue that normally informed and reasonably
attentive internet users are unable to determine, on the
basis of the advertising link and the commercial message
attached thereto, whether the advertiser is a third party vis-
à-vis the proprietor of the trade mark or, on the contrary,
economically linked to that proprietor.

ECJ, 23.03.2010, joint cases C-236/08 - C 238/08, Google France, MarkenR 2010, 174, par 89, 90.



What does an ad have to look like, so as not to
impair the function of indicating origin?

‣ Is
it enough for a third party just not to show the
competitor’s TM in the ad? (“Adv-”)

‣ Competitor obliged also to display the competing brand?
‣ Different situation if TM-owner also displays text ads?
‣ Why should a TM-owner sponsor all the ads shown?



What does an ad have to look like, so as not to
adversely affect the function of origin?

Text Ads:
Up to 4 lines,
Headline: max 25 signs
Following lines: 35 signs each
Display URL

Further content & formal restraints:
e.g. price, goods & service offered


Discretionary questions stemming from Google France
Agenda
‣ The aspect of what is meant by ‘vague’ remains subject to interpretation
by national courts. Where to draw the line between being ‘vague’ and
not causing any wrong assumptions remains the crucial issue.

Infringement Infringement No Infringement

‘Suggesting a Being ‘vague’ No wrong assumptions
connection’


Agenda


connection’

Infringement No Infringement


Agenda


connection’


Not having done everything to
rule out any chance of confusion

TM-owner friendly view
e.g. OGH, 21.06.2010, 17 Ob 3/10f, Bergspechte II;
UK High Court of Justice [2010] EWHC 2599 (Ch)


Agenda


connection’


Not having done everything to Not having done anything to
rule out any chance of confusion cause any kind of confusion

TM-owner friendly view Advertiser friendly view
e.g. OGH, 21.06.2010, 17 Ob 3/10f, Bergspechte II; e.g. BGH, 16.01.2011, XXXX, Bananabay
UK High Court of Justice [2010] EWHC 2599 (Ch)


Content

‣ Introduction
‣ 2007 - 2011; Many Changes...
‣ The ECJ Rulings
‣ Function of Indicating Origin
‣ Advertising Function


ECJ Google France - Advertising Function

The trade mark owner may have not only the objective of
indicating the origin of its goods or services, but also that of
using its mark for advertising purposes designed to inform
and persuade consumers.

The proprietor of a trade mark is entitled to prohibit a third
party from using his trade mark if that use adversely affects
the owner’s use as a factor in sales promotion or as an
instrument of commercial strategy.

With regard to the use of that sign for keyword advertising, it
is clear that that use is liable to have certain repercussions on
the advertising use of that mark by its owner and on his/her
commercial strategy.




Repercussions caused by the use of a sign identical with the
trade mark by third parties do not of themselves constitute an
adverse effect on the advertising function of the trade mark.

When internet users enter the name of a trade mark as a
search term, the home and advertising page of the proprietor
of that mark will appear in the list of the natural results,
usually in one of the highest positions on that list. That
display means that the visibility to internet users is
guaranteed.

Thus it must be concluded that use of a sign identical with
another person’s trade mark for keyword advertising is not
liable to have an adverse effect on the advertising function of
the trade mark.




‣ What should happen in the unusual case that the TM-
owner’s website is not included in the natural search
results?

‣ In practise only the first couple of results count. Is it still
enough for the TM-owner to be on the second page?
(“Primacy Effect”)

‣ Is there a duty for competitors to check if the TM-holder’s
website is (still) being displayed?


Content

‣ Introduction
‣ 2007 - 2011; Many Changes...
‣ The ECJ Rulings


ECJ Google France - Liability Exemption
The liability of a referencing service may be limited under
Article 14 of Directive 2000/31, if the role played by that
service provider is neutral, in the sense that its conduct is
merely technical, automatic and passive, pointing to a lack of
knowledge or control of the data which it stores.

With regard to Google AdWords, it is apparent that, with the
help of software which it has developed, Google processes
the data entered by advertisers and the resulting display of
the ads is made under conditions which Google controls.
Thus, Google determines the order of display according to,
inter alia, the remuneration paid by the advertisers.

The Directive never mentions the criteria of ‘neutrality’!

ECJ, 23.03.2010, joint cases C-236/08 - C 238/08, Google France, MarkenR 2010, 174, par. 114, 115, 116.


The mere facts that the referencing service is subject to
payment, that Google sets the payment terms or that it
provides general information to its clients cannot have the
effect of depriving Google of the liability exemptions.The fact
that Google matches keywords and search terms is also not
sufficient of itself to justify the view that Google has
knowledge of, or control over, the data entered into its system
by advertisers and stored in memory on its server.

The role played by Google in the drafting of the commercial
message which accompanies the advertising link or in the
establishment or selection of keywords is however relevant.

The national court, which is best placed to be aware of the
actual terms on which the service is supplied, must assess
whether the role thus played by Google corresponds to that
described in Art 14 of Directive 2000/31.

ECJ, 23.03.2010, joint cases C-236/08 - C 238/08, Google France, MarkenR 2010, 174, par 116, 117, 118, 119.



- Keyword Tool (neutral)
- Price Setting Mechanism (neutral)
- Broad Matching Function (neutral)
- Display of Ads (neutral)
.
Every part considered on its own, appears neutral, thus the
liability exemption might be applied.

But however, should the broader concept of selling ‘user
attention’ really be deemed neutral?


Content

‣ Introduction
‣ 2007 - 2011; Many Changes...
‣ The ECJ Rulings


Summary & Outlook

‣ Change in the concept of trademark protection.

‣ Keyword Advertising by itself does not infringe function of origin,
only the content might.

‣ Unclear scope of the protection of the advertising function.

‣ Liability of referencing services (AdWords) still not clear.

‣ No legal certainty ...yet.

Many questions remain...


Thank You
Agenda For Your Attention

Ott/Schubert, ‘It’s the Ad text, stupid’ – Cryptic Answers by the ECJ won’t Help to establish Legal Certainty
for Online Advertisers, Journal of Intellectual Property Law and Practice 2011, Vol. 6, No. 1.

Mag. Maximilian Schubert LL.M.
Jurist.0.8.15@gmail.com
www.austrotrabant.at


BACKUP
Agenda

BACK UP


!"#"$%&'()*+,$#*-%

FLYER / INVITATION ."/(0-%'1.'0"2
*)#-*-(-,'1.'0"2'")3'-,/4)1015%

cordially invites you to attend a workshop:

Making Money by Riding on the Coattails of the Reputation of the
Trademarks of Others
OR
an Inventive Business Model That Happens to Reveal the Flaws of the
Traditional Perception of Trademark Use?

Keynote:
Mag. Maximilian Schubert, LLM
Legal o cer at ISPA (Internet Service Providers Austria)

Worskhop will be led by:
Mgr. Mat j My⌃ka
(Institute of Law and Technology)

Date and time: 7th April 2011, 14.00 - 16.00
Venue: Room n. 109, Faculty of Law, Masaryk University
Entrance: Free
Registration at: www.cyber.law.muni.cz


ADDITIONAL LINKS:
‣ Google Suggest:
‣ How Google Instant’s Autocomplete Suggestions Work (07/04/2011)
‣ Google loses autocomplete defamation case in Italy (05/04/2011)

‣ Google Trademark Policy:
‣ http://adwords.google.com/support/aw/bin/answer.py?hl=en&answer=6118


User perspective:
‣ Objectively most users’ usability stills are very poor.
‣ Anyway, they don’t mind!
‣ Objectively users don’t really understand how search engines function
and how they fund themselves.
‣ Actually, they don’t care!
‣ Only one out of six search engines users can differentiate between
search results and paid advertisement.
‣ But they just (subconsciously) ignore it most of the time!
‣ Enormous trust in search engines!
Fallows, Search Engine Users – Internet searchers are confident, satisfied and thrusting – but they are also unaware and naive (02.04.2009) 27;
Fries, Suchverhalten im Internet VDM Müller Verlag (2007), Saarbrücken 72;
Pan/Hembrooke/Joachims/Lorigo/Gay/Granka, In Google We Trust: Users’ Decision on Rank, Position, and Relevance, Journal of Computer-Mediated
Communication 2007, 12/3 (02.04.2009)


Online Dichotomy:
Agenda
‣ Challenge:
“to find an adequate balance between the legitimate
concerns of rightholders to be protected, and those of the
public to access and use the information contained in these
assets” [Gilliéron, ICC 2008/6 688]

‣ Consumer Search Costs:
“[T]rademark law, by preventing others from copying a
source-identifying mark, reduce[s] the comsumers’ costs of
shopping and making purchase decisions, for it quickly and
easily assures a potential customer that this item - the item
with the mark - is made by the same producer as other
similarly marked imtems that he or she like (or disliked in the
past” [United States Supreme Court, Qualitex, Co. v. Jacobson Products
Co. Inc, 514 U.S. 159, 163 et seq. (1994) ]


Online Dichotomy:
Agenda
‣ Shop Example:
“[S]uppose a customer walks into a store and asks for
Playboy Magazine and is then directed to the adult magazine
section, where he or she sees Penthouse or hustler up in
front on the rack while Playboy is burried in back. One would
not say that Penthouse or Hustler had violated Playboy’s
trademark. this conclusion holds even true if Hustler paid the
store owner to put its magazines in front of Playboy’s.”

[Judge Berzon in his dissenting opinion in Playboy Enterprises v. Netscape Communications, 354 F.
3d 1020, 1025 (9th Cir. 2004) 1034-1035]


Law of Unfair Competition & text ads
Agenda

‣ The content of text-ads; the future playground of law of unfair
competition lawyers?

Moringware Inc. v. Hearthware Home OLG Hamm, 26.01.2010, 4 U 141/09
Products Inc.

Keyword used: TM of the competitor Question: “eye-catching ad” as the ad
does explicitly not state that the price is
Question: “False statement / derogatory only valid for one package per purchase.
speech”as the ad text implies somehow
implies that the competitors’ goods are
imitations?

For more information on these cases please see www.austrotrabant.at


Opinion Maduro, Google France

Only for TM
Issues dealt with Criteria for trademark infringement [54. & Fn 21.] with a rep.
trade
in the GA’s opinion i) no consent ii) in the iii) relates to iv) affects main affects other mark
by TM holder course of trade goods/services TM function TM functions infringement

Display of natural results
by Google (72.) " " " !
(86.-92.)
NO
(no confusion)

Display of advertiser’s ads
by Google (70.) " " "
(79.-81.)
! “no risk of
confusion on
(86.-92.) the side of the
NO
(no confusion)

consumer”
Allowing advertisers to
select keyword by Google
(60.) " " !
(62.-67.)
!
(69.)
NO
(different goods &
no confusion)
“other side
of the coin”
Booking of keyword
by advertiser (147.) " !
(151.)
NO
(private, not in the
course of trade)

MAYBE
Use of TM in the text of ads
by advertiser (46.) " " " "
(153.)
(if ad or website
creates confusion)

MAYBE
Contributory liability
by Google/AdWords (114.) " " " "
(123.)
(under certain
circumstances)

Infringement of
TMs with reputation (93.) " " " not required
(94.) !
(113.)
NO
(result of a balance
of interests)

Directive AdWords Yes " Exception AdWords No " MAYBE
Liability Exception Applicable? applicable? for AdWords
Art. 12-14 Directive 2000/31 !
(136.) Google Yes " (137.) Google Maybe (“not neutral”)

" criteria fulfilled
" criteria hypothetically fulfilled
! criteria not fulfilled


Opinion Maduro, Google France

AdWord’s service establishes a link Ads by the advertiser,
between the keyword/TM and the might be infringing, (153.)
goods of the advertiser. (79.) depending on the content of
Thus iii) criteria is fulfilled. the ad and the website =
if they create confusion.
However there is no
risk of confusion (86.-92.) Liability governed by
Thus the iv) criteria is not fulfilled. national law

Use 2
Advertiser’s
Adwords Website

Google
SERP
Keyword Advertiser
Selection

Use 1 Buying/booking of the keyword by the Advertiser is a private act
and thus no use in commerce.
Thus the ii) criteria is not fulfilled. (151.)

The sale /allowing of selection of the keywords by Adwords is not a use
for related to similar goods and service as Adwords sells keywords and NOT
good or services which are similar to the ones of the TM holder.
Thus the iii) criteria is not fulfilled. (67.)


OGH: Keyword Buying?

Simplified layout of a SE List of Hits (“Trefferliste”) List of Hits (“Trefferliste”)
result page narrow meaning broad meaning

Top-Ad Top-Ad Top-Ad

(organic) Side- (organic) Side- (organic) Side-
Search Results Ad Search Results Ad Search Results Ad

List of Hits: List of Hits:
(organic) Search Results (organic) SR + Top Ads


OGH: Keyword Buying?

[6] [...] That advertising link appears under the heading
‘sponsored links’, which is displayed either on the right-hand
side of the screen, to the right of the natural results, or on the
upper part of the screen, above the natural results.

[43] [...] In those circumstances, examination of the protection
conferred by a trade mark on its proprietor in the event of the
display of advertisements of third parties which are not
‘sponsored links’ would not be useful in resolving the dispute
in the main proceedings.

In the view of the ECJ, Google does not display
advertisements inside their ‘organic’ search results.



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