In recent decades commercial marketing has evolved significantly. Part of that evolution is largely related to a specific shift in the way of reaching the customer audience. In this sense, advertising has started to slide away from the grounds of traditional media and is now increasing its focus on the media of the new millennium – the internet. This developing trend has brought legal controversy along the way since the applicable legislative framework is lagging behind in view of the pace of technological and commercial developments. This is particularly evident in the sphere of trademark law and especially when its mechanisms for protection of rightholders need to be applied in the online environment. Today, many of the most efficient strategies in the world of digital marketing heavily rely on the use of SEO (search engine optimization) which is the process of improving the visibility of a webpage among the users of a search engine. At the same time, the popularity of such strategies in online advertising is also linked to an increasing number of legal disputes. This article will focus on the topic of liability for trademark infringement in view of two types of activities within the realm of online referencing services – online advertising through the purchase of keywords and the use of meta tags in the source code of websites.
Google Search and Google Ads
The search engines of today are certainly not providing their services as a form of charitable donation to society. Basically, their efforts stem in two directions: i) generating a broad user base and ii) capitalizing on it by way of acting as an intermediary between advertisers and that base. A clear example of this model can be seen in the mechanics behind the functioning of Google’s search engine. Google Search produces two types of results in case an internet user enters a search term – natural results and sponsored results. The natural results do not include ads and are represented in a decreasing order of relevance as to the entered search term. At the same time, again as a consequence of the entered search term, sponsored content appears separately from the natural results. This sponsored content is delivered through a referencing service – Google Ads (former Google AdWords). The essence of this service is that online advertisers are allowed by Google to purchase certain keywords that trigger the appearance of their advertisements when an internet user enters one of those keywords in the search field. Thus, both the direct competitors of a trademark owner and potential counterfeiters are free to purchase its trademark as a keyword and divert consumers’ attention towards their own goods and services or potentially cause confusion with regards the origin of the goods. A question therefore arises if it is the operator of the search engine that should be held liable in case of a trademark infringement or the online advertisers that use the search engine’s platform?
Case law
The question of liability for trademark infringement in relation to the use of Google’s AdWords platform has been analyzed by the Court of Justice of the European Union (CJEU, the Court) in its Judgement of 23 March 2010 on Joined Cases C-236/08 to C-238/08. The claimants in those joined cases, among which Louis Vuitton Malletier SA, Viaticum SA, Luteciel SARL, accused Google of infringement of their trademarks by way of providing opportunities for competitors and potential counterfeiters to purchase keywords that constitute their trademarks and furthermore arranging the display of advertising links to websites offering goods and services that are similar or identical to those covered by the registered trademarks. The CJEU based its analysis on the cases upon the provisions of three legal instruments – First Council Directive 89/104 to approximate the laws of the Member States relating to trade marks (Directive 89/104), Regulation No 40/94 on the Community trade mark (Regulation No 40/94) and Directive 2000/31 on electronic commerce.
The analysis of the CJEU
With regards to the question of Google’s liability, the CJEU based its core analysis on the provisions of Article 5(1)(a) of Directive 89/104 and Article 9(1)(a) of Regulation No 40/94. The Court concluded that in order for a proprietor of a trade mark to prohibit the use of a sign identical to its trade mark by a third party, three conditions need to be fulfilled – i) the sign must be used in the course of trade, ii) it must be used in relation to goods and services that are identical or similar to those for which the trademark is registered and iii) the use has to be liable to affect the functions of the trade mark. In view of the online advertisers, there was no doubt that they were actually using the signs (through the keywords) in the context of their commercial activity. However, the CJEU concluded that the referencing service provider allows its clients to use a sign but does not itself use the sign in its own commercial communication. In the court’s view, Google only created technical conditions for the use of a sign by third parties. That position of the CJEU is of paramount importance. It actually postulates at the outset that a referencing service provider could not possibly be held liable for trademark infringement as a result of the use of a keyword and precludes further analysis whether any of its activities could impact negatively the functions of a trademark. It must be noted here that the Advocate General in Joined Cases C-236/08 to C-238/08 proposed a different and more accurate approach as to tackling the issue of Google’s liability. He clarified that there are two types of use of keywords performed by Google – one when Google allows advertisers to purchase keywords and a second when Google displays ads based on the keywords. Advocate General Maduro further concluded that both activities of Google represent use in the course of trade since in both events the services provided by Google are aimed at profiting. However, the first use (the offering of keywords) was aimed at marketing the AdWords service itself and thus it did not satisfy the second condition for trademark infringement – use in relation to services that are identical or similar to those for which the trademark is registered. As for the second use, the Advocate General proceeded to analyze all three required conditions and finally concluded that the display of advertisements did not undermine the functions of the trademark.
As a result of its conclusion, the CJEU continued its analysis in view of the presence of the second and third condition only with regards to the use of signs by the online advertisers. In view of the second condition, the Court concluded that there was use in relation to goods or services identical or similar to those for which the trademark is registered. As for the third condition, the CJEU decided that two relevant functions of a trade mark need to be examined – its origin function (to guarantee the identity of the origin of the marked goods or service to the consumer by enabling him to distinguish the goods or service from others which have another origin) and its advertising function (using the mark for advertising purposes designed to inform and persuade consumers). In its analysis the Court clearly demonstrated that the use of a keyword had no adverse effect on the advertising function of the trademark. With regards to the origin function, the CJEU indicated that it could be adversely affected if an advertisement does not allow “normally informed” and “reasonably attentive” internet users, or makes it difficult for them, to ascertain whether the goods or services in question originate from the trade mark proprietor or a third party. However, the CJEU left that assessment to be performed by the national courts on a case-by-case basis while at the same time it provided certain instructions for that assessment.
The American view
It is worth comparing the CJEU’s general position on liability of referencing service providers for trademark infringement with the positions taken by the US courts. In the case of Rescuecom Corp v. Google, Inc, 562 F.3d 123, 2d Cir. 2009, (the Rescuecom decision), the Court of Appeals for the Second Circuit took a position that is opposite to the one introduced by the CJEU. It held that Google has in fact used Rescuecom’s trademark in the course of trade by recommending and selling a sign identical with the trademark to the competitors of Rescuecom through AdWords. The Court of Appeals took the stance that Google displayed, offered and sold Rescuecom’s trademark when selling its own advertising services . Additionally, Google encouraged the purchase of the sign through its Keyword Suggestion Tool. Therefore, the Court of Appeals postulated that the use of a trademark in an internal software program could not by itself exclude the liability of a referencing service provider for trademark infringement. Instead, further investigation needed to be pursued in order to establish whether that use is liable to cause confusion on the market.
The shortcomings in the reasoning of the CJEU
Both the Rescuecom decision and the position of Advocate General Maduro reveal a significant weakness in the position taken by the CJEU. The CJEU introduces a new element into the first requirement for trademark infringement – when analyzing whether there is use in the course of trade it imposes a requirement that the referencing provider must use the keywords in its own commercial communication. First, the Court did not substantiate properly the inclusion of this new element. Second, it did not provide a compelling argument that this new requirement is actually fulfilled in Joined Cases C-236/08 to C-238/08. It should be taken into account that when providing online advertisers with the opportunity to purchase keywords Google was also using a supplementary service – Keyword Suggestion Tool. That service provided online advertisers with information for the number of searches for related keywords and thus enabled them to maximize their customer reach . Therefore, an argument could be made that Google was in principle capable of using keywords in its own commercial communication in order to promote its AdWords service through the Keyword Suggestion Tool. When substantiating its position that Google uses keywords in the course of trade, the Court of Appeals in the Rescuecom case explicitly highlighted the fact that Google encourages the purchase of a keyword through its Keyword Suggestion Tool. Third, by terminating the inquiry for liability at the level of the first requirement – use in the course of trade – the CJEU in fact created a non-penetrable protective shield for all referencing service providers. Knowing that under no circumstances they could be held liable for trademark infringement regarding the use of keywords, the referencing service providers are now given an immensely wide field of operation. That field is no longer strictly constrained by legal boundaries and there are no guarantees that the referencing service providers might not abuse their regulatory freedom in a direction that affects adversely the functions of a trademark.
An additional weakness of the decision of CJEU in Joined Cases C-236/08 to C-238/08 is its strong reliance on the abstract notion of a “normally informed” and “reasonably attentive” internet user. In the absence of a definition or at least certain guidelines, it is quite possible that there might be a wide variety of interpretations by the various national courts and consequently legal uncertainty as to the review of the third condition in the test for trademark infringement applicable to online advertisers.
Meta tags in HTML code of websites
Another situation where trademarks can be infringed through online advertising practices is the use of meta tags in the source code of a website. Meta tags are words or phrases that appear in the HTML (Hypertext Markup Language) code of a website and they are used by search engines in order to determine and index the website’s content. Accordingly, meta tags can be used as part of SEO strategies as they can have a direct correlation to the position of a website in the list of search results triggered by the use of a search term. It is easy to imagine that such practices could allow a competitor to unlawfully benefit from the good will and reputation of another brand by using its trademark as a meta tag in the HTML code of its own website. Despite not being directly visible on a website, the use of meta tags is in principle an activity that is capable of infringing a trademark. This position was confirmed by the courts in Australia in the case of Accor Australia & New Zealand Hospitality Pty Ltd v Liv Pty Ltd. Accor owned the trademark “Harbour Lights” which was used by Liv in the source code of their website. Both the judge at first instance and the Federal Court confirmed that the use of the words “Harbour Lights” as a meta tag by Liv on their website constituted a trademark infringement. Additionally, the owner of the website was liable for trademark infringement irrespective of the fact that the website was created by an IT service provider who formally implemented the meta tags in the HTML code.
At the same time, a different stance was taken by a Dutch court in 2019 – the Court of the Hague in the case of the Transocean Marine Paint Association (Transocean) vs Pinturas Eurotex S.A. and Industrias Quimicas Eurotex S.L. (Eurotex). In the case at hand the Dutch court had to determine whether the use of meta tags by Eurotex on its website was affecting the trademarks of Transocean. In its decision the court postulated that the mere negative impact in terms of search engine optimization (i.e. the website of Eurotex appearing before the website in Transocean in the list of results as a result of the use of meta tags) was not sufficient in itself to be treated as a trademark infringement. Instead, the claimant should have proven that the use of meta tags by its competitor was negatively affecting the functions of the trademark, causing confusion or providing unfair advantage to the competitor.
Based on the diverging positions expressed in case law, it is advisable for website owners to be cautious and if possible avoid using registered trademarks as meta tags on their websites unless they have obtained the consent of the rigthholder. Otherwise, they should perform prior analysis on the potential impact of the use of the meta tags upon the functions of the competitor trademark and the likelihood of causing confusion among the end users or gaining unfair advantage.