The full court of the European Court of Justice (ECJ) today ruled that an online advertiser cannot use a registered trademark as a keyword without the consent of the trademark owner. The Court further denied the provider of an online paid referencing service the liability exemption for hosting.
This long-awaited decision will be welcomed by the business community as well as by consumers. It confirms and emphasizes the critical role played by trademarks in a dynamic economy to protect innovation and the investments carried out by businesses, and will avoid confusion on behalf of consumers as to the quality of the products and services they are buying.
Following the decision, LVMH Senior Executive Vice-President, Pierre Godé, commented: “This decision represents a critical step towards the clarification of the rules governing online advertising, of which LVMH is one of the foremost clients. As the world’s leading luxury group, with more brands actively engaged with the internet than any other luxury company, we are committed to working with all parties, including Google, to eradicate illicit online practices and to promote a framework that fosters the continued growth of the digital economy”.
The French Supreme Court (Cour de cassation) called upon the ECJ to decide on the rules governing the applicability of trademark law online as well as the liability of providers of a paid referencing service. For many years, these issues have been the subject of concern for various trademark owners, including Louis Vuitton, owned by LVMH.
Google claimed that advertisers on its service did not commit any illicit use of registered trademarks when purchasing keywords representing such registered trademarks on its website without the consent of the trademark owner. Google further claimed that, in any event, a provider of a paid referencing service was merely hosting the service and therefore could not be held liable.
The ECJ strongly rejected both claims. Its decision will apply to the jurisdictions of the 27 countries of the European Union and will therefore put an end to the uncertainties of diverging national case laws. Therefore, a provider of a paid referencing service can be found liable alongside an advertiser, either because it was aware when selling the keywords that the advertiser was infringing a trademark, or because it did not verify that the advertiser was authorized by the trademark owner to use the trademark.
The Court’s decision does not call Google or its competitors’ business model into question. The illicit use of key words only amounts to a limited share of the turnover achieved by providers of a paid referencing service. The significant part of their revenues stem from the selling of key words which do not represent registered trademarks or which represent trademarks that are used with the consent of the trademark owner.