ECJ rulings on Google keywords might not resolve controversy, warns High Court

A widely-requested European Court of Justice (ECJ) ruling on keyword advertising may fail to give businesses in the UK and Ireland the legal clarity it would give to the rest of Europe, a High Court judge has warned.

Mr Justice Arnold last week referred two cases to the ECJ, the European Union's highest court, so that it could decide whether or not the use of a trade mark as a trigger for someone else's advertising is trade mark infringement.

But he said that even if the ECJ was to rule on the issue, which is not certain, it could still leave British businesses in the dark because Google's UK and Ireland trade mark policy is different to that in the rest of the EU.

"Since May 2008 Google has had a different policy in the United Kingdom and Ireland to its policy elsewhere in Europe," he said in his ruling. "That in itself is fairly remarkable given that the relevant law is, or should be, essentially the same throughout Europe. It may mean, however, that the common European set of answers must be amplified or qualified so far as the position in the United Kingdom and Ireland is concerned."

Pressure is building on the ECJ to clear up the increasingly contentious area of trade mark law. Mr Justice Arnold said that already three French cases had been referred to the Court, along with two German cases and one Dutch one. Last week he added two British cases to that list.

They all seek clarification on whether or not the use of a trade marked term as a keyword constitutes "use in trade", and therefore trade mark infringement, according to EU law. Companies buy the right for their adverts to appear beside the 'natural' search results when a particular keyword is typed into the search engine.

Mr Justice Arnold put off making a final decision in a dispute between Interflora and Marks & Spencer (M&S), saying that it can only be settled once the ECJ has cleared up the status of keywords. Pinsent Masons, the law firm behind OUT-LAW.COM, is acting for Interflora in the case.

The dispute centred on the biggest of the keyword systems, Google's AdWords. M&S bought the right for its ads to be displayed when terms such as 'Interflora' and 'Interflora flowers' were searched for on the site.

The adverts triggered by the keywords promoted M&S's own flower delivery service, though when the court checked Google, the M&S ads were displayed below Interflora's own.

Google used to take down adverts which were triggered by other people's trade marks when it was told about them, but it changed its UK and Ireland policy in May 2008 to one that applies in the US and Canada. As long as trade marks are not used in the text of ads the adverts can stay up, it now says.

It has since made that situation its policy in another 190 countries, though the UK and Ireland are still the only two EU nations where that is the case.

The High Court heard that the policy change had drastically altered Interflora's cost of keyword advertising since, for the first time, it had to compete with others for the right to have its ads displayed beside the search results for its own brands.

"Interflora's bidding costs for their keywords during the nine days leading up to Valentine's Day increased from 2p per click in 2008 to 23-28p per click in 2009," said the High Court ruling. "Interflora estimate that in total their costs will have increased by about $750,000 in the year from 5 May 2008."

Interflora argued that the use of its brands as keywords constituted use in trade of registered trade marks, which would be trade mark law infringement.

M&S argued that its use of the terms was not 'use in trade', and that there is no likelihood of confusion between the two flower services. It said that the law was unclear and that the Court should not find against it without clarification from the ECJ.

Interflora agreed that the ECJ should resolve the questions of European law before the case proceeded further. It asked, though, that M&S be prevented from bidding for Interflora keywords while the ECJ considered the questions referred to it. The Court refused that, saying that the company had not asked for an injunction when it first lodged its case, and that the case itself was lodged seven months after the action complained of.

"It seems to me that it is now too late for Interflora to turn around and say that M & S should be prevented from bidding pending the receipt of guidance from the ECJ," he said.

Mr Justice Arnold also referred aspects of a dispute between make up firm L'Oréal and eBay to the ECJ on similar grounds last week. L'Oréal complained of keyword-generated search engine ads which linked through to eBay pages selling goods using the trade marked terms.

L'Oréal's case is slightly different in that in this case it is not objecting to all keyword uses, only the use of its trade marks in relation to eBay sales of goods that themselves infringe its trade mark rights, such as counterfeits or grey imports.

EBay argued in that case that the sponsored links did not constitute 'use' of the trade mark, and that any use was not 'in relation to' infringing goods or 'in the course of trade' unless all the goods listed were infringing, which was not necessarily the case.

The Court said that the ECJ would have to rule on whether eBay's way of doing business breaches the terms of the EU's Trade Marks Directive.

EBay claimed that the E-Commerce Directive protects it. Article 14 of that Directive says that service providers who store and host material for others are not liable for material which breaks the law as long as they do not know it is going on.

Mr Justice Arnold said that he preferred L'Oréal's arguments to eBay's on the issue, but that it, too, would need to be referred to the ECJ for clarification.

He also said that the ECJ would have to decide what kind of injunction against eBay would be suitable under Article 11 of the Enforcement Directive.