April 2009
US Appeal Court: A Step too far for Google's AdWords?
Rights holders have won their first victory against Google after the introduction of Google’s controversial AdWords facility.
In May last year Google launched its AdWords facility in the UK and Ireland after running a similar policy in the US and Canada. The AdWords facility gives non-rights holders an opportunity to bid for the right to use a registered trade mark to generate a sponsored link to their website (For more information see Briffa article Google AdWords).
The policy change was greeted with litigation on both sides of the Atlantic and is currently the subject of a referral to the ECJ in Europe. This month in the US a computer repair business called Rescuecom successfully sued Google for trade mark infringement after Google sold its trade mark as an AdWord.
The US Court of Appeal overruled a lower district court which had simply followed the status quo, by ruling that Google’s use of the AdWords was in fact “use in commerce”.
"What Google is recommending and selling to its advertisers is Rescuecom’s trade mark," said the Court's ruling. "Google displays, offers, and sells Rescuecom’s mark to Google’s advertising customers when selling its advertising services."
One hurdle for trade mark owners is establishing a likelihood of confusion i.e. people doing Google searches are confused into believing that the advertiser is linked to the trade mark owner. However the Court of Appeal concluded that there may be confusion:
"If the searcher sees a different brand name as the top entry in response to the search for 'Rescuecom,' the searcher is likely to believe mistakenly that the different name which appears is affiliated with the brand name sought in the search and will not suspect, because the fact is not adequately signaled by Google’s presentation, that this is not the most relevant response to the search," said the ruling. "Whether Google’s actual practice is in fact benign or confusing is not for us to judge at this time."
The lower court now has to decide if on the facts whether there has been any evidence of “actual confusion”.
Briffa’s Comment
This could be a turning point for the Google AdWords facility, at least in the US. It will be interesting to see if the ECJ follows suit.
The difficulty for the courts is that they appear to recognise that Google is doing something unfair but cannot pin down how this amounts to infringement of a trade mark owners rights under trade mark law. The courts may be able to invoke the principle of unfair trade which exists in various EU countries alongside registered trade mark rights to reach the correct balance here.
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