The Court of Justice of the European Union ("CJEU"), formerly the European Court of Justice, has handed down its decision in three conjoined cases concerning Google AdWords and potential trade mark infringement.

Google operates a system called AdWords, which enables advertisements to appear alongside natural search results which are returned when the internet user enters a keyword into the Google search engine. Advertisers are allowed to bid for any keyword they want including registered trademarks, the keyword will then generate a sponsored link to the advertisers website. The advertiser will then pay Google on a cost-per-click basis.

The key concern for brand owners is that allowing advertisers to bid on keywords which correspond to their registered trade marks goes against their exclusive rights as trade mark proprietors.

The cases in question here were brought before the courts by brand owners in France, which included Louis Vuitton, part of the LVMH group. The French courts turned to the CJEU for guidance as to whether Google, or indeed the advertisers, were in breach of trade mark law.

The CJEU had essentially two issues to consider:

• whether by allowing advertisers to bid on trade marks as keywords through its AdWords system, Google was infringing trade mark law; and  
• whether the advertiser was committing a trade mark infringement by bidding on a trade mark as a keyword with a view to displaying links to its website.

The CJEU was clear with regards the position of Google. The AdWords system does not amount to a trade mark infringement. The court also held that Google was an information services provider and so could rely on the E-Commerce Directive to avoid liability for the storage or transmission of advertisements which are held to infringe a third party mark. This is on the proviso that Google has no active role in the advertising process and acts quickly to remove infringing advertisements as soon as it becomes aware of them. 

The position as regards the advertisers is less straightforward. The Court held that the act of bidding on a third party's trade mark as a keyword will not amount to a trade mark infringement. However an advertiser could be liable if the resulting advertisement does not enable the average internet user to distinguish whether the goods or services referred to originate from the trade mark owner, or some other third party. The internet user should be able to easily ascertain the origin of the goods or services and the link to the advertisement should clearly identify the goods or services as those of the advertiser, if not the advertiser may be liable.

The CJEU has left it to the national courts to decide in each case whether the internet user may be confused as to the origin of the goods and so whether the essential function of a trade mark; as a badge of origin to distinguish goods/services, has been affected. As such national courts have a wide discretion to determine whether there has been an infringement in keyword cases and so the harmony which was desired across the European Community may not be achieved.

This is the first of a number of cases to come before the CJEU concerning the use of Google AdWords so we shall have to wait and see what the future has in store on this particular issue. For the moment Google's AdWords service has been held to be a legitimate service which advertisers may use, all be it they should now tread with caution as to the content of the advertisements displayed and, above all, should ensure clarity for internet users.

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