The trademark war continues over Google Inc.’s popular and profitable AdWords program. AdWords allows advertisers to purchase “sponsored links” that appear as a result of Google searches that use specific words, which can be trademarks of third parties. In my last article, I discussed a U.S. District Court decision that allowed Google to use the trademarks of Geico Insurance to trigger sponsored links from Geico’s competitors. I warned that the Google victory was likely to be only an early win in what promises to be a long war.
It didn’t take too long for the war to expand. It has gone international, and Google has now lost a battle in France. On February 4, a French court ordered Google, Inc. (essentially Google.com and Google.fr, Google’s French affiliate) to stop selling advertising that used the terms “Louis Vuitton,” “Vuitton,” or “LV” as part of its AdWords program. It also imposed a €200,000 fine (about $425,000).
The French court decision is a lower-court decision. It adds a new, but not unexpected, wrinkle to the war over Google’s AdWords program.
To appreciate this you should understand that, fundamentally, trademarks are “local” in scope. In other words, trademark rights extend to a limited territory. In the past, registration was generally made on a state or national basis, but the trend is toward allowing registration on a regional basis (for example, registration in the European Community).
Generally, trademark rights arise in two ways – as a result of use or, in some situations, registration. No matter how the rights arise, a trademark recognized under the laws of one country or region does not, except in some situations not relevant here, confer trademark rights in another country or region. Because of the “local” character of trademark rights, trademark law is ill-suited to deal with the Internet. The laws simply have not been written to anticipate the transnational character of a global information network.
The latest Google decision is an example of this. While a court in the United States has ruled that Google can use the trademarks of other entities (such as Geico) as part of its AdWords program, a court in France has ruled it cannot. Since Google is accessible virtually everywhere, it is possible that identical actions by Google can be both legally allowed and prohibited at the same time. This presents a significant dilemma for Internet companies like Google.
In the United States, and presumably in most countries and “regions” with a governing authority, conflicts in what is legally allowable can ultimately be resolved. In the United States, this would be resolved by Congress or the U.S. Supreme Court. However, there is no body that can be the ultimate arbiter of the rights of trademark owners under the range of legal systems that have some ability to regulate the use of trademarks on the Internet. As a result, trademark rights in Internet commerce will continue for some period of time to be uncertain and subject to significant risk.
That said, the facts in the French case involving Google are somewhat different than the United States case, and it is by no means certain that – given the same facts as those in the French court – a United States court would rule differently.
In the U.S. case, Google sold sponsored links using third-party trademarks, but the third party trademarks never actually appeared in the ads. In the French case, searchers using a query containing the term “Louis Vuitton” or “Vuitton” discovered advertising that actually contained the terms Louis Vuitton or Vuitton to offer fake Vuitton products. It could be argued that the United States case involved “competitive advertising” while the French case involved abetting counterfeiting. Regardless, the French decision will not be the last word on trademark rights.
It does, however, open an international door, at least for larger companies with worldwide operations, to forum shopping (bringing your case in a jurisdiction that has laws favorable to your position) when trademark rights are implicated. It is likely that Google will appeal the French ruling, and I would expect that it and similarly situated companies will be actively working to establish an international framework for harmoniously resolving trademark- related disputes.
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