News Analysis: The June 28 decision supports leather goods manufacturer Louis Vuitton's claim that a search for Vuitton should only return sites and ads that mention Vuitton and not those that mention knock-offs or competitors.
A French court of appeals on June 28 sided with leather goods manufacturer Louis Vuitton and ruled that Google had violated trademark, unfair competition and advertising laws by showing ads for Vuitton rivals when people searched for Vuitton.
The closely watched casewhich involves Google having to pay a fine of about $250,000has huge implications for a wide range of search and related Web activities.
The Web is intended to be convenient for the searcher, and the assumption is that someone searching for one companys products might also be interested in rivals. In other words, the Web assumes that the person is likely searching for handbags and is using "Vuitton" as a way to start such a search, in the way that someone might search for "Toyota" or "Ford" if they are interested in cars.
Vuittons efforts are aimed at making the search engine more of an advertising/marketing service for the merchant than a research service for the customer. The Webs roots suggest its intended to be more of a populist tool.
The Vuitton case raises other issues, such as whether a global company such as Google can be forced to abide by the laws of different countries.
The International Herald-Tribune recently quoted Bertrand Legret, a spokesman for Googles French subsidiary, as saying, "You cannot make a rule to forbid all usage of a name. There is some difference with domestic rules and brand standards. But its the responsibility of the advertiser to control or do a different campaign in different countries."
Legret makes an excellent point, but the French courts saw it differently. Ill try to avoid suggesting that Vuitton held the home-court advantage.
Vuitton issued a statement June 28 saying it is "very pleased with the ruling" and that Vuitton "is more determined than ever to pursue its relentless battle against counterfeiting, in particular on the Internet, in order to safeguard its intellectual property and the interests of its customers."
Google is testing a new advertising program that pays site owners based on demonstrable post-click actions. Click here to read more.
That last part of the statement is, in my view, key. Is this decision truly in the best interests of Vuittons customers? Its clearly in the best interest of Vuittons sales reps.
Last year, when the Paris District Court made the initial ruling that was upheld June 28, Vuitton issued a statement that said it was "very pleased with the ruling." I guess Vuittons executives are very easily "very pleased." But the initial statement addressed the core issue and made a stronger case.
"This milestone ruling grants protection for the first time to both consumers and brand owners by finding that Googles Adwords and Premium Sponsorship services as misleading advertising services," the 2005 statement said. "It was absolutely unthinkable that a company like Google be authorized, in the scope of its advertising business, to sell the Louis Vuitton trademark to third parties, specifically to web sites selling counterfeits."
In California, its not only thinkable, its fairly obvious. But is it legal? Is Google indeed trafficking on the brand name that companies like Vuitton paid for to sell ads? Candidly, yes, it is. But is that a bad thing ultimately for the common good?
The Web is part of the Internets network of networks, and its strength and magic is in the unexpected pieces of information that come from following one web of knowledge to a connecting nearby Web of knowledge. In the commerce world, that means that a search for a well-known product will also list related products, which will include rivals.
Ultimately, manufacturers, search engines and all other e-commerce players will profit from a stronger competitive business environment. This French ruling deserves a Bronx cheer.
Evan Schuman is retail editor for Ziff Davis Internets Enterprise Edit group. He has tracked high-tech issues since 1987, has been opinionated long before that and doesnt plan to stop anytime soon. He can be reached at Evan_Schuman@ziffdavis.com.
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Evan Schuman is the editor of CIOInsight.com's Retail industry center. He has covered retail technology issues since 1988 for Ziff-Davis, CMP Media, IDG, Penton, Lebhar-Friedman, VNU, BusinessWeek, Business 2.0 and United Press International, among others. He can be reached by e-mail at Evan.Schuman@ziffdavisenterprise.com.