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A recent decision against Google Inc. in a French court is a reminder that conflicts over jurisdiction and how trademarks are protected online are likely to get worse before they get better, according to legal analysts.
On Feb. 4 the Paris lower court (Tribunal de Grande Instance) imposed a 200,000-euro fine and sanctioned Google.com and Google.fr from selling search-related advertisements against terms such as “Louis Vuitton,” “Vuitton” or “LV.” The court said Google had carried out trademark counterfeiting, unfair competition and misleading advertising.
Google said on Friday it is still considering whether it will lodge an appeal. “We believe the Paris courts ruling is deeply flawed, and we will continue to defend ourselves vigorously,” a company spokeswoman said.
The case is significant because, while its broadly in line with previous decisions in Europe and the United States it conflicts with a December decision that favored Google over a trademark holder.
In mid-December, a federal judge dismissed the major claim in a lawsuit by the Government Employees Insurance Co. GEICO had accused Google of undermining its trademark and confusing consumers by allowing GEICO competitors to bid on the insurers trademark to return the sponsored links that appear alongside Web search results.
The U.S. court ruled that there was no likelihood of confusion because users would recognize the sites in question were not affiliated with GEICO. On another claim, however—involving the issue of trademarked terms within the ads themselves—the judge asked both parties to work on a settlement.
The Vuitton case and an earlier preliminary decision involving the hotel chain Le Meridien go the other way. “In GEICO, the judge ruled that the use of trademarks as keywords to trigger ads was not trademark infringement. This is the exact opposite of the French decisions,” said Olivier Hugot, an attorney with Paris-based law firm Hugot Avocat, which specializes in IT and intellectual property issues.
The conflicting GEICO, Vuitton and Le Meridien cases may put Google in the position of being able to legally sell keywords such as “Vuitton” in the United States, but be legally liable in France for the same action, Hugot said: “If the GEICO and Vuitton rulings are confirmed, Google is going to be in an extremely difficult situation.”
At stake are the advertising systems with which Google and other search engines, such as Yahoo Inc.s Overture, generate most of their revenues. Googles AdWords allows advertisers to link their advertisements against search keywords, including words that are the registered trademarks of competitors.
Earlier cases
The Louis Vuitton and Le Meridien cases found this practice to be trademark infringement, but they were only the latest in a string of similar cases on both sides of the Atlantic, legal observers said. In 2003 two French travel firms, Viaticum and Lucetiel, successfully sued Google for allowing their trademarks “Bourse des Vols” and “Bourse des Voyages” to be used as metatags by competitors. In 2000 a German court reached a similar conclusion in a case involving online cosmetics retailer iBeauty, the search engine Excite.com and the keywords “Estee Lauder,” “Clinique” and “Origins.”
In the United States, a substantive judgment was handed down in a 1999 case, Brookfield Communications Inc v West Coast Entertainment Corporation, which favored the trademark holder. West Coast had planned to use the “moviebuff.com” domain name and a similar metatag for its Web site; the court ruled that this infringed on the Brookfield trademark “Movie Buff” on the basis of “initial interest confusion.” In other words, West Coast would be misappropriating the goodwill associated with Brookfields trademark, even though users might “realise immediately upon accessing moviebuff.com that they have reached a site operated by West Coast and wholly unrelated to Brookfield,” the court stated.
In January 2004, an appeals court decided that the idea of “initial interest confusion” needed to be reconsidered in the case Playboy Enterprises Inc. v Netscape Communications Corp., ruling that the case could proceed to a full trial. Playboy had accused Netscape of infringing its trademarks by selling “playboy” and “playmate” as keywords to trigger banner advertisements; the parties have now settled.
“Is [initial interest confusion] unfair competition? Arguably not,” said Abida Chaudri, an associate solicitor with London-based law firm Bristows. “Were all IT literate these days, and we know that when you put a search term into Google there will be results other than the exact site were looking for.”
The GEICO decision reinforced this point of view; another case involving American Blind & Wallpaper Co., Google and other search engines remains to be decided.
The GEICO case aside, Chaudri believes a consensus is emerging in the United States and internationally that the sale of keywords and metatags can constitute trademark infringement and unfair competition. “I think thats the way it will go,” she said.
Lack of clarity
However, for the time being there is little consistency or clarity on how trademark law affects search engines—in spite of the fact that United States and European trademark law are very similar, according to analysts.
“There is a lot of confusion about what Internet companies can and cant do,” said Lee Curtis, a trademark attorney with London-based Pinsent Masons. “For the next couple of years people are going to have to look at each case as it comes up. Until theres a broad wealth of case law experience, no one is going to be able to draw out general principles globally. In theory all countries should slowly fall into line with each other.”
The confusion is partly due to different facts in each of the cases, attorneys say. For example, the judge ruled that GEICO hadnt proved its case, while Louis Vuittons case was based on specific examples of sites selling Vuitton fakes.
The court found that companies had used Googles advertising service to associate terms such as “imitation,” “replica,” “fake,” “copies” and “knock-offs” with terms such as “Louis Vuitton” and “Vuitton” to give their own sites as much prominence on Google as the official vuitton.com site. These competing sites not only dont have commercial links with Louis Vuitton Malletier but actually used the Vuitton trademark to sell products “inspired by” Vuitton products, the court said. This caused consumer confusion, according to the court.
Another issue is that judges find it difficult to understand systems such as AdWords, and therefore apply legal reasoning in different ways, Hugot said. “It is normal that at first decisions will be contradictory,” he said. Besides technical issues, different judges may decide to give trademarks different levels of protection, he said.
Recent decisions are still open to appeal, attorneys noted. Google may challenge the Vuitton case, which was from a relatively low court—it could still head to appeals court and then the French Supreme Court. The Le Meridien case was a preliminary relief, meaning that the case wasnt decided on its merits. However, a judgment on the merits is expected soon, and such relief is granted only if the court finds serious grounds to believe that the plaintiff will prevail.
“[The decisions] are not authoritative, and there is no binding precedent in France. A decision from a court of appeal has more weight, and once the Supreme Court has ruled, the law is set,” he said. It is also possible that the European Court of Justice could be asked for a ruling by France or one of the other European Union member states, Chaudri added.
While differences remain, Internet companies will have to deal with the fact that plaintiffs can take their case to any forum that they believe will favor them, and which believes it has jurisdiction. French courts consider that if a site is available from France, the court has jurisdiction, Hugot noted.
There is little Internet companies can do but deal with legal problems as they arise and lobby for international agreements or safe harbor provisions, analysts said. “Companies like Google or Yahoo just have to cope with it the best they can,” Hugot said. “International companies should not rely on courts to hand out decisions that are coherent with other countries legal systems.”