March 30th, 2010
There’s a real reputation-meets-revenue battle happening online.
Today, any advertiser with a Google AdWords account can buy virtually any keyword to advertise its own goods, regardless of whether said advertiser has the rights to use the word. This is particularly troublesome for companies that have spent decades burnishing brand franchises and consider the associated names and words to be reputational assets of great value.
If you go to Google right now and type in “LVMH” (the owner of numerous brands including Louis Vuitton and Hennessy), one of the sponsored ads shouts “Designer Handbags 70% off,” with a URL that includes the Louis Vuitton name. That has LVMH steamed and the company sued Google in Europe for trademark infringement.
Well the ruling is in… and it’s a split decision, advantage: Google. Upon Google’s appeal of earlier rulings (that didn’t go its way) the highest court in the EU has determined that – on its face – the mere fact that an LVMH-protected word is available for sale by Google does not mean that Google is in violation of LVMH’s trademark rights.
Specifically, the court has said that the search company is not violating trademarks if (a) its automatic ad system is judged to be “merely technical, automatic and passive” in its operation, and if (b) the company is not aware and cannot be expected to fully police all the words that advertisers purchase.
Since computers are programmed by humans, I would argue that the first point is debatable, but there it is. It was not a flat-out win for Google, however, as the court also ruled that Google must remove said ads if the brand owner formally complains about an advertiser infringing on its marks. If Google fails to do this, the court says it won’t be so helpful in protecting Google’s revenue stream the next time around.
The court also reinforced that Google could be held liable for selling keywords that openly encourage or facilitate counterfeiting, which is a win (or at least a booster shot) for brand owners. And lastly, the court also clarified the responsibilities of advertisers who mustn’t, by “using such keywords, arrange for Google to display ads which do not allow Internet users to easily establish from which undertaking the goods or services covered by the ad in question originate.”
I don’t know about you, but if I’m an advertiser that gets into hot water for legally buying a word that Google sold to me – and I’m not trying to sell knock-offs – I’m naming Google in my legal response.
LVMH has been on the attack re. this issue for a long time all around the world, and must fight infringement in all possible sales channels. It has sued (and has won), for example against eBay in the past. And LVMH was front and center in the effective elimination of a thriving Louis Vuitton counterfeit trade on Canal Street in New York City. After this ruling, the company will flood Google “Don’t Be Evil” Inc. with complaints until the search company will at least have to question what (and how much) it is defending by taking on massive legal expense (and bad PR) in order to make money from advertisers leeching off others’ trademarks.
And speaking of buying Louis Vuitton knock-offs on the street, a LVMH board member asks what may be the most probative observation yet: “Under trademark law anywhere in the world, brand owners have the right to stop third parties from using their names. “Why make an exception for the digital world?”
As the division between online and offline “worlds” continue to disappear, why indeed?
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