Keyword advertising and the L’Oréal v. eBay ruling

A couple days ago, the ECJ gave judgement in L’Oréal v. eBay. L’Oréal had sued eBay because some eBay-sellers offered L’Oréal counterfeit goods for sale. Some sellers also offered goods that were not intended for sale (such as tester or dramming products) or goods bearing L’Oréal trademarks intended for sale in North America and not in the European Economic Area. L’Oréal also submitted that eBay is liable for the use of L’Oréal trademarks in sponsored search results. eBay used L’Oréal trademarks in both the advertisement’s text and as a keywords to trigger  the advertisement. One of the questions before the ECJ was: is eBay’s use of L’Oréal’s trademarks in sponsored search, use in the sense of Article 5(1) of the Trademark Directive? In other words: is eBay’s trademark use actionable?

Trademark use in keyword advertising

The ECJ differentiates between two types of use by eBay. If eBay advertises to promote its own service of making an online marketplace available to sellers and buyers of products, then that use is not in relation to goods or services identical with, or similar to L’Oréal products. eBay ‘s online auction service is in no way related to L’Oréal perfumes, cosmetics or hair-care products. eBay’s trademark use is thus at the very most actionable under Article 5(2) of the Trademark Directive, which protects trademarks with a reputation (and does not require trademark use in relation to identical or similar goods or services).

However, in so far as eBay uses L’Oréal trademarks to promote its customer-sellers’ offers, then there is use  related to goods or services identical with those for which L’Oréal trademarks are registered. The ECJ compares the products offered by eBay-sellers with L’Oréal’s products. According to the ECJ, eBay’s advertisements create an obvious association between the trade-marked goods which are mentioned in the advertisements and the possibility of buying those goods through eBay. Even though eBay itself does not offer the infringing products for sale, the ECJ held that eBay’s use falls within the scope of Article 5(1) of the Trademark Directive.

This is in line with the EJC’s earlier decision in UDV North America  v. Brandtraders, in which the ECJ considered trademark use by an intermediary. UDV was the proprietor of the Community trademark Smirnoff Ice. Brandtraders operated a web site on which traders could anonymously place advertisements and negotiate the sale of goods. Brandtraders, in its own name but on behalf of another company, entered into a contract of sale of bottles of Smirnoff Ice with a buyer for which it used the SMIRNOFF trademark. The ECJ explained that the fact that a third party uses a sign in relation to goods that are not his own goods, does not by itself mean that such use is not covered by Article 5 of the Trademark Directive. Brandtraders was considered to have used the sign in such a way that a link was established between the sign and the goods marketed by Brandtraders.

Use in relation to goods and services is not enough to constitute trademark use in the sense of Article 5(1) of the Trademark Directive. Trademark use should be liable to have an adverse effect on one of the functions of the trademark. Whether eBay’s use affects the functions of L’Oréal’s trademarks is decided based on the result of the black box created by the ECJ in its Google France v. Louis Vuitton and Portakabin v. Primakabin decisions:

94. As regards, finally, whether the use of a keyword corresponding to a trade mark is liable to have an adverse effect on one of the functions of the trade mark, the Court has made clear in other cases that there is such an adverse effect where that advertising does not enable reasonably well-informed and reasonably observant internet users, or enables them only with difficulty, to ascertain whether the goods or services referred to by the advertisement originate from the proprietor of the trade mark or from an undertaking economically linked to it or, on the contrary, originate from a third party (Google France and Google, paragraph 99; and Case C‑558/08 Portakabin and Portakabin [2010] ECR I‑0000, paragraph 54).

Conclusion: Nothing new here!

Search Engines Searching for Trouble?

I just uploaded a modified version of my Research Master’s thesis, which is titled ‘Search Engines Searching for Trouble? Comparing Search Engine Operator Responsibility for Competitive Keyword Advertising Under EU and US Trademark Law.

In my thesis, I compared EU and US law regarding the liability of search engines for competitive keyword advertising. To be precisely: their liability for linking search engine advertisements to a trademark owned by the advertiser’s competitor without explicit reference to the trademark in the advertisement’s text. Download it!

Update 2/9/2011: Also available at SSRN.


Creative Commons License

This work by Stefan Kulk is licensed under a Creative Commons Attribution 3.0 Unported License.
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Google Takes Rogue Pharmacies to Court for Circumventing Advertising Policy

Google is getting sick and tired of advertisements of rogue pharmacies that are illegally selling drugs on the Internet. Despite its best efforts, Google has been unsuccessful in banning all illegal online pharmacies from its advertising platform. So this morning Google filed a civil lawsuit in federal court against those advertisers that have broken Google’s advertising rules:

Litigation of this kind should act as a serious deterrent to anyone thinking about circumventing our policies to advertise illegally on Google. As we identify additional bad actors, we will add them to the lawsuit. Rogue pharmacies are bad for our users, for legitimate online pharmacies and for the entire e-commerce industry—so we are going to keep investing time and money to stop these kinds of harmful practices.

I’d love to read more about it, but unfortunately there is no more to the story (yet).

Update – September 22, 2010; 8.30PM GMT+1

Eric Goldman has posted the Google complaint on Scribd.