Auto IES, a car company in France, brought a suit against Google Inc., Google France and Google Ireland, claiming that Google contributed to the infringement of its trademarks.  Allegedly, if a consumer uses the terms “ies”, “auto ies”, “autoies” or “auto-ies” as keywords in a Google search, sponsored listings would appear on the right side of the search results.  These sponsored listings are advertisements of Auto IES’s competitors that lead to their own respective sites.  According to Auto IES, there is a likelihood of confusion because the advertisements are promoting the same line of business.  They claim that this advertising method infringes their trademark rights under article L. 713-2 of France’s intellectual property code and the EU Trademark Directive (89/104 EEC).  The court disagreed.

A few weeks ago, on September 25, the Commercial, Financial and Economic Chamber of the Supreme Court of France held that there is no likelihood of confusion on the part of consumers because the sponsored ads do not indicate that they are from Auto IES.  This follows the decision of the European Court of Justice from 2010 (Google France S.a.r.l. v. Louis Vuitton Malletier), holding that the purchase of adwords, even if they contain trademarks of competitors, is lawful under European Union Law. “[T]he advertisers’ selection in AdWords of keywords which correspond to trade marks can take place for many legitimate purposes (purely descriptive uses, comparative advertising, product reviews, and so on). The consequence of considering that such selection constitutes, in itself, a trade mark infringement would be to preclude all those legitimate uses.”

The Fate of Keyword Search in Internet Advertising in the U.S.

Before 2009, the prevailing case in the U.S. was a Second Circuit case involving 1-800Contacts.  There, the court held that the use of trademarks to generate pop-up advertisements is not an actionable use under the Lanham Act, thus, rejecting the claim of trademark infringement by 1-800Contacts against its competitor, Vision Direct and the internet marketing company, Whenu.com.  In 2009, the same circuit court revisited the issue in the case Rescuecom Corp. v. Google and held that use of trademarks as search terms is indeed a “use in commerce” under the Lanham Act.  Unfortunately, since Rescuecom decided not to pursue the suit further, the Second Circuit did not have the opportunity to rule on the issue of the likelihood of confusion.  The good thing that came out of it, though, is that since the Rescuecom decision, there seems to be a consensus among U.S. courts that the sale or the use of trademarks in internet advertising could be a target of trademark infringement suits.  However, whether there is somebody out there who would pursue such a suit against the Google empire and actually succeed remains to be seen.  Until then, Google has free reigns to cash in for the sale of trademarks as adwords.