AdWords: Who Won?

March 23, 2010

In the dim and distant past when I could still run for 90 minutes and kick a football vaguely in the direction I intended, I took my wife to watch me play. I scored a hat trick in a 5-2 thrashing of {East Cowton:} (we were not good enough to beat {i}all{/i} of Cowton). I left the pitch expecting to be mobbed by my adoring fan. I was somewhat non-plussed on eventually finding my anorexic fan club to be greeted with ‘Who won?’ and the revelation that my adoring fan had been so pre-occupied sheltering from the cold and rain that she’d missed all my goals. They had had apparently been scored at the ‘wrong end’ – ie the end not visible from her makeshift shelter. I actually had some sympathy with her this morning after wading my way through the European Court of Justice judgment in the Adwords case. I thought I just about knew who had ‘won’ when writing my brief piece for the web site but my confusion returned after reading the reaction of the participants. Had I missed something due to adverse weather conditions?

According to Louis Vuitton, the ECJ has ruled ‘in favour of trademark protection and has denied Google the status of hosting services provider’. According to Google, the ECJ has ruled in favour of Google, confirmed that Google has not infringed trade mark law by allowing advertisers to bid for keywords corresponding to their competitors’ trade marks and held that the ‘European law that protects internet hosting services applies to Google’s AdWords advertising system’.

All lawyers are used to the adage ‘you win some, you lose some’, but it is unusual for it to apply to all parties at the same time. In this case, it probably does. Here’s my tentative view on winners and losers.

1. Google wins because the ECJ says it is a protected service and selling AdWords which includes trade marks doesn’t threaten that unless it takes ‘an active role’ (and they are not going to be daft enough to do that). That’s probably the biggest win but . . .

2. Trade mark holders win because they can prevent the use of sponsored links advertisements where the consumer cannot tell if the advert comes from the trade mark holder or not – which is pretty much all the attractive yet dubious trade mark sponsored links, so that source of revenue for Google is threatened.

3. Google loses because it can be overwhelmed with take down notices (or a new variant on them) and will be held liable if it does not act promptly to block access to the bad boys. Moreover, there will be a ‘chilling effect’ here because it’s not really going to be worth Google’s while to establish whether the allegation is well founded or not.

4. Trade mark holders lose because they only sued Google in the first place because they cannot get to the bad boys in question, whether because of jurisdictional difficulties or because they are asset-free, and you can bet that the bad boys will make sure that the relevant text (ie that displayed by Google) is informative and not misleading, however misleading all the rest of their web sites may be.

I think it is probably a good result for consumers but the proof of the pudding will be in the application of this ruling by the various national courts with a direct or indirect interest in it. My guess is that we might see a bit of a divergence in its interpretation between the French courts and UK courts, but I am a bit of a cynic and might well be wrong. It is certainly a bad result for advertisers who push the limits of trade mark law, but they probably won’t care anyway.

My advice to all the parties in the case is that next time they should look for an easier target. Can I suggest East Cowton?