Mike Gardner and Kara Landsborough-McDonald offer a comparison of English and French approaches to the liability of Internet companies for trade mark infringement
The liability of Internet companies for trade mark infringement has been a hot topic for the past few years, but is currently relevant because of recent decisions in the UK and France. These are the cases of Victor Andrew Wilson v Yahoo! UK Limited, Overture Services Limited  EWHC 361 (Ch) and SA Louis Vuitton Malletier v eBay Inc and ebay International, where there is a marked contrast between the approach taken by the English and French courts. This difference in approach is grounded in earlier French cases, particularly those that have been brought against Google.
The issue is also relevant because shortly after the decision in Wilson v Yahoo, Google conducted a legal review of its 'AdWords' policy and controversially announced that it was changing its policy on sponsored keyword searching so that brand owners would have to outbid other companies to have their trade marks appear as sponsored links.
The Technical Bit
It is helpful briefly to explain the technical background to some of these claims.
When a search query is made, it produces two sets of search results – 'normal' search results and 'sponsored' search results. 'Sponsored' search results are those generated for advertisers who pay for the privilege. Advertisers can 'bid' a cost per click ('CPC') against certain keyword search terms. Google calls these 'AdWords'. Based on the amount of money that the advertiser is prepared to bid, and the characteristics of the advertiser's website, a search result under the 'sponsored links' column will be produced. This will be in the form of an advert for a website and link to that website.
There are different types of word matching that help advertisers target their advertising campaigns. There are four key types that Google provides.
This is the default option for AdWords. Under this type of search, the Google AdWords system automatically generates sponsored search results based on what it determines to be relevant variations of advertisers' keywords. Keyword variations can include synonyms, singular/plural forms, relevant variants of the keywords and phrases containing the chosen keywords. So, even if an advertiser has not chosen particular keywords as Adwords, an advert for that advertiser's website can still be generated.
For example, if the word 'web hosting' is chosen, it may generate search results for 'web hosting company' or 'web host'. But, because Google's technology continually monitors various factors as well as the CPC bid, the search results generated by Broad match queries will themselves be subject to change.
Google gives the example 'tennis shoes'. With Phrase match searching, the advert would be eligible to appear when a user searches for the phrase tennis shoes as well as searches for that phrase and other terms. For example, the advert could appear for the query 'red tennis shoes' but not for 'shoes for tennis', 'tennis shoe' or 'tennis sneakers'.
Exact match for AdWord restricts search results for specific phrases without additions. As per Google's own example, 'tennis shoes' with Exact match would not produce a result for the query 'red tennis shoes' or 'tennis shoe'.
This enables advertisers to reduce results which they are unlikely to need and which would not be targeted correctly. If the keyword is 'tennis shoes' and a negative keyword, such as 'red' is selected, the advertiser's website will not be advertised when a user searches on 'red tennis shoes'.
Google also operates a 'Premium Sponsorship' service which allows a sponsor to be ranked at the top of its search results pages when the keywords purchased correspond to the words typed into its search engine by the user.
Wilson v Yahoo
Mr Wilson is a mobile caterer who has, since 1985, been running a business selling spicy foods and snacks from a mobile catering unit under the trading name 'MR SPICY'. On 5 December 2001, Mr Wilson filed an application to register 'MR SPICY' as a community trade mark ('CTM'). His mark achieved registration on 4 February 2003, in class 29 for meat, poultry, fish and game, class 30 for sauces and spices and class 42 for providing food and drink including restaurant and bar services.
Overture Services Limited provides sponsored search engine technology. Yahoo! UK Limited makes Overture's sponsored search engine results available to the public through its website at the domain yahoo.co.uk. Yahoo also provides separate search engine technology. Both Overture and Yahoo are subsidiaries of Yahoo Inc.
Mr Wilson made internet searches via the Yahoo search engine, and was aggrieved to discover that when he typed the words 'Mr Spicy' into the web browser the results showed a number of 'sponsored' links for other parties such as Sainsburys and Pricegrabber. He decided to take legal action to protect his trade mark and eventually ended up suing Yahoo and Overture for infringement of his CTM. The defendants applied to strike out Mr Wilson's claim and asked for summary judgment on the grounds that they had not used or infringed Mr Wilson's trade mark and Mr Wilson's infringement claim had no real prospects of success.
The defendants' application for summary judgment was successful and Mr Wilson was left with a hefty bill for legal costs.
When Mr Wilson entered the words 'Mr Spicy' into his Yahoo web browser there were 515 responses to his search query. At the top of the list of responses came two items under the heading 'Sponsor Results', one being to Sainsburys and the other being to Pricegrabber. At the right hand side of the page was a largely blank section headed 'Sponsor Results' and the words 'Advertise your site here'.
A key finding of fact in Wilson v Yahoo was that neither Sainsburys nor Yahoo ever selected 'Mr Spicy' as a keyword. In fact, they selected a number of keywords featuring the word 'spicy', such as 'spicy', 'spicy parsnip soup', 'spicy soup' and 'cooking spicy'. The defendants' case was that when a search was made using their search engines on the phrase 'Mr Spicy', sponsored results for Sainsburys and Pricegrabber appeared because of Yahoo 'broad matching' the term 'spicy'. As such, the judge found that the defendants had not used the CTM and that the only use of the CTM was by the third party member of the public who accessed the defendants' technology and typed the CTM into the search engine. Accordingly the defendants had not infringed Mr Wilson's CTM.
Other Rulings in Wilson v Yahoo, and Their Significance
In addition to the ruling that the defendants had not used the CTM (and could not therefore have infringed the mark), the judge also held that even if the defendants had used the trade mark, they would not have been using it as a trade mark. The judge felt that the case would fall within the circumstances envisaged in Arsenal v Reed  EWCA Civ 696, ie Mr Wilson would not be able to prohibit the use of the words 'Mr Spicy' even if they were being applied to goods identical to those for which the mark is registered because such use would not affect his own interest as proprietor of the mark having regard to its functions.
Other UK Cases
The High Court in Road Tech Computer Systems Ltd v Mandata (Management and Data Services) Ltd  etmr 970 held that passing off had occurred where a defendant had used metatags corresponding to the claimant's trade marks when promoting its website.
Metatags are indexing systems used by search engines that take account of visible and invisible matter contained within a website. When a user conducts a search which includes a word in a metatag, the search results will include that site along with all other sites using that word, either in visible or hidden form. Sometimes metadata is translated into visible text on a search engine results page.
However, doubts were expressed about the Road Tech decision when the Court of Appeal delivered its judgment in Reed Executive Plc v Reed Business Information Ltd  EWCA Civ 159.
Reed v Reed concerned a claim to infringement under the Trade Marks Act 1994, s 10(2) (implementing Article 5(1)(b) of the Trade Marks Directive), ie the use of similar marks in relation to identical or similar services. As such, it was necessary to show evidence of a likelihood of confusion in the mind of the public in order to establish liability. On the facts, the court found that there was no such likelihood of confusion. However, in giving judgment, Jacob LJ made some interesting obiter observations on whether or not it was possible for the use of 'banner' advertisements to amount to infringement.
Jacob LJ noted that, in addition to the results of a search under a particular name or phrase, unasked for 'banner' advertisements often pop up which, if clicked on, take the browser to the advertiser's website. Such banners may either be totally random or may be linked to particular search terms. Advertisers who wish to advertise using banners must pay the appropriate search engine company for the privilege. Banner advertisements are, therefore, broadly comparable to sponsored links and AdWords.
The judge at first instance held that, when the banner was triggered by a particular chosen search term and that term was a registered trade mark, there was infringement of that trade mark, though loss could not be proved merely because the banner appeared. Jacob LJ disagreed. He held that the simple act of causing a banner to appear could not amount to infringement for the purposes of Article 5(1)(b) of the Trade Marks Directive. In particular he commented that:
'The web-using member of the public knows that all sorts of banners appear when he or she does a search and they are or may be triggered by something in the search. He or she also knows that searches produce fuzzy results – results with much rubbish thrown in. The idea that a search under the name Reed would make anyone think there was a trade connection between a…banner making no reference to the [trade mark] is fanciful…'
Jacob LJ went on to say that, if anyone actually clicked through and found infringing use on the website arrived at, such use could amount to an infringement but that infringement would depend on the site content, not on the banner.
Despite the above, it is not clear that the position in the UK is fully decided. Jacob LJ went on to discuss infringement under Article 5(1)(a), which relates to use of an identical sign to the trade mark in relation to goods or services which are identical to those for which the mark is registered. He said:
'If this had been an Article 5(1)(a) case then the position might have been different. For then there would have been no requirement to prove a likelihood of confusion. The question would appear to turn on whether the use of the word "Reed" by Yahoo at the instance of RBI properly amounted to a "use in the course of trade" as to which, I say, I reserve my opinion. It may be that an invisible use of this sort is not use at all for the purposes of this trade mark legislation – the computers who "read" sets of letters merely "look for" patterns of 0s and 1s – there is no meaning being conveyed to anyone – no "sign".'
The judge at first instance also held that the metatag use by Reed Business Information was passing off and an infringement. Jacob LJ disagreed with this on the facts presented, and questioned (though reserved his opinion) on whether or not metatag use could count as trade mark use at all.
Whilst nothing has been irrevocably decided by the UK courts, the judgments in Reed v Reed and Wilson v Yahoo are not terribly encouraging for anyone wishing to challenge the use of keywords by search engine providers on the grounds of trade mark infringement. This is in stark contrast to the position in France, where a number of successful actions have been brought against search engine providers for trade mark infringement.
Obviously, given that trade mark law is supposed to have been harmonised throughout the EU, it is highly unsatisfactory that there should be significant differences in interpretation of that law by the domestic courts of the Member States.
The current position in France is that the unauthorised use of keywords that are registered trade marks is trade mark infringement and advertisers there should not use registered trade marks as keywords unless they have authority to do so from the registered proprietor, or unless they are otherwise authorised to use such words. It is worth considering a few of the key cases, and in particular looking at the reasoning of the judgments, to see how the French courts have arrived at this result.
Viaticum & Luteciel v Google France
The first French case is Viaticum, Luteciel v Google France  ETMR 63. Viaticum was the proprietor of registered trade marks in France for inter alia 'LA BOURSE DES VOLS' (which translates as 'Flight Market') and 'LA BOURSE DES VOYAGES' (which translates as 'Travel Market') for various goods and services in classes 9, 16, 38, 39, 41 and 42 including services relating to tourists and travel. Luteciel carried out the business of providing computer services and broadcasts and managed the websites of Viaticum under the www.bourse-des-voyages.com and www.bourse-des-vois.com domain names, both of which were registered in the name Luteciel.
The defendant, Google France, ran a free internet search engine providing 'AdWords' and 'Premium Sponsorship' advertising services.
Like Mr Wilson, the claimants were aggrieved because when they typed their trade marks into the Google search engine, the links that were shown as search results were displayed together with their competitors' advertisements. The claimants commenced proceedings against Google France for trade mark infringement and unfair competition. Google France denied liability and counterclaimed for cancellation and revocation of the claimants' trade marks. The Court of Nanterre held that the claimants' trade marks had been infringed.
The evidence showed that if a user typed 'bourse des voyages' into the browser, the website at google.fr did not display any Premium Sponsorship commercial links to the claimants' competitors though it did display AdWords commercial links to the claimants' competitors. In respect of 'bourse des vols', a Premium Sponsorship commercial link and Adword commercial links appeared for competitors of the claimants. These advertisements were displayed because Google France sold to different clients phrases corresponding to those trade marks. Even though the advertisers had only acquired the common words 'vol', 'voyage' or 'bourse' (i.e. flight, travel or market), their advertisements were automatically displayed as soon as one of those words was contained in a Google user's request because of the Broad match system. This meant that when the search engine user sent a request on 'bourse des vols' or 'bourse des voyages', there appeared commercial links pointing to competitors of the claimants.
Accordingly, the Court of Nanterre held that Google France used or had used the claimants' trade marks in circumstances that allowed their direct competitors to advertise flight tickets, travel and other products and services designated in the registration of those trade marks. This was contrary to the provisions of Article L.713-2 of the Code of Intellectual Property, French legislation which prohibits the use of a deposited trade mark for goods or services identical to those designated in the registration, unless such use is authorised by the owner of that trade mark.
The reasoning of the Court was that:
Louis Vuitton v eBay
The second French case is Louis Vuitton v eBay, judgment in which was handed down on 30 June 2008 in the Commercial Court of Paris.
Louis Vuitton is a company that designs, manufactures and markets leather goods and ready-to-wear products worldwide under the well-known and prestigious Louis Vuitton trade marks. Louis Vuitton brought a claim against eBay for failing to ensure that its business did not enable unlawful activity which would cause damage to other businesses (such as Louis Vuitton). Louis Vuitton further claimed that eBay hosted advertisements on its sites that were obviously unlawful, enabled acts of infringement and caused various losses to Louis Vuitton of around 20 million euros.
As regards the substance of the case, Louis Vuitton produced evidence which showed that advertisements on the eBay website related to products infringing its registered rights. Louis Vuitton also asserted that eBay had refused, in spite of repeated warnings since 1999, to take effective measures to prevent infringement, such as forcing the sellers to state that they would guarantee the authenticity of the products offered for sale, or terminating the account of any seller at the first offence.
eBay claimed that it was a mere conduit and, therefore, able to exonerate itself from any and all direct liability, handing over responsibility to the users of its sites in connection with any acts of fraud that may be committed on those sites. In particular, eBay cited its 'Vero' system as a means by which it helps to protect the intellectual property rights of third parties. The Court considered whether eBay was a mere conduit, but concluded that eBay was a brokerage site and that it could not benefit from mere conduit status because it engaged in paid activities in relation to the sale of products. eBay acts as an intermediary between sellers and buyers and sets up tools specifically designed to ensure the promotion and development of sales on its sites through a 'sales manager' with the creation of on-line 'stores' and the possibility of becoming a 'Power Seller'. eBay plays a very active role, particularly through commercial reminders, in order to increase the number of transactions generating commissions for its benefit. For this reason eBay did not restrict its business to that of a mere conduit.
The Court agreed with Louis Vuitton that eBay had enabled acts of infringement by taking part in the marketing of infringing goods and that eBay had defaulted in its duty to ensure that its business did not generate unlawful activities, such as infringement. The Court also held that eBay had defaulted in its obligation to ensure that sellers who habitually carry out infringing transactions on its sites were reported to the appropriate authorities. The Court further referred to the fact that the advertisements and transactions relating to infringing products appeared quite obviously and said that the fact large quantities of infringing products were being sold demonstrated eBay's lack of compliance with its general obligation of supervision. The Court also considered that eBay's liability was all the greater for refusing to set up effective and appropriate measures to combat infringement, such as requiring sellers to supply, on request, a purchase invoice or certificate of authenticity.
Hotels Méridien v Google France
In Hotels Méridien v Google France, Hotels Méridien brought a claim against Google France for infringement of its trade marks 'MERIDIEN' and 'LE MERIDIEN' on the grounds that Google France suggested, as keywords in its AdWords Google Keywords Tool programme, the words 'meridien' and 'le meridien' and that searches for the same triggered advertisements from competitors in the 'sponsored links' results. In the judgment laid down by the Court of Nanterre on 16 December 2004, the Court ordered Google France to remove from its AdWords Google Keywords Tool programme the words 'meridien' and 'le meridien', combined or not with the words 'hotel' or 'resort', and to stop triggering advertisements from competitors of Hotels Méridien when users searched on the words 'meridien' and 'le meridien', combined or not with the words 'hotel' or 'resort'.
The Court's reasoning was that Google France had played an active role in the choices made by the advertiser, in particular in respect of the 'suggestion tools' section of its AdWords program, where it proposed a list of specific keywords. This encouraged clients to select words to increase their click rate through and, therefore, increase profits to Google France.
The Court also felt that the limitation of liability clause reminding the advertiser that it may be liable to trade mark infringement by selecting certain words was insufficient to discharge Google France of its liability toward third parties.
Finally, in contrast to the comments of Jacob LJ in Reed v Reed the Court held that the user of the search engine who entered the words 'meridien' and 'le meridien' searched the services covered by the trade marks, and found a commercial link to another offer concerning identical or similar services to those covered by the trade mark, might be led to believe that those services originated from the owner of that trade mark.
There are some important themes in the reasoning of the French judgments. In particular, the French courts:
The result of these differences seems to be that French courts have been more inclined to find trade mark infringement.
Louis Vuitton v eBay, Viaticum & Luteciel v Google and another case (CNRRH, Pierre-Alexis Thonet, Bruno Raboi, Tiger, a franchisee of Unicis v Google France Case C-238/08) are currently being referred to the ECJ. This is to determine whether a trade mark owner is entitled to prevent a provider of a paid reference service from making keywords available which might contain or consist of trade marks and which link to sites offering infringing goods. The question is also being asked as to whether such providers fall within the protection of the E-Commerce Directive, allowing them to avoid liability as a 'mere conduit' until the provider has been notified by the trade mark proprietor of the unlawful use by the advertiser.
If the ECJ agrees with the decisions of the French courts, Google and eBay may have to change, at great expense, the way they currently operate to prevent infringements, not just in France but in England and throughout the EU.
Whatever the eventual result of the ECJ's deliberations, some consistency in how trade mark law is applied in the field of e-commerce would be welcome.
Kara Landsborough-McDonald is a Solicitor in the Intellectual Property and Commercial Department at Wedlake Bell: firstname.lastname@example.org or visit www.wedlakebell.com