E.U. Adviser Supports Google in Ad Keyword Case

A legal adviser to the European Union’s highest court has backed Google in a high-profile trademark case, agreeing with the company’s position that it should be permitted to sell brand names as keywords that trigger ads on a search results page.

Advocate General Luís Miguel Poiares Pessoa Maduro recommended that the European Court of Justice clear Google of charges of trademark infringement in several lawsuits in France brought by luxury goods companies such as LVMH Moët Hennessy Louis Vuitton. European brand owners have brought a number of lawsuits against search engines and online auction sites on the grounds that the use of their brand names undermines their value and makes it easier to sell fakes.

The sale of keywords triggering paid ads identified as “sponsored links” alongside search results generates the vast majority of Google’s revenue. Online retailers, product review sites, and competitors buy brand names they do not own as keywords to bring searchers to their Web sites. But the use of trademarked keywords is a legal gray area because consumers never actually see the trademark. Rulings in European courts have gone both ways. The French courts referred the cases to the European tribunal for clarification on how to apply E.U. law to search-engine practices. A ruling is expected in the next few months. In the meantime, Google has stopped selling trademarked keywords in France and several other European countries.

Maduro opined that brand owners “do not have an absolute right of control over the use of their trademarks” online. “It is important not to allow the legitimate purpose of preventing certain trademark infringements to lead all trademark uses to be prohibited in the context of cyberspace,” he wrote. Although he sided with Google on the trademarked keyword issue, he recommended the company be held accountable under individual European countries’ laws if ads displayed by search engines, rather than the search terms themselves, contained trademark infringements.

Why it matters: The advocate general’s opinion is nonbinding. Although the European court often goes along with such findings, it has also ignored them in cases involving trademarks. We anticipate that this is not the end of the ongoing battle between Google and other search engines over the use of trademarked keywords – the money involved is just too great and the courts too divided.