Simply put, the Court finds that "the use (...) of the company name (...) as a keyword, can only constitute an act of unfair competition insofar as the content of the ad would lead to confusion in the spirit of consumers and lead them to believe that they are dealing with the same distributor," since judges consider that "the display of commercial links (...), under the banner ’commercial links’ enables knowledgeable Internet users paying an average attention, to distinguish ads from naturally retrieved results" and that "users of the search engine Google know perfectly well this pattern and know that advertisements appear concomitantly to natural results."
Judges here fully confirm the position of the Court of Justice of the European Union, backed by the Court of Cassation, according to which the reservation of trademarks to use as keywords as part of the AdWords service is not illegal in itself; such use can only become unlawful if, given the circumstances of the case (and particularly in view of how the ad that appears next to the commercial link is written), confusion is created in the consumer’s mind or a disloyal action aiming to divert him from the subject of his search.
Matthieu Bourgeois, lawyer (KGA firm), explains for PremiumBeautyNews the outlines and consequences of such a ruling.
Premium Beauty News - Since the famous Google (March 23, 2010) and Interflora (September 22, 2011) judgements rendered by the Court of Justice of the European Union (CJEU) laying down the principles to be respected for the use of a trademark as a keyword when using a paid referencing service (like Google’s AdWords service), users where eagerly waiting to see how French judges would apply these principles dictated by their European counterparts.
Matthieu Bourgeois - Yes and this has actually been done since March 27 with this judgement.
Two words first on this so-called Interflora decision: in this case, the company Marks & Spencer Pic (M&S) had reserved the term Interflora with Google, to generate the display of commercial links pointing to the M&S site, and the Interflora companies, holders of the famous trademark, had then initiated legal proceedings for infringement before an English court which had decided to question the CJEU on the following matter: can a brand owner refuse the right to one of his competitors, of reserving a keyword identical to his brand name as part of a referencing service on the Internet, enabling the display of a commercial link in favour of this competitor’s products?
To this question, the CJEU responded by stating that it was possible for a brand owner to oppose to its reservation as a keyword only in the case he could demonstrated that such use impaired one of the "essential functions" of the brand, namely the function of "indication of origin", the function of "advertising" and the function of investment" of the brand.
in plain language, this "Interflora" decision is fundamental because it has established the principle (already stated by the Google judgements of 23 March 2010 of the CJEU) according to which the use of words, and therefore of trademarks (which are categories of words) is free on the Internet, particularly in the case of a paid referencing service and this in order to ensure free competition among Internet players, for whom the free use of words is an essential resource to attract online customers.
Premium Beauty News - How to you explain such a position? Does it not reflect a weakening in trademark laws?
Matthieu Bourgeois - This new concept on trademark law which has puzzled and still puzzles some practitioners accustomed to the old law, is actually a natural consequence of the impact that e-commerce has had on our economy.
Indeed, unlike the "real" world, the "virtual" world of the Internet requires, in order to find the information or the relevant site, the use of search engines that are questioned through the use of "keywords". "Words" therefore are particularly important to allow users to surf freely and access information. Obviously, in this context, a too rigorous protection of trademarks would deprive internet users of the possibility to freely surf and have access to the content they are looking for: hence a internet user who is looking for a flower home delivery service will be able to type Interflora in the Google search bar engine, not to access the offerings of the Interflora company, but simply to have displayed the possible competing or alternatives flower delivery offers.
In this context, Community judges considered it was essential to ensure a free e-commerce and freed from all constraint, to authorize the use of words and to circumscribe the right of brands to its essential function, which is to guarantee the origin of a product or service. For this reason, the use of the trademark of a third party as a keyword on the Internet is only unlawful if it violates this basic function, that is in short, if it induces the risk of confusion.
Premium Beauty News - Thank you for these explanations and now, can you explain how this French decision takes up the European position?
Matthieu Bourgeois - The "Hifissimo" decision of the Paris Tribunal de Grande Instance, very clearly confirms the solution of the European Court.
This decision is all the more remarkable that French judges have ruled on a broad range of legal principles, not confining themselves to the only law of trademarks, but by also examining in detail the arguments related to unfair competition as well as to consumer law (comparative and misleading advertising), thus providing important information to practitioners and all stakeholders in e-commerce.
Here are the facts: the Hifissimo company who was marketing in particular on the internet some hi-fi video products (on the site bearing the same name), was the holder of the exclusive right to use the trademark of the same name, which had been filed in 1998. Without requesting its prior agreement, one of its competitors (the Home Ciné Solution company) had then reserved the term Hifissimo with Google as a keyword to generate a commercial link, whose display, triggered by entering the keyword in Google’s query form, was accompanied by the following text: "Hi-fi and home cinema, why pay more? Choice, quality and service for the past five years, www.homecinesolutions.fr ".
The holder of the rights to use the trademark then appealed to the Paris Tribunal de grande instance in January 2008, claiming that such use of its trademark was not only an act of infringement (1), but also an act of unfair competition and finally an act of misleading and unlawful comparative advertising.
Premium Beauty News - By the way, wasn’t this decision influenced by the position taken by the CJEU on this issue?
Matthieu Bourgeois - That’s correct. The procedure regarding this Hifissimo case was even suspended because of a preliminary question raised by the Court of cassation on 20 May 2008 to the Court of Justice of the European Union, concerning the interpretation of the DIRECTIVE 89/104 of 21 December 1988 on the use of trademarks as part of paid referencing services. And it was not until November 2011 that the Hifissimo case was reactivated, following the so called Google judgement rendered by the CJEU on 23 March 2010 and of those rendered by the Cour of cassation on 13 July 2010. As I said earlier, this decision very clearly reproduced the principles set out by the Community judges, and in particular those resulting from the Interflora ruling.
Premium Beauty News - Clearly, since this famous Interflora judgement, Community judges have reaffirmed that a third party can freely use the trade name of another as a keyword without needing his consent!
Matthieu Bourgeois - That’s right! The famous Google rulings of 23 March 2010 and "Interflora" rulings of 22 September 2011, were the ones who confirmed this freedom in so far as one of its "core functions" is not prejudiced (first and foremost the guarantee of "origin" of the product or service). The supreme Community court has thus stated that it was possible for the owner to object to such use by an unauthorized third party if it was demonstrated that the commercial link suggested (explicitly or implicitly) "the existence of a economic link between the third party and the trademark holder "("Interflora" CJEU judgement).
To note that concerning the use of the word Hifissimo, judges did not need to apply these principles, because they found a lack of "genuine use" "for a continuous period of five years," and therefore ordered the lapse of the trademark in question. Indeed, insofar as the Hifissimo company did not sell any products under its own brand name and was instead selling hi-fi products, sold under the trademarks of their manufacturers, judges came to the conclusion that it was "not using its trademarks to identify the products it was selling," but simply as "a banner or mere trade name" not subject of characterizing a genuine use within the meaning of the Code of intellectual property and therefore leading to the revocation of the claimant’s rights on his brand.
I want to stress on the fact that this sanction, particularly severe, should help everyone realize that it is essential to develop a marketing policy that complies with the legal requirements imposed by trademark law, and that this judgement is a (severe) illustration of it.
Premium Beauty News - But that’s not the end of the story! Against all odds, the Hifissimo company, even lost on the matter of unfair competition or on that of comparative and misleading advertising!
Matthieu Bourgeois - Absolutely!. The Hifissimo company was accusing the defendant of using its company name and trade name as a keyword as part of the AdWords service and argued that such use was an act of unfair competition.
The judges here, fully confirmed the position of the CJEU, according to which the reservation of trademarks as keywords with the AdWords service was not illegal as such; such use can only become unlawful if, in the circumstances of the case (and particularly in view of how the advertisement appearing next to the commercial link is written), confusion is created in the consumer’s mind or a disloyal action aiming to divert him from the subject of his search.
In this case, judges then devoted themselves to a review of the text of the ad appearing next to the commercial link in question, considering that:
"the terms Hi-fi and Home cinema were generic" and that the defendant company could not,
therefore, "claim having an exclusive property right" on them;
"the phrase, "Why pay more? "Is a fairly commonplace advertising slogan";
"the formula, ’’Choice, Quality and Service for the past five years’ states that the distributor (!) has been offering for the past five years quality products which are trademarks of manufacturers and that it has some choice" and that, therefore, such terms are "neutral and can not constitute an act of unfair competition";
"no confusion with the Hifissimo company is implied by the wording of the ad," and this point is further reinforced by the fact that "the text of the ad is immediately followed by the website address of the company Solutions SARL."
Judges confirm that the use of words on the Internet must be open to all economic actors, insofar as it is the main browsing and search criterion and, consequently, a crucial element to ensure free competition between the different actors in e-commerce.
As for the rejection of the claim on the basis of comparative and misleading advertising, judges also rejected both arguments of the plaintiff considering that:
the slogan "Why pay more?" merely states that people can find this price on the website of the defendant "which cannot be compared to comparative advertisement because it is not said that these prices cannot be found anywhere else";
that the way the ad is written and displayed is not likely to lead to any confusion or deception in the minds of consumers, for reasons already mentioned above.
Finally, it is clear that this decision confirms the need to carry out a concrete review on the circumstances under which a trademark is used for paid referencing purposes and, in particular, to conduct a detailed examination of how the ad which is displayed with the relevant commercial link is written, an ad which can be attacked - we have seen this with this decision - on a variety of legal basis (trademark counterfeiting, comparative advertising, unfair competition, deceptive marketing practices!) but that judges here strictly apply with the clear concern to ensure open competition among Internet players for whom the free use of words is an essential resource to attract online customers.