AdWords and trade marks: taking care of business

As oil continues to gush into the Gulf of Mexico, BP has tried to limit some of the damage to its reputation by purchasing search terms such as "oil spill" and "BP lawsuit". Its aim is simple: to improve the chances of getting its own message across when people search for information on the spill.

Getting a message across is also the aim of the thousands of businesses who are spending increasing sums to link their websites to specific search terms via services such as Google's AdWords.

But as the importance of paid search terms grows, so too does the risk for businesses that their trade marks may be used as search terms by others.

The use of trade marks in paid search terms has not yet been addressed by a New Zealand court, and questions therefore remain over its legality. However, a recent ruling by Europe's highest court may provide some guidance for New Zealand trade mark owners and advertisers alike.

The Louis Vuitton case

The case involved an advertiser who bought Google AdWords which included the term "Louis Vuitton" -- an internationally registered trade mark owned by French company LVMH. Users who searched on terms such as "louis vuitton copy bags" were shown links to websites selling just that -- cheap knockoffs of Louis Vuitton products.

LVMH sued Google for infringement of its trade mark.

Key issues for the court were whether Google infringed the Louis Vuitton trade mark by selling it in AdWords to a third party, and whether an advertiser infringes a trade mark by including it in AdWords.

In a substantial victory for Google (and similar online services), the European Court of Justice effectively gave Google the green light to continue selling AdWords containing trade marks, ruling that Google was not "using" the trade mark, and therefore not infringing it.

Importantly, though, the Court confirmed that advertisers who register trade marks as AdWords are "using" the trade mark, and therefore may be liable for trade mark infringement. The key issue is the manner in which the advertiser uses the AdWord. If the AdWord (or the way it is used) suggests, even if only vaguely, that there is an "economic link" between the advertiser and the trade mark owner, there is likely to be an infringement. A subsequent Australian case has since come to a similar conclusion.

The New Zealand position

In New Zealand, registered trade marks are governed by the Trade Marks Act 2002. Under that act, trade mark infringement occurs, for example, when an advertiser uses another firm's trade mark (without consent) to promote:

the same goods or services covered by the trade mark; or

similar goods or services, in a manner likely to deceive or confuse.

If the persuasive reasoning of the Louis Vuitton (and recent Australian) cases are followed in New Zealand (which seems reasonably likely), simply registering another firm's trade mark as an AdWord would not be an infringement. The advertiser would need to do something more to infringe the trade mark, such as using the AdWord to promote good or services identical (or similar) to the trade mark owner's, or sowing doubt about whether there is a "connection" between the advertiser and the trade mark owner.

It follows that advertisers who use another company's trade mark in their AdWords should be careful to ensure the usage is legitimate -- even a small basis for finding a "connection" or other improper use, whether intended or not, could result in trade mark infringement or liability on other grounds such as the Fair Trading Act 1986. It should also be remembered that there are genuine reasons for using another firm's trade mark (both "in trade" and for other reasons), and there are various uses of trade marks that will not be infringing.

For companies seeking to protect their brands (online and off), registering trade marks is a key step.

Legal remedies

What, then, can a business do if its registered trade mark is used in an AdWord by another advertiser?

The first step is to establish how the AdWord / trade mark is being "used". If the AdWord gives a misleading or confusing impression that the advertiser is connected with the genuine owner, or is being used to sell the same goods or services, or may otherwise result in consumer confusion, there are likely to be grounds for a claim of trade mark infringement.

This will always depend on the specific situation. In the Louis Vuitton case, the websites linked to searches such as "louis vuitton copy bags" clearly stated that their bags were copies. No reasonable customer would be misled into thinking they were buying genuine merchandise, or were on a website connected with the real Louis Vuitton. There was no attempt to mislead or divert customers seeking the real thing. In such cases, there may not be grounds for infringement, though as always it will depend on the circumstances. If identifiable harm is occurring to the trade mark owner, that may support a claim.

It should also be remembered that registered trade marks are country and product specific -- for example, a New Zealand-registered trade mark is not infringed by its use in Australia, and a trade mark registered in relation to one class of products does not (generally) prevent its use by a third party in relation to other products.

If there is a possible trade mark infringement, options that may be considered include:

Contacting the advertiser directly and requesting they cease using the trade mark. Trade mark owners have legally protected rights, and should not take misuse lightly -- in fact, doing so can undermine the owner's ability to retain the trade mark. If the advertiser's AdWords are managed by a outside company such as a search engine optimiser (SEO) firm, the advertiser may not even be aware that their ads are using another company's trade mark, and may quickly comply.

Reporting it to Google: if the advertiser does not voluntarily give up the offending AdWord, Google may remove it if the situation meets its policies for removal. This is a free process, but Google does not guarantee that it will investigate every complaint or take any specific action.

A trade mark infringement claim and / or Fair Trading Act or "passing off" claim. While litigation is typically a last resort, it is sometimes the only way for trade mark owners to protect their brands.

AdWords and other paid search terms are yet another challenge for trade mark owners to be alert to. For advertisers, attempting to "ride the coat tails" of another brand is always risky, and the same care should be taken with AdWords as with other forms of advertising. Likewise, you don't want to inadvertently build your online campaign around someone else's trade mark.

Given the huge investments made by many firms in their trade marks, an AdWords-type dispute is likely to arise in this country sooner or later which, hopefully, will provide more certainty for trade mark owners and advertisers. Until then, the Louis Vuitton case provides some useful guidance, as may another Australian court judgment expected later this year.

In the meantime, trade mark owners should not be discouraged from taking steps to protect their brands from improper online use.

Burgess is a lawyer specialising in commercial and IT law at Clendons barristers and solicitors, Auckland. He can be reached at guy.burgess@clendons.co.nz

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