Keyword Ads and Trademark Infringement in 2009 Update on the latest case-law in the US and Europe which could make or break the search engine industry Alexander Tsoutsanis Stanford Law School – April 23 rd 2009

Topics  Introduction  Keyword Advertising  Overview 2008/2009  Infringement  by Advertisers  by Search Engines  Evaluation

Portakabin v. Primakabin (NL)  Dispute between TM owner and Advertiser: Google not directly involved  2008: Supreme Court refers to ECJ  Extensive questions:  Infringement  Fair use  First sale doctrine  Unfair competition

7 Questions pending before ECJ  1(a) TM Use. Does the use of a third party TM as a keyword for advertising identical products constitute TM use by the advertiser?  1(b) Presentation. Does it make a difference whether the ‘sponsored result’ is displayed in the ‘ordinary list of webpages found’ or ‘in an advertising section identified as such’?  1(c) Actual offer. Does it make a difference whether the identical products are offered in the ‘sponsored result’ or in the linked webpage?

 2. Fair use defense. Can an advertiser escape TM infringement by relying on fair use?  3. First sale doctrine. Can an advertiser escape TM infringement by relying on the first sale doctrine?  4.“Typo keywords”. Do the answers to the foregoing questions also apply for keywords in which the trade mark is deliberately reproduced with minor spelling mistakes ?  5. Unfair competition. If there’s no TM use, can a TM owner invoke unfair competition pursuant to § 5- 5 of the Directive?

Keyword Advertising: possible TM use Selling/ suggesting keyword Purchase of keyword Display TM in ad on website SE Display TM on advertiser’s website Search engine AdvertiserSE / Advertiser Advertiser +SE?

Overview 08/09: selected key cases EU + US Europe  3 June 08:Google v LouisVuitton (C- 236/08) Google v Viaticum (C-237/08) Google v CNRRH (C-238/08)  26 June 08:BergSpechte v G. Guni (C- 278/08)  17 Dec 08:Portakabin v Primakabin (C- 558/08)  22 Jan 09:Bananabay (I ZR 125/07)

Overview 08/09: selected key cases EU + US United States  18 June 08:Finance Express v Nowcom (C.D.Cal, )  1 Aug 08:Hysitron v MTS (D. Minn., )  27 March 09:Hearts on Fire v Blue Nile (D. Mass, )  3 April 09:Rescuecom v Google (2 nd Cir, )

Overview (2): relevance re. defendants Re. infringement by advertisers:  Google v CNRRH  BergSpechte v G. Guni  Portakabin v Primakabin  Bananabay ***  Fin. Express v Nowcom  Hysitron v MTS  Hearts on Fire v Blue Nile Re. infringement by search engines:  Google v Louis Vuitton  Google v Viaticum  Google v CNRRH ***  Rescuecom v Google

TM Infringement Three issues: 1.Use in commerce 2.ALikelihood of confusion 2.BDilution 3.Defenses

(1) Establishing ‘use’ EUUS Use in commerce“for the purpose of distinguishing goods or services” “in connection with (offering for) sale, distribution or advertising of any goods or services” Use as a Trademark? ECJ: no, as long as use affects function(s) of TM Key: what function?  McCarthy: No  Barrett: Yes Score-card keywords  BX: mostly -  Portakabin  DE: split +/-  Bananabay  AT: +  Bergspechte  FR: +  Google Trend towards TM use:  Fin. Express v Nowcom  Hysitron v MTS  Hearts on Fire  Rescuecom v Google

(2a) “Likelihood of confusion” EUUS Basics  Identical sign for identical products (!): presumption  Otherwise: evidence, multi- factor test  Indirect confusion is also sufficient  association = factor.  No presumption  Multi-factor test  ‘substantial’ evidence Initial interest Confusion Less of an issue, because of presumption Often invoked Actual Source confusion Often invoked in case TM is displayed in ad or website Keyword context factors: Presentation; lay-out Evidence ? Average consumer

(3) Defenses - selection EUUS Fair use  Now pending in Portakabin  “Honest” use  “Necessary to use TM”  Trend: often denied  “Fair” use First sale  Now pending in Portakabin  Can never apply to ‘typo’ keywords.  ? Keyword context factors: Use of TM in Ad Presentation of advertiser’s website Link to advertiser’s website

Evaluation Towards ‘sustainable’ (and profitable) keyword advertising  More clear lay-out  Drop “Suggestion Tool” for third party TM’s  Consistent uniform complaint policies  “Towards best practices” ?

 Any questions ? 