Technology Bulletin - May 2010

Welcome

Welcome to Thomas Eggar LLP's technology bulletin and corresponding blog. Written in conjunction with Tom Alkin Specialist IP Counsel of 11 South Square, the aim of our regular technology updates is to bring you a considered view of some of the latest key commercial technology issues. Our updates have also been incorporated as a web-blog (which can be accessed here) to enable up-to-date commentary and an informal look at some of the current technology issues that our clients and the market in general, are talking about. We would be delighted if you would post your comments on the blog.

The bulletin topic this month is an update on 'Adwords' and the surprising ruling from the European Court of Justice. We also discuss what this means for your business. Our most recent blog looks at another case featuring Google and three of their executives being given suspended jail sentences.

If you have any comments on either the bulletin or the blog or would just like to make contact I would be delighted to hear from you.

Joshy Thomas
Associate, intellectual property and technology
023 8083 1231

Adwords - an update

In December we reported on the Advocate General's advice to the European Court of Justice in the Google ‘Adwords' cases. To recap, the case concerned the much-debated question of whether competitors can lawfully bid for each others' trade marks as Google Adwords. The beauty – or vice – of this practice is that, with a competitor's trade mark in the bag as an Adword, a business can use the Adwords service to display a sponsored link to its own products whenever a customer Googles its competitor's trade mark, creating a highly targeted form of advertising.

As readers with a sharp memory will recall, the AG essentially recommended that the Court declare the practice lawful, for the good of competition within Europe and to ensure that search engines like Google survive brand-owner attacks.

The Court itself has now ruled – and its ruling is something of a surprise. In the past the Court been accused of being pro-brand-owner in its interpretation of the law, particularly where Europe's all-important luxury brands are concerned. On the question of Adwords, however, it has come down firmly against the big brands. In substance, it has followed the AG's advice and declared that a business can lawfully bid for a competitor's trade mark as an Adword and use the Adwords service to display sponsored links to its own website whenever a web-user searches the competitor's trade mark.

What does this mean for my business

If followed carefully, the ruling effectively means a free-for-all on Adwords. Your business is entitled to bid for a competitor's trade mark and advertise direct to its competitor's would-be customers. By the same token, it cannot stop its competitors doing likewise. However, the ruling must be followed carefully. In particular, it needs to be crystal clear whose goods the sponsored link is promoting. If there is any suggestion that the link is promoting the trade mark owner's own goods, or even any doubt on this, the Court is quite clear that this will amount to trade mark infringement with all its associated consequences.

Commercially, the ruling clearly favours those who are trying to build a brand more than those who have already done so. If you are new to, say, the luxury leather goods market and you want to promote to consumers with a proven taste for such goods, there is nothing to stop you (other than a potentially punishing click-through) from using the Adwords service to get a sponsored link in front of every web-user who searches ‘Louis Vuitton'. It is difficult to see how Louis Vuitton can take similar advantage of less well-known operators in its market. So, by-and-large, we think the ruling is likely to be good news for small or new business trying to make a name for themselves and a challenge for more established players. But as the smaller players are likely to be seeking to take advantage of their larger rivals, it is all the more reason why any post-ECJ Adwords campaign should be conducted with care.

The Thomas Eggar technology blog

Google: guilty as charged?

Last month, three Google executives in Italy were all given six-month suspended jail sentences in a criminal trial that has been condemned by Internet observers the world over...

To read our full blog, please click on this link