Google AdWords Beats Trademark Claim in France, But Loses on Two Other Issues

[UPDATE: After posting the message below, it dawned on me that there is a connection between Google's troubles in Italy and cases it has litigated in France. According to one report, the Italian prosecutor is seeking to hold Google liable as a publisher of the materials uploaded to Google Video. In Jean-Yves L. v. YouTube et al, a 2008 ruling involving copyrighted videos that had been uploaded to YouTube without permission, the court ruled that Google was a Web host, not a publisher. The ruling was a victory for Google because, in France and in other European countries, a publisher is strictly liable for content on its site. But the law is by no means settled on the proper categorization of user-generated content sites, in France or in Italy.]  

Widespread publicity today (here, here, and here) about the legal troubles of Google officials over the posting of distasteful video on Google Video is yet another reminder that the U.S. legal system is, well, the U.S. legal system. Online, we have safe harbors for third-party content, our privacy laws are forgiving or non-existent, and we have the First Amendment to protect even the coarsest utterance. Things are done differently elsewhere. Google's Italian troubles are merely the latest evidence of this obvious-to-all state of affairs.

Rather than beat that horse, I am going to devote the rest of this post to a different overseas dispute involving Google that got a lot more interesting last month.

Most attorneys know that Google is continuing to attract lawsuits in France over Google Adwords, an advertising product that allows advertisers to purchase a prominent page placement in search results for queries on their competitors' trademarks. Recently, a Paris court sided with Google on the trademark infringement issue, creating a split of authority in France. Unfortunately for the search giant, however, the court also ruled that Google violated a French duty of loyalty and good faith by failing to put in place means to verify that advertisers on Google AdWords had authorizations to use other companies' marks as search keywords. The same court also found Google liable for deceptive advertising, because the sponsored links returned by Google were displayed similarly to the natural search results.

BNA's Paris correspondent spoke to a couple of French online law experts about the latest in l'affaire Google. Here is his story:

Paris Court Enters `Huge' Award Against Google France in Keywords Case

PARIS—In a new twist to les difficult s juridiques de Google, the Paris Court of First Instance (TGI) Jan. 7 ordered Google Inc. to pay €410,000 ($523,000) in damages and costs for business tort and deceptive advertising, according to court papers and legal experts.

In the ruling, Voyageurs du Monde, Terres d'Aventure v. Google, TGI Paris, 1/7/09, the court rejected the plaintiffs' argument that Google France, Google Ireland, and Google Inc. violated their registered trademarks by allowing them to appear, in search results, next to sponsored hyperlinks to competitors' sites.

Nevertheless, the court found Google had caused commercial harm to the plaintiffs, in violation of France's civil code and its 2004 law to support confidence in electronic communication (LCEN). The court ordered the search-engine company to pay €200,000 ($255,000) to plaintiffs Voyageurs du Monde and €150,000 ($192,000) to Terre D'Aventure, in damages and interest. It also ordered Google to pay €60,000 ($62,000) in court costs.

Though modest by U.S. standards, the awards were seen here as a severe slap to Google. "It's a huge sum by French standards," Bradley Joslove, a Paris-based attorney who heads the Franklin law firm's new technologies department and co-manages its commercial law section, told BNA.

In a statement, Google said it has already appealed the case to the Paris Court of Appeal.

"Google's terms and conditions make clear that advertisers are responsible for their choice of keywords and warn against their unauthorized use. Google believes that our advertising services comply with French and European law on online advertising," the company said.

Search Calls Up Links to Competitors.

Google's AdWords service lets advertisers create advertisements and choose keywords related to their business. When people do a Google search using one of the keywords, the ad can appear next to search results. AdWords can also suggest keywords to advertisers.

The ruling noted that when Web users Googled the trademarked terms "Voyageur du monde" and "Terres aventure" they would get search results that included advertisements for direct competitors of those companies.

Plaintiffs argued that this constituted trademark infringement. The TGI did not agree, diverging in particular from a 2006 ruling by the Paris Court of Appeals, which upheld a lower court decision in favor of plaintiff Louis Vuitton (Louis Vuitton Malletier v. Societe Google Inc., No. R.G. 04/05745 (Tribunal de Grande Instance de Paris, Feb. 4, 2005) (10 ECLR 296, 3/23/05).

In that case, the lower court found that Google's AdWords advertising system infringed on several LVMH trademarks, caused unfair competition, and falsely advertised potentially counterfeit products sold by unlicensed rivals finding AdWords.

The Paris TGI agreed with Google that advertisers are responsible for determining whether they have legal authorization to use trademark terms as keywords. However, it ruled Google had failed, in violation of article 1382 of the civil code, to put in place means to verify that advertisers on Google AdWords had authorizations to use protected trademarks, corporate names or domain names as keywords.

"The court said Google, as an advertising agency, committed business tort by not verifying that what advertisers put up is legal. It said Google had an 'affirmative obligation' to do this," said Joslove, explaining that "French law emphasizes rules of loyalty and good faith."

David Taylor, a Paris-based partner at Lovells LLP specializing in intellectual property, media, and technology, questioned the court's argument that Google should have taken all available technical measures to filter the requests generating the display of infringing hyperlinks made on AdWords.

"[It] places an unreasonable burden on Google as a platform and the burden should be more on the advertisers themselves. All the trademarks in question were blocked by Google at the beginning of the case," said Taylor, who noted that Google is a client of his.

Deceptive Advertising.

The TGI also ruled that Google violated France's 2004 Loi sur la Confiance dans l'Economie Nume´rique, No. 2004-575 (June 21, 2004)(LCEN) because AdWords commercial links were deceptive advertising in that they failed to make clear they were advertisements.

"The ambiguity and risk of confusion apparently stemmed from the fact that the commercial links were displayed in a similar manner to the natural search results, i.e., with the same color, same typography and font size," said Taylor. "Contrary to previous decisions against Google, [in the TGI ruling] the term `commercial links' was not considered to be misleading," he said.

`Moving Goalposts.'

Both Joslove and Taylor said this latest case adds to confusion over Google AdWords' status in France.

"France is far and away the most active European jurisdiction on these [Google AdWord] cases. There have been many suits against AdWords in France. Almost invariably Google loses, but never on the same legal grounds," said Joslove. "Google and other platform providers are having to deal with moving goalposts in France and this is unwanted as it can only create legal uncertainty," Taylor said.

Both attorneys said clarification will have to wait for a decision by the European Court of Justice relating to the Louis Vuitton decision.

Google made a final appeal of that case to the Cassation Court, France's highest court of appeal, which in turn, in May 2008, asked the Luxembourg-based European Court of Justice for definitive rulings to help make its decision (13 ECLR 798, 6/11/08).

Joslove said the Cassation Court asked the ECJ to rule on three questions, whether Google is an advertising company, whether the AdWords system infringes on trademarks, and whether Google is a hosting services provider and thus protected under the EU Electronic Commerce Directive.

"Under the directive, a hosting services provider is only liable for a violation after it has been notified of the violation," Joslove noted. However, Joslove warned, the ECJ might not have the last word. "It will depend on how the Court of Justice words its decision. The best scenario for Google is for the Court of Justice to find that [operations like Google] are hosting services providers," he said.

"But even then the French courts could say, 'fine, but Google is also an advertiser.' French courts are already finding that Google does a lot more than just hosting," Joslove said.

The ruling is available here in French at the Legalis site.