France's eBay ruling is a distraction – it's next month's AdWords decision that counts

Out-Law Analysis | 18 Feb 2010 | 2:28 pm | 3 min. read

OPINION: A Paris court ruled last week that eBay infringed the trade marks of Louis Vuitton by sponsoring misspellings of its brand as search engine keywords. But speculation about the impact of the ruling is pointless: the big decision comes next month.

On 23rd March, Europe's highest court is set to rule on a suite of cases that involve AdWords, Google's keyword advertising service. Brand owners, including Louis Vuitton's owner, are fighting Google France in three separate actions, each arguing that their trade mark rights are infringed when other businesses use their names as triggers for adverts.

The ruling of a district court in Paris is far less important than what's coming, but it has taken some US observers by surprise.

"Apparently, in France, you're not even allowed to misspell a trademarked brand name without official permission," blogged Ashby Jones at the Wall Street Journal. "Would this be the case in the US?"

No, it probably wouldn't be the case in the US. Courts in the US have said, in most cases, that you can sponsor another company's brand name as a keyword in Google AdWords. In Europe, trade mark law is different, so the eBay ruling comes as less of a surprise. Brand owners are waiting for the EU's highest court to give a clear view on how trade mark law applies to AdWords disputes.

Last week's result focused on eBay's sponsorship of misspellings of the Louis Vuitton brand in Yahoo! and Google, including 'Louis Viton' and 'Wuiton'. Brand owner LVMH Moët Hennessy Louis Vuitton SA, better known as LVMH, sued for trade mark infringement.

LVMH sought €1.2 million and won a more modest €200,000 in damages plus €30,000 in costs. EBay also faces a fine of €1,000 for each future violation. According to reports (we haven't seen the full judgment yet), the court found that eBay had harmed "the reputation of Louis Vuitton trade marks, the company name and the domain name."

The case is complicated by arguments over the sale of counterfeit goods at eBay's site. That is a different argument, though it's still about trade marks. A ruling in Belgium, a qualified ruling in the UK and even a ruling in France have backed the auction site on the issue of counterfeits, more or less in line with a ruling in the US. More recently, rulings in France on that point went against eBay.

Questions from the UK counterfeit case have been referred to the Court of Justice of the EU, and they touch on keyword sponsorship. But we won't hear the answers to those questions for a while. In the meantime all attention is focused on the forthcoming judgment.

An advisor to the judges has already given his view on the questions raised in these three cases, which will be answered in a single ruling. An Advocate General's opinion is the forerunner to the full judgment of the Court and the Court usually but does not always follow the opinion.

Broadly speaking, the Advocate General supports an open market for keywords. Perhaps unsurprisingly, that approach is more popular than an alternative that gives owners of global brands a high level of control over how others can use those brands.

The Advocate General was concerned that the scope of trademark protection was being expanded and he expressed a general nervousness about how the internet will develop.

But enforcing trade mark exclusivity against a trader (Google) which is using and letting other businesses use trade marks without the permission of the trade mark owner does not expand the scope of trade mark protection at all. It merely presents a great opportunity for the court to re-state established trademark law in the context of a new advertising model.

The advocate general also suggested that there was no confusion in the minds of the consumer when the adverts were displayed. But according to the current law in Europe, the brand owner doesn't need to prove confusion where a trade mark is used in relation to identical goods or services. That's a key reason why this is different from the US litigation on the same subject and a key reason why the Advocate General got it wrong.

In just under five weeks we should find out whether the Court of Justice agrees with the Advocate General or not. That ruling will have far greater significance for brand holders and the advertising strategies of their rivals than last week's ruling in France.

By John Mackenzie, a partner with Pinsent Masons, the law firm behind OUT-LAW.COM. Pinsent Masons is acting for Interflora in a dispute with Marks and Spencer over the use of AdWords – a case that has also been referred to the Court of Justice of the EU .