European Parliament joins French traders in opposing use of rival brands as keywords

Out-Law News | 15 Nov 2010 | 10:06 am | 2 min. read

Companies should be able to block rivals from using their brand names as keywords for internet search advertising systems, a European Parliament report has recommended. The proposal backs calls made by a coalition of French firms.

The trade bodies said that they were calling on Google to put an end to what it called acts of parasitism, unfair competition and counterfeiting.

The European Parliament's report (13-page / 165KB PDF), which will be debated in December, recommends that the European Commission change the law so that search engine companies can only allow bids on terms if the owner of the term approves them.

Search engines operate advertising systems in which a company can buy the right to have their adverts displayed beside the natural search results of a given term. Google's market-leading system is called AdWords.

Brand and trade mark owners have argued that rivals should not be allowed to buy the right for their trade marked terms to trigger the rival adverts, but advertisers and search engine operators have disagreed.

Google's policy in Europe is to allow companies to use other companies' terms as triggers, though not in the ads themselves.

Trade bodies representing thousands of French companies wrote to Google earlier this month protesting at the policy. Now, the coalition of French trade bodies has written to Google chief executive Eric Schmidt demanding that the company change its policy.

The bodies said in a statement that the letter claims Google's policy change encourages illegality, "acts of parisitism, unfair competition, counterfeiting and risks of confusion for consumers looking for reliable references".

Google rejected the claims.

"This change brings our trademark policy in Europe into line with our policies across the rest of the world and enables users to access more relevant information," it said in a statement, according to news service AFP.

The trade bodies behind the complaint are the union of advertisers UDA; the union of manufacturers UNIFAB; the union of newspapers SPQN; and magazine union SPM.

Companies represented by those trade bodies include Air France, Alcatel-Lucent, L'Oréal, Hennessy, Hermes and Mattel.

The European Parliament's report was prepared by MEP Philippe Juvin and has been adopted by the Parliament's Internal Market and Consumer Protection Committee.

It said that the Parliament should ask the European Commission to "modify the limited liability regime for information society services in order to make the sale by search engines of registered brand names as advertising keywords subject to prior authorisation from the owner of the brand name in question".

This would allow companies to block anybody else's use of names they owned even in the background of advertising systems.

Google changed its policy across Europe in September, allowing companies to bid on other company's trade marks as keywords.

Courts in France have ruled that the practice infringes trade mark rights. But in a case involving Louis Vuitton Moet Hennessy (LVMH), the European Court of Justice (ECJ) ruled in August that trade mark rights are only infringed by ads that cause confusion about the identity of the advertiser.

Announcing the policy change in August, Google said that it had the right to operate its policy in the planned way.

"We defended our position in a series of court cases that eventually made their way up to the European Court of Justice, which earlier this year largely upheld our position," said Google product manager Dan Stokeley. "The ECJ ruled that Google has not infringed trade mark law by allowing advertisers to bid for keywords corresponding to third party trade marks. Additionally, the court ruled that advertisers can legitimately use a third party trademark as a keyword to trigger their ads."

"Our policy aims to balance the interests of users, advertisers, and trademark owners," said the updated policy.  "Furthermore, Google's position is in line with the principles set out in the [LVMH] European Court of Justice (ECJ) judgment."