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Summary:

A European Union court decision says that Google can continue to sell trademarked terms as advertising keywords, but the EU’s highest court left the door open for future lawsuits against the search company — if it’s found to have encouraged trademark infringement through its AdWords service.

In a closely watched case involving Google’s sale of trademarks and brand names as advertising keywords, the European Union’s highest court has ruled in the search company’s favor — although the decision contains a handful of important caveats, which initially led to some confusion over whether Google had won or lost. The bottom line is that the European Court of Justice said the search company can sell trademarked terms through its AdWord service. But it didn’t give Google blanket protection from lawsuits by trademark holders, saying it could be held liable in future cases if it’s found to have encouraged AdWord buyers to engage in trademark infringement.

The confusion over the decision was likely caused by the fact that LVMH — the parent company behind luxury brands such as Louis Vuitton, which launched the case that resulted in the EU court decision — put out a press release claiming victory in the case. In it, the company said that:

Google claimed that advertisers on its service did not commit any illicit use of registered trademarks when purchasing keywords representing such registered trademarks on its website without the consent of the trademark owner. Google further claimed that, in any event, a provider of a paid referencing service was merely hosting the service and therefore could not be held liable. The ECJ strongly rejected both claims.

As both the New York Times and the Financial Times explain, however, that’s only part of the story behind the ruling. LVMH wanted Google to be legally prevented from selling any trademarked terms as AdWord keywords to anyone, something the EU court explicitly did not do. Instead, it said that Google could continue selling trademarks and brand names through the service, provided it took action to remove those terms if a trademark holder complained — a system similar to the “notice and takedown” provisions for copyright infringement that YouTube and other providers are governed by under the U.S. Digital Millennium Copyright Act.

Google has already been hit with a number of such lawsuits from trademark holders, both in the United States and in Europe, and maintains that it does its best to remove infringement when it occurs. The company noted in a blog post about the LVMH ruling that:

[C]ontrary to what some are intimating, this case is not about us arguing for a right to advertise counterfeit goods. We have strict policies that forbid the advertising of counterfeit goods; it’s a bad user experience. We work collaboratively with brand owners to better identify and deal with counterfeiters.

Some of those who have sued the search company have tried to argue, as LVMH did in the latest EU case, that Google is encouraging trademark infringement by simply suggesting trademarked words and phrases when an advertiser is looking for an AdWord placement. Unfortunately for the search company, the EU decision appears to leave that question unanswered, which could open the door to further lawsuits.

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Post and thumbnail photo courtesy of Flickr user bloomsberries.

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