We addressed the issue of certain unlawful acts related to contextual advertising from a general perspective in a previous article. Shortly after the publication of that contribution, which was rather a brief introduction to this issue, this area was also addressed by the European Court of Justice. Particularly given that the subject of the Court’s interpretation was provisions of Community law which are implemented in our legal system, the conclusions contained in the judgment may be of interest to the “Czech viewer” as well.

By way of introduction and for simplification, the issue of unlawful conduct related to contextual advertising may be divided into three basic areas: 1) Liability of the operator of the advertising system for content inserted by advertisers (e.g. liability of Google Inc. as the operator of the Google Adwords system); 2) Use by an advertiser (within the advertising system) of a keyword confusable with a trade mark of another person in connection with the promotion of authorised distribution of goods or services marked with that trade mark (e.g. an e-shop operator uses the keyword “Nokia” in contextual advertising for the sale of telephones marked with that trade mark); 3) Use by an advertiser (within the advertising system) of a keyword confusable with a trade mark or other designation of a competitor in economic competition (e.g. an e-shop operator “ABC” uses the designation “Alza” in contextual advertising settings).

The judgment of the European Court of Justice in question, which we shall examine in more detail below, dealt primarily with the issues defined under points 1) and 3) above. Specifically, these were judgments in three joined cases C-236/08 to C-238/08. In all these cases, Google Inc., or other companies from its group, appeared on the defendant side, always in connection with the operation of a contextual advertising system. We note that in studying this judgment it is certainly advisable to proceed from its English version and not from the available Czech translation, which is unfortunately not entirely precise in terms of terminology.

What was it actually about? Lower French courts found that in the case of an advertiser using (within the advertising system) a keyword confusable with a trade mark of another person (our point 3), not only does legal liability of that advertiser arise for infringement of the trade mark, but also liability of the operator of the internet advertising system (our point 1). It is probably not necessary to emphasise too much that a final court judgment in this sense could have very negative consequences for the Google Inc. group, not only in terms of operating the advertising system in question. The legal issues at stake are in fact very close to the issue of liability for video content uploaded by users within the YouTube service and potentially also to the issue of legal liability related to the actual operation of an internet search engine. In this connection, it may be mentioned that we addressed the issue of liability for video content uploaded by users in more detail at the Internet Video Forum 2007 conference, whilst the legality of operating an internet search engine from the perspective of Czech law was the subject of this article on Lupa.

In the further course of the proceedings, the higher French courts eventually referred to the European Court of Justice for a so-called preliminary ruling. The purpose of preliminary ruling proceedings is the interpretation of Community law. In this case, the subject of interpretation by the European Court of Justice was provisions regulating the area of trade marks in Community law and further provisions establishing limitation of liability of a service provider in the information society for content uploaded by users (including the mutual relationship of these regulations).

The European Court of Justice primarily addressed the question of possible liability of the operator of the advertising system in connection with the advertiser’s conduct consisting in the use of designations conflicting with a third person’s trade mark in the form of so-called keywords (our point 3). In relation to this legal issue, the Court eventually concluded that the operator of an internet search engine or advertising system does not bear direct liability for infringement of the trade mark of a third person (the advertiser) within its advertising system, since in the Court’s view, in this case there is no use of the trade mark by the operator of the advertising system in the trade mark law sense (unlike the advertiser). The limitation of liability of a service provider in the information society (for content uploaded by users) applies, in the Court’s view, also to the operator of an internet search engine provided that “that service provider has not played an active role of such a kind as to give it knowledge of, or control over, those data. If it has not played such a role, that service provider cannot be held liable for the data which it has stored at the request of an advertiser, unless, having obtained knowledge of the unlawful nature of those data or of that advertiser’s activities, it failed to act expeditiously to remove or to disable access to the data concerned.” The question of what is meant by an active role of the operator of an internet search engine or advertising system was left by the European Court of Justice to the assessment of national courts in individual specific cases. The national court should therefore assess in these cases the degree of interference by the operator of the advertising system in the advertiser’s behaviour (automatic offering of keywords confusable with a trade mark, etc.). Given that the issue of liability of the operator of the advertising system concerns only a narrow circle of entities, we have mentioned it only briefly.

From our point of view, the Court’s conclusions concerning the issue of an advertiser’s liability for use of a designation belonging to a competing undertaking within contextual advertising are far more interesting. In paragraph 67 of the reasoning of the judgment in question, the European Court of Justice declared what the motivation consists in of an advertiser who engages in such conduct. The Court specifically stated in this paragraph that “it is undisputed that the aim of the advertiser who selects as a keyword a sign identical to a trade mark belonging to another person is to have the Internet users who enter that word as a search term click not only on the displayed links which come from the owner of that trade mark but also on that advertiser’s advertising link.” This not particularly groundbreaking conclusion can, in our view, be applied in the area of Czech law both to a designation registered as a trade mark and to an unregistered designation used earlier lawfully by another entrepreneur.

However, the Court’s further conclusions are relatively surprising. Specifically, paragraph 87 of the reasoning of the judgment in question may be cited: “Having regard to the essential function of the trade mark in the context of electronic commerce, which consists in particular in allowing Internet users who view the advertising displayed in response to a search relating to a specific trade mark to distinguish the goods or services of the owner of that trade mark from those which have a different origin, such an owner must be entitled to prevent his competitors from advertising, on the basis of a keyword identical to that trade mark which those competitors have, without the owner’s consent, selected in connection with an internet referencing service, goods or services identical to those for which that mark is registered, in the case where that advertising does not enable reasonably well-informed and reasonably observant internet users, or enables them only with difficulty, to ascertain whether the goods or services referred to by the advertisement originate from the proprietor of the trade mark or an undertaking economically connected to it or, on the contrary, originate from a third party.” From this, in our view, a relatively surprising conclusion may be drawn that not every use of a keyword confusable with a trade mark within the contextual advertising system constitutes an infringement of the proprietor’s rights to that trade mark. In the event that the advertisement has such a form as to exclude the possibility of confusion between the owner of the trade mark and the person of the advertiser (by the user), it should apparently, in the Court’s view, not constitute an infringement of the trade mark. It may, of course, be questionable whether it is objectively possible to fulfil such a condition in the relatively small space of contextual advertising at all. In any event, this is an interesting view, although it may be pointed out that the interpretation of the European Court of Justice in the case in question related only to issues connected with the regulation of trade marks. As the Court itself expressly stated, the said view cannot be automatically applied to the area of unfair competition (parasitism on reputation, creating a risk of confusion), given the fact that this area is not regulated at Community level at all.

In any event, the above idea also appeared in the first operative part of the Court’s judgment in this case, in the following form: “The proprietor of a trade mark is entitled to prohibit an advertiser from advertising, on the basis of a keyword identical to that trade mark which that advertiser has, without the proprietor’s consent, selected in connection with an internet referencing service, goods or services identical to those for which that mark is registered, in the case where that advertising does not enable reasonably well-informed and reasonably observant internet users, or enables them only with difficulty, to ascertain whether the goods or services referred to by the advertisement originate from the proprietor of the trade mark or an undertaking economically connected to it or, on the contrary, originate from a third party.” The operative part of the judgment of the European Court of Justice contains a binding interpretation of Community regulations. This in effect means that the interpretation of Czech legislation implementing the assessed regulations of the European Communities should also be the same. However, it is appropriate to note once again that the Court dealt only with the interpretation of legal issues connected with the regulation of trade marks and not with the issue of unfair competition.

This text was translated from Czech to English using an AI translator.