A bad romance?

Been meaning to write about the recent EU judgment on LVMH’s action against Google for trademark infringement. This was the focus of my research for a large part of last term, so I was pretty excited to see this report on NYT: Luxury Goods Makers Complain about Ads for Counterfeit Items.

In case you’re still lost: Google makes money by selling ad spaces. When we enter keywords like “Louis Vuitton”, for example, it generates relevant links as well as sponsored advertisements. How does Google know which sponsored ads to feature in response to this search? When advertisers buy ad spaces with Google, they may demand that their ads appear in response to a search for, say, “Louis Vuitton”. In this context, this phrase is called an Adword.

Retailers of counterfeit leather goods purchased the terms “Louis Vuitton” and “LVMH” in order to advertise their products on Google each time a user enters these terms. As a result, they gained more hits based on Louis Vuitton’s popularity.

To note, LVMH is only one of many companies that have attempted to stem online sales of counterfeit products by suing Google for selling their trademarked terms. The issue, really, is this: does the use of a trademarked term in the Adwords programme constitute a trademark infringement?

Authentic Fendi handbags, anyone?

Much of the litigation over this issue occurred in the US, France and Germany. France and Germany later submitted this question to the European Court of Justice (ECJ). Although the ECJ has answered this question in the negative, the US courts still adopt rather inconsistent approaches to it. I won’t go into the technical details of US trademark law here, but suffice to say that there is no decision that binds the Courts of Appeal in the 13 circuits because this question has not been submitted to the Supreme Court of the United States.

I haven’t read the ECJ’s full judgment on this issue, but a large part of my analysis was based on the AG’s legal opinion, which the court usually follows. It is rather persuasive, and I suppose the US courts might refer to it if they ever have to consider this issue again (they probably will).

Do I think this decision takes us in the right direction? Probably — as much as I love and admire the institution that is LVMH. No point in shooting the messenger, really. However, a couple of caveats:

1. The courts should limit their judgments to the facts of this case so as to prevent the indiscriminate use of trademarked terms on the Internet. Different search engines work differently so they shouldn’t be allowed to escape liability completely based on the Google case.

2. To quote the AG, the courts should warn Google that it might still be liable if it suggests keywords that denote sales of counterfeit products.

Where does that leave my dear LVMH? Probably back firing arrows at its original targets — it really stands a much better chance with that. Also, cf DNA authentication — think LVMH might be taking this one up?

This entry was published on April 1, 2010 at 3:26 pm. It’s filed under Uncategorized and tagged , , , , , , , , , , , , , , , . Bookmark the permalink. Follow any comments here with the RSS feed for this post.

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