Archive for the 'Trade Mark Law' Category

*ECJ Decision in C-323/09 INTERFLORA – ‘Same, Same But A Different Trademark Function’

The INTERFLORA case is based on a (seriously lengthy) reference containing 10 questions by the England and Whales High Court (EWHC) dated to May 2009. In the light of the ECJ’s Google France decisions in March 2009 the EWHC upon request by ECJ later reduced the number of questions in its reference down to 5 in mid-2010. AG Jääskinen published his opinion  in early March 2011 and the final decision by the ECJ swiftly followed  six month later.

The disputes itself concern the display of an ad by Marks and Spencer which looked like this [para 20]:

Continue reading ‘*ECJ Decision in C-323/09 INTERFLORA – ‘Same, Same But A Different Trademark Function’’

*OLG Hamm: No Asterisk Needed To Explain That Germans On Average Only Need Two Condoms Per Week

One of the main findings of the ECJ’s recent Google France judgement and the previous GA’s opinion is that it is the content of the ad that matters.

The German OLG Hamm in January issued a decision (26.01.2010, 4 U 141/09) which  dealt with the question of an alleged violation of the German law of unfair competition for misleading customers in connection with an AdWords text-ad.

The concept of ‘eye-catching(‘Blickfangwerbung‘) in German an Austrian unfair competition law means, that an advertiser highlights only certain (favourable) aspects of his advertisement so much that consumers don’t perceive the rest of the offer and thus are ‘lured’ into a purchase. Such an advertisement is seen as an act of unfair competition if the complementary information is missing entirely or is hardly recognizable. (Yes, I am aware of the fact that some of my readers living on that island far up north distrust this principle of law of unfair competition, but please read on…)

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The ad in question more or less looked like this:

The text was (roughly translated) ‘100 condoms starting at 3,95€ / More than 180 kinds at ‘URL1′ / Everything in stock & Porto starting at 0,00€ / URL2/Kondome’. On a subsequent site the users however got informed that the offer was limited to one package per purchase.

Screenshot of defendant's website, taken 28/04/2010 by Austrotrabant

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I’d like to address this issue in three steps: In the first section I will analyse the case and summarise the decision (as the summary is quite detailed I’ve also highlighted the important sections for speed-readers) , then I will take a look at the legal framework (Austrian law), followed by an short insight into Google’s Editorial guidelines for text ads and I will close with a short criticism.

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The Case:

The claimant – unsuccessfully – claimed that the defendant’s ‘eye-catching‘ ad would ‘lure‘ customers into the webshop of the defendant only to find out that the offer was valid for just  a single pack (of 100 condoms) per customer. Thus, the claimant argued that the customers were deceived as they would assume that they could order a unlimited quality of the product. The defendant argued that the ad targets ‘end-‘customers, that 100 condoms would cover the demand of an average customer for at least 50 weeks and that the group of customers who might want to order even larger quantities was ‘small and irrelevant‘. [11-19]

The court of first instance (Landesgericht Bielefeld, 17 O 88/09) decided in favour of the defendant and found that the ad does not violate German unfair competition law. The court found that ad did not contain a misleading/deceiving statement and that customers,  a: who understood that the ad that way that they would anyway only be allowed one package per person or b: who realized that the ad did not contain any information on that issue and were thus seeking for more information, would not be deceived/mislead about the fact that they can only order one package per purchase. [20-21]

The court found however that c: customers, who have no information on the matter, would assume that there would be no limitation and would thus be mislead/deceived. Such a misleading statement only is however only of relevance if it could have had an impact on the purchase decision of customers. In the relevant case, the court found that the vast majority of customers would anyway plan to purchase only one package. [22]

The court continued saying that (even) a misleading statement of the defendant would not cause a significant negative impact for the customer, as the deceit would be corrected right during ‘the next step‘. As soon as customers click on the link they will be informed on the site of the defendant that the offer is limited to just one package per customer. As a consequence the customers could move on to another vendor with hardly any time loss. ['Der Verbraucher könne sich nun fast ohne Zeitverlsut anderen Anbeitern zuwenden.'] As the consequence of the deceit is so insignificant, it is not seen to be relevant and thus is also not sanctionable. [23]

As a last point, the court of first instance found that the ad did not influence/harm users’ choice by omitting relevant information. Any possible misunderstanding/deceit would be corrected after one more click – safely – before the a customer could reach the decision to purchase the good. [24-25[

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The court of second instance, largely agreed with the court of first instance and added that:

- The limitation to one article per purchase is a rightful way of avoiding having competitors take unfair advantage of the offer by buying large quantities, only later to inform authorities that the vendor has not supplied a sufficient amount of articles to customers.[36]

- The term “ab” (‘starting at’) is seen as a kind of a ‘warning‘ for customers, that the good is not sold without restrictions/conditions for the price displayed. Thus it is unlikely that customers gained the impression that they could buy the product without any limitations. [40]

- Even if some customers (group c:) would actually misunderstand the ad, this would not amount up to a (sanctionable) deceit as they would be informed about the condition already on the ‘next page’.

Usually the danger of  a deceit is assumed if, as a consequence of the ad, the consumer is paying attention to it. Consequently, separate clarifications are usually not enough to correct such a misunderstanding/deceit. The court however stated that these principles can nevertheless not be applied for this kind of advertising (keyword advertising). The court in this context referenced a previous decision about an ad promising ‘delivery within 24thrs‘ (‘Lieferung innerhalb von 24 Stunden’, MMR 2009, 861) which contained restrictions depending on the time at which the order was placed.

In the view of the court, this ‘bullet-point-like‘ ['Schlagwortartig'] kind of advertising (keyword advertising) is inseparably connected to the clarifying information on the website of the vendor, which the consumer has to navigate to anyway before investigating the offer any further.

The courts further states that for eye-catching ads, deceit is usually avoided by a well visible sign in the form e.g. of a star (‘deutlicher Sternchenhinweis‘ = *) which leads customers to the clarifying (complimentary) information. Thus the link between the ad and the website of the vendor can be seen as some kind of ‘*’ which the customer has to follow anyway when interested in the offer.

As a consequence the effect of the ad does not amount up to a misleading statement or a ‘bold lie’. The ad in question thus can not be compared to ‘luring the customer into the vendor’s shop‘, as customers who realize that the offer is of no use to them due to the limitation are free to leave the website. The mere fact that the customers have paid attention to the website is in the view of the court, a very small competitive advantage in the ‘fast-paced world of the internet. As it is unlikely that a customers will buy at the vendor’s website just because ‘they are already there’, the competitive advantage gained through the ad is not enough to amount up to an act of unfair competition. [41]

- The OLG furthermore agrees with the LG that the number of customers interested in quantities larger than 100 pieces is rather small. The court at this point even referred to a study from the German Ministry for Family, Pensioners, Women and Children which states that there are around 400.000 prostitutes living in Germany. The claimant had brought forward this study to underline his point that there are customers who regularly order ‘larger quantities‘ of condoms. This argument, or the argument that customers might want to buy condoms in larger quantities ‘for parties’  however obviously failed to convince the court.

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The Law:

As mentioned in the introduction, the concept of ‘eye-catching advertising‘ (‘Blickfangwerbung‘) sanctions advertisers who highlight certain (favourable) aspects of their ad, in an-eye-catching-way, so much that consumers don’t perceive the rest of the offer and thus are ‘lured‘ into a purchase. If the complementary information is missing entirely or is hardly recognizable, such an advertisements is seen as an act of unfair competition under § 2 UWG (Austrian Law of Unfair Competition). [Anderl/Appl in Wiebe (Hrsg) § 2 UWG Rz 191f]

If a sign (e.g. ‘*’) is used to indicate the presence of  complimentary information to users, this sign has to be easily perceivable and must effectively lead to the information [OGH, 4Ob6/08y, ÖBl-LS 2008/113].

The mere existence of a sign (e.g. ‘*’) alone indicates to a diligent (‘verständig’) internet user that extra information is necessary to fully understand the offer. [BGH, I ZR 110/00, Preis ohne Monitor, GRUR 2003, 249]

Concerning the level the relevance of the misinformation Austrian law too stipulates that the misinformation much reach a certain level and that the misinformation must be strong enough to lead consumers to a transaction they wouldn’t have carried out if they had been correctly & fully informed.[Anderl/Appl in Wiebe (Hrsg) § 2 UWG Rz 45f]

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Google’s Editorial Guidelines:

Google’s Advertising Policies contain a section that deals with ‘Prices, Discounts and Special Offers‘.

… If your ad includes a price, special discount or ‘free’ offer, it must be clearly and accurately displayed on your website within 1-2 clicks of your ad’s landing page. Prices in your ad text must be accurate. Prices can also apply to bulk purchases. …

Although Google stresses the fact that advertisers are ‘solely responsible’ for their ads (Terms&Conditions 3.4), Google reserves the right to remove the ad for ‘any or no reason‘ or ‘modify ads to the extent reasonably required to comply with [...]  policies related to any Google Property‘ (Terms&Conditions 3.6).

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Summary:

While most lawyers are solely concentrating their attention on the question of trademark use and maybe of exemption from liability, there seems to a rise of unfair competition cases arising out of keyword advertising. Having read the decision of the LG Bielefeld and the OLG Hamm I am however positively surprised not only with the level of technical understanding some German courts demonstrate in such cases, but also with their willingness to discuss the adaptation of existing principles along with changes in practise.

Concerning the respective sections of Google’s Advertising policy, I am of the opinion that these not only largely reflect the reasoning behind & requirements of e.g. Directive 2005/29/EC , but also  the principle that advertising restrictions should aim at maximising the choice and information for consumers, while at the same time enabling fair competition.

To me it seems that Google position actually forces it to leverage three differing interests: Searchers are interested in finding information online with minimum effort and without being distracted by annoying or misleading ads. Advertisers on the other hand long for a (cost) efficient way to communicate with consumers. Providers of search advertising, as the third group, are interested in the advertising revenues created by the searchers, while at the same time, with keeping good relations with the advertiser. As a result, it does not surprise that the (vague) regulative framework applied by Google through its Advertising Policy is relatively similar to the legal provisions in the countries where the ads are displayed. Although Google can’t be held liable for any unlawful advertising of its customers (Art 14 2000/31/EC), it has to adopt a system that is familiar to all parties and thus creates confidence.

As said previously people [just] ain’t no good and thus I am quite positive that, although Google provides a pretty useful framework for advertising on its platform, lawyers will also in the future not run out of cases to litigate upon grounds of e.g. the law of unfair competition. And once again it’s the content of the ad that counts, not the fact which keyword triggered the ad (for another example please read my post on Morningware v. Hearthware).


Alternative title (after being criticised by the IPKats that my titles are not so much a “turn on” ;)
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Please Note; after being told that the titles of my posts are ‘as much a turn-on as yesterday’s sandwich, abandoned at the platform of Paddington Station‘ I have tried to use a slightly more catchy title line this time. Yes, it took some effort!

*From Biblical Questions To Delphian Confusion: The ECJ’s Decision On Google France C-236/08

Seek and you shall find“. A legal dispute that began its career on the ECJ’s level with a quote from the new testament (Matthew 7:7) has – for now – found its end in a judgement which is as confusing as a statement of the oracle in Delphi might be. At this critical point the efforts of the IPKat  have to mentioned who not only organized - on very short notice – a (Google AdWords Rapid Response) seminar at Ashurst for over 100 people interested in the issue, but who also provided the audience with an excellent summary of the controversial judgement.

Dr Jeremy Phillips, Michael Edenborough, Dr Birgit Clark, Annsley Merelle Ward (from left to right)

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Before digging into the difficult questions I’d like to highlight a few issues I found rather clear:

- The ECJ held that Google cannot (directly) be held liable for selling trademarks as keywords and subsequently displaying ads (triggered by the keyword=trademark).

- Advertisers can be held liable on the basis of the content of their ads. The sole fact that they have booked a trademark as a keyword doesn’t amount up to a trademark infringement. National courts however have to decide if the the ad does not enable normally informed and reasonably attentive internet users, or enables them only with difficulty, to ascertain whether the goods or services referred to by the ad originate from the proprietor of the trade mark or an undertaking economically connected to it or, on the contrary, originate from a third party.

Thus the court has missed its chance to simply say that, except for special circumstances (e.g. acts of unfair competition), ads not bearing the TM should not be seen as violating the TM-holder’s rights and ads that do contain the TM very likely do.

- While painstakingly trying to avoid the word “confusion” the ECJ has thus ruled that also cases of Art 5 (1) lit a (sign identical or similar, goods&services identical or similar), a de facto likeliness of confusion needs to be demonstrated by the TM-owner to forbid third parties the use of their trademark. The way the ECJ did this was to say that the TM-owners rights are violated if the functions of the TM are affected. And causing a ([confusion]) of whether or not the good or service advertised stems from the TM-holder affects the function of origin of a trademark. [49, 79]

- The court also seems to be in favour of the idea of granting Google’s AdWords service the liability exception provided by Art 14 of the eCommerce Directive. However the final decision on the subject of whether Adwords is “purely technical and neutral service” again lies with the national courts.

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The whole thing however gets a bit more complicated if one looks at the fact that:

- National courts have to decide whether users are able to ascertain if the goods or services originate from the trademark owner. This doesn’t sound like too difficult a task, but one has to look at the different national perspectives ranging from the ultra conservative French courts to the highly liberal German courts, who would for sure have little doubts to rule that the function of origin is usually not affected by an ad not containing the disputed TM.

- The national positions concerning the liability exception of Art 14 are similar to the question mentioned previously, except for the detail that in this case Austria is actually highly liberal, granting this exception to AdWords already since a Austrian Supreme Court decision in 2004. As the cases referred to the ECJ are however French, Michael Edenborough has put it like this:

You must bear in mind, that the court is in France, the claimant is French, the defendant is American. Where do you think this will lead?

Or in other words, does allowing the (obviously anti-Keyword Advertising) French court to decide on the liability exception mean that the exception was not meant to be granted anyway?

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Issues the court definitely did not get right:

-The court seems effectively mistaken in its assumption that the (also protected) advertising function of the TM is not affected as the TM-owners website usually appears (rather high up) inside the search results anyway and thus the TM-owner still has the chance to advertise/communicate/convince potential customers.

This sounds pretty reasonable at first glance, but if you think about it a bit longer you might wonder if one can really assume that a TM-holder can actually be found by users if his/her website is not displayed on the very first page of the search results. In theory one could assume that users might keep searching for the TM-owner, but I think the reality is that most users don’t have a clue about Boolean search operators and due to the Primacy Effect it is illusory to expect users to do little more than using the scrolling wheel of their mouse to scroll down on the first results page.

Does this matter? I believe so, as in the cases at hand all of the claimants were listed on the first page of the search results. Thus, if a national court might have to issue a decision in a case where the TM-owner’s website is not shown (on the first page) in the search results, the (?French?) court might assume that his case is substantially different from the cases upon which the ECJ had to decide and is thus not bound to its ruling.

I do know the last point, which was actually brought up by Dr. Stephan Ott in the course of preparing an article on that topic, might be a highly theoretical one, but… I would certainly not be surprised to see a national court using it to justify its decision.

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For more information on the cases please refer to the video stream of the Google AdWords Rapid Presponse Seminar, which was hosted by the IPKats, Eric Glodmann’s blog, Adam Smith’s article on the Blog of the World Trademark Review, a short article on OUT-LAW.com,  a analysis (in German) by Dr. Stephan Ott on his Links&Law website or a short newspaper article (in German too) by Austrotrabant. A more elaborate version of this and Dr. Ott’s post will be published in the next issue of the German law Journal MarkenR; Ott/Schubert, Fremde Marken als Keywörter – Orakelsprüche des EuGH als Antwort auf biblische Fragen, MarkenR 2010, 173 (link hopefully coming soon). 

*Image-transfer Through A Louis Vuitton Basketball in a Car Commercial?

Luxury good maker Louis Vuitton sues Hyundai for using a basketball bearing the LV-logo in a car commercial. What is your opinion on that issue, taking into consideration Art 5  (2) of the Directive (89/104/EEC)?

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2. Any Member State may also provide that the proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade any sign which is identical with, or similar to, the trade mark in relation to goods or services which are not similar to those for which the trade mark is registered, where the latter has a reputation in the Member State and where use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark.

I think its safe to say that under European/Austrian jurisdiction courts would see a violation of this provision.

For more details on the case please refer to techdirt.com or see below:

*Surprisingly Clear Words: Noha on Keyword Advertising

Ever since I’ve started working on the topic of Keyword Advertising, the Wein&Co decision has always remained a mystery to me as the Austrian Supreme Court (OGH) stated in it, that Top-Ads (ads above the search results, displayed on a light blue or yellowish background) should be seen/treated as being a part of the search results. This would imply that the OGH alleges Google of paid placement = selling ad space within its search results.

In a earlier post I was already wondering to what extent the court might have been influenced by screenshots handed in by the plaintiff. Sadly enough the OGH has upheld and repeated its highly disputable view also in its quite recent Bergspechte reference.

I have always disagreed with the OGH on this certain issue and thus I was very -pleasantly- surprised to find a quite clear & explicit statement in an article by Birgit Noha [1] referencing to Baars/Troge [2], stating that:


“These arguments by the OGH give room to doubt whether the court has actually understood the setting of Keyword Advertising. One might suspect that the OGH got the principles of trademark law and the principle of diversion [betweens ads and content] mixed up[2].”
(Roughly translated by autrotrabant)

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There is nothing left for me to add ;)


[1] Noha, Neue spezifische Formen der Internetwerbung – Keyword Advertising im weiteren Sinn und rechtliche Grenzen, in Feiler (Hrsg), Innovation und internationale Rechtspraxis (2009), 589-602 (594).
[2] Baars/Troge, GRUR Int 2008, 526-531 (530).

*Paid Inclusions on Google Product Search?

Searchengineland.com has reported that Google has been testing Paid Inclusions (= Keyword Buying = advertisement inside the list of organic search results = ads not sufficiently separated from organic results) and provided a screenshot as proof thereof. Please note the small “AD” buttons next to the first three search results. [Special thanks to Stefan Kauf of kamjomi for this information]

Red circles added by austrotrabant

Expanded view of screenshot above. Red cicles added by austrotrabant

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I think that Google should be very, very careful doing so, as the Austrian OGH in Case C-278/08 (BergSpechte) as well as the Dutch “Hoge Raad de Nederlanden” in Case C-558/08 (Primakabin) are already considering the currently layout (where ads above the search results are displayed on a yellow-brown background and labelled as Sponsored links in the lower right corner) to display ads “inside the search results” to constitute a case of Paid Placement while Google attorneys have always claimed that Google clearly separates “organic” search results and “paid” advertisement. Thus personally I’d be very surprised to see Google attempting such a move before the ECJ has rendered a decision on the pending keyword advertising cases.


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