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…)
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.
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.
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. 
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. 
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[
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.
– 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. 
– 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. 
– 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.
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]
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).
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” 😉
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!