Archive for the 'Law of Unfair Competition' Category

*Google Slightly Changes Layout of Top-Ads – Further Blurring The Line Between Ads and Search Results?

Google announced on the 3rd of February that Top-Ads (these are the ads shown above the -organic- search results and placed on a coloured background) will be shown in a slightly different style in the future.

Ads on Google  are shown in a layout that is different from the layout of the (organic) search results. The different layouts thus might help users can (more easily) distinguish between them. The more similar the layout of ads are to the layout of search results, the more difficult it is for a user to correctly differentiate between the two.


Legal aspects:
From a legal point of view the differentiation between ads and search results is not only important from the point of the obligation to label commercial communication as such but also from a law of unfair competition point of view. As proven in the past by numerous ‘AdWords’-cases there also exists a trademark law aspect of this issue. Continue reading ‘*Google Slightly Changes Layout of Top-Ads – Further Blurring The Line Between Ads and Search Results?’

*’Instant Preview’ – One More ‘Instant’ Function On Google

About a month ago Google launched the ‘Instant Google‘ feature which rendered the ‘Search’-button kind of obsolete. While the ‘Instant Google’ feature might be highly interesting from an unfair competition law point of view (results are being shown already while the user is searching and thus users may be especially vulnerable for distractions etc.) the implications of the new ‘Instant Preview‘-feature onto currently ongoing TM-disputes should be considered.

The ‘Instant Previews’-feature enables users to see -after clicking on the magnifying glass besides the title of the search result- a preview (Google calls it a ‘image based snapshot‘) of the search result whilst remaining on the SERP (Search Engine Result Page). There is a also YouTube-Video available in the respective Google blog post.

 

Continue reading ‘*’Instant Preview’ – One More ‘Instant’ Function On Google’

*Ads Inside Of Google Suggest: Trade Mark Infrigements & Acts of Unfair Competition?

The issue of ads inside of the suggestions made by Google’s Suggest Function has already been dealt with in great detail in a previous post, at the beginning of February. My conclusion back then was that:

[…] The question of trademark use in relation to ads inside of ‘Google Suggest’ shall be judged quite similar to the use TM in ordinary Keyword Advertising. It has to be noticed however that the suggestions, relating to a query entered by the user and containing a TM, are offered in real time and close proximity to the user’s query. Thus the chance that users might see a correlation between the search term entered and the ad displayed might -contrary to ordinary Keyword Advertising- be higher. Seeing a correlation between the ad and the user query would thus be the key for the (main/essential) trademark function (indication of origin) being impaired.

From an unfair competition point of view the “distracting presumptive customers” argument (“Abfangen von Kunden vor dem Geschäftslokal eines Mitbewerbers) shall not be applicable due to the early stage of the search, while however the “passing off / slipstream riding/coattail-riding” argument (schmarozerische Rufausbeutung) might be valid one as users are more likely to see a correlation between their query and the ad. […]


Back in February this was all mere speculation. Today however I stumbled across following suggestion (ad?) while searching on www.google.us searching for the term “Pizza“.

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As the term “Pizza” is of course not covered by any (e.g. TM, or company name) protection this fact/screenshot on its own isn’t too exciting, but I think things would indeed get very interesting if Google were to expand this service also to other (probably even protected) terms and to other countries…

*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!

*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).

*Florist “Renamed” her Competitors’ Businesses on Google Maps; Act of Unfair Competition through Keyword Advertising II

click to enlarge

The Early Bird Is For The Worms.” This might be especially true in the case of the florist, who renamed her competitors’ businesses on Google Maps (e.g. changing her competitor’s firm from “Forest Gump” to “Forest Gimp“) in my opinion this case only caused so much publicity because she is an pioneer in abusing this service and thus on the long run, will help Google to improve the quality and the reliability its service.

The Dominion Post reported that:

Anyone who uses Gmail or has a Google account can access the “edit” details. People can have multiple Gmail accounts. Police allege [the florist] accessed the sites, using various names, […], and giving her location as Canada, UK and China. She allegedly altered addresses, phone numbers and website details of businesses, in an apparent bid to divert potential customers. [A competitor], said it was frightening how easy it was to alter details. It was a matter of simply clicking “edit” on the company’s details on Google Maps.

Manipulating Wikipedia entries to e.g. hide unfavourable passages of politicians etc. is a common and broadly accepted practise. So, when looking at the case at hand were a person has manipulated information in a business directory to divert traffic to her business I wonder if that person should be treated that differently. Sure, while the first leads (only) to the misinformation of the public and does not require any deception of identification systems, the second leads to economical harm on the side of the competitor and requires deception of identification and validation systems.


Still, I think the issue here lies deeper as:

a: there are no or little standards concerning the origin and the quality of the data and apparently in the case at hand the competitors had not used their chance (I might even say that there is a responsibility on the side of every business owner) to update his/her information ong Google Maps.

b: users still place people place an enormous amount of thrust into the data provided by search engines while not even caring where the data actually comes from. More about this trust issue here.


After reading the news on this case I was wondering if it were really that easy to edit business information. Well, actually no, but maybe Google has implemented different procedures for different countries or the validating options recently got changed after the incident I’ve just reported about.

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However, in case you are a business owner you might be interested in how to change your business information, so just follow the instructions below:

a: Locate your business on Google Maps.

Locate your business on Google Maps

b: Next to the entry, click on the option “more info” and …

Click on "more info"

c: when seeing the detailed view of your business click on the option “Business Owner“.

Click ob "Business Owner"

d: After logging on (into Google’s Local Business Center) with your Google Account you will have the chance to edit your business details (location, contact details, upload pictures, etc). After having finished, validate the changes.

Validation options on Google Maps

*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.

*’Why Buy an Imitation?’: Acts of Unfair Competition Through Keyword Advertising

Advertisers should better not imply in their keyword ads that their competitors are selling cheap counterfeit products of inferior quality.

Eric Goldman mentioned this case (Morningware, Inc. v. Hearthware Home Products, Inc.) on his blog in mid-November 2009.

Morningware and Hearthware (=NuWave) both offer “counter-top electric ovens“. On their websites both companies point out that they hold “Worldwide patentsetc. The products seem to targeted at people who first learnt about this product by telemarketing (“As Seen on TV“). The products in fact indeed look almost identical. Please see here and here. To summarise: both companies appear to be selling portable, electrical ovens at an impressive price (above 100 USD) to most presumably couch-potatoes-customers who appear to be likely to be convinced/tricked into the purchase of such a product by marketing claims such as “worldwide patent” and “most affordable way of cooking” or extra “free” items, such as e.g. “the Custom Carrying Case” and “FREE Two NuWave Twister Multi-Purpose Blenders”.

The defendant has booked the plaintiff’s trade mark to trigger his ads. What makes the case so interesting however is the text of the Ad by Heartware: “The Real NuWave ® Oven Pro Why Buy an Imitation? 90 Day Gty.

sample-ad created by the author

Because the defendant had not referenced the plaintiff’s trademark in the ad copy, Google would not act on behalf of the plaintiff, meaning that the trademark owner had to go to court to fight against the display of this ad. For a summary of Google’s TM policy, see here.


As I am currently working on the unfair competition part of my thesis, § 7 of the Austrian UWG (law on unfair competition) immediately came to my mind, which forbids entrepreneurs from using false statements/derogatory speech in advertising. So, while totally pointless and derogatory statements are covered by the sweeping clause of § 1 UWG, false (factual-)statements (that could however be proved to be true) are sanctioned by § 7 UWG.

The OGH has always interpreted the meaning of the term statement widely, so implicit, indirect or subtle statements are also covered.[0] Furtermore it is not necessary to explicitly name the competitor, its enough if he is “obviously affected” by the statement. [1]

The Austrian Supreme Court has thus ruled that following statements to be factual” statements: that a competitor’s product is a “almost copy” („weitgehende Kopie”; [2]), that a competitor’s product is a “discount product” („Diskontprodukt”; [3]), that a competitor’s product is “rubbish ” („Klumpert”; [4]), the claim that a competitor is violating intellectual property rights through its products (Patentrechtsverletzung [5]).


Now looking at the AdWord at hand I can spot various indications pointing towards my assumption that such an ad, displayed in Austria (or: directed at uses in Austria) would lead to the application of § 7 UWG and thus would find that the ad constitutes an act of unfair competition as the the ads implies that the plaintiff”s products are a “cheap” (inferior) “copy” (counterfeit) of a “®“- protected (patent or trademark protected) product.

This, together with the fact that users exposed to this ad were searching for the trademark of the plaintiff, amounts to stating that the plaintiff is selling cheap counterfeits of inferior quality and would thus, if not proven true,  constitute an act of unfair competition under Austrian law. Thus, the defendant would most probably (in my opinion this is not a case of Art 10 ECHR; freedom of speech) be subject to an obligation for omission, damages and revocation.

References:
[0] Handig in Wiebe/Kodek (Hrsg) UWG, § 7 Rz 25ff.
[1] OGH 18.03.1997, 4 Ob 47/97h –Staubfrei– wbl 1997, 309 [Schmidt].
[2] OGH 24.07.1976,  4 Ob 320/76 – Stahlkanalverbau– ÖBl 1977, 11.
[3] OGH 29.01.1991, 4 Ob 5/91 – Diskontprodukt – ÖBl 1991, 224 = ecolex 1991, 331.
[4] OGH 03.10.1972, 4 Ob 344/72 – Espressomaschinen– ÖBl 1973, 105.
[5] OGH 01.06.1999, 4 Ob 72/99p – Spritzgusswerkzeuge– ÖBl 2000, 35 = GRUR Int 2000, 558.

*New BGH meta tag decision “Partnerprogramm”

Screen shot 2009-11-02 at 11.20.33I’ve just discovered on  IPKat blog a new decision by the  BGH [BGH, Urteil vom 07.10.2009 – Az. I ZR 109/06] on the topic of meta tagging or other SEO methods and the liability of advertiser. This is thus NOT and keyword advertising case.

In the Partnerprogramm case the TM (“ROSE”) of a claimant (www.roseversand.de) was found to be used by an web-advertising company 0049-net GmbH which got hired by the defendant (www.raddiscount.de) , a  competitor of Rose, to promote the defendants website.  The core problem of the case does not lie in the trademark use issue but on the liability of the defendant for the trade mark infringement by the advertising website. The courts have had no troubles to find an infringement as the TM of the claimant got used in the search results of the advertising company which then directed possible customers to the website of the defendant and thus the courts for an confusion of origin.

The BGH states that:

1. Wird ein als Suchwort verwendetes – geschütztes – Zeichen dazu verwendet, das Ergebnis des Auswahlverfahrens in der Trefferliste einer Internetsuchmaschine zu beeinflussen und den Nutzer auf diese Weise zu einer Internetseite des Verwenders zu führen, liegt eine markenmäßige Benutzung vor. (vgl. BGH, Urteil vom 18.05.2006 – Az. I ZR 183/03, MIR 2006, Dok. 196 – Impuls; BGH, Urteil vom 08.02.2007 – Az. I ZR 77/04, MIR 2007, Dok. 287 – AIDOL; BGH, Urteil vom 22.01.2009 – Az. I ZR 30/07, MIR 2009, Dok. 063 – Beta Layout; BGH, Beschluss vom 22.01.2009 – Az. I ZR 125/07, MIR 2009, Dok. 050 – Bananabay).

[translation by Austrotrabant] If a protected sign [trade mark] ]is used as search term [keyword] to influence the decision-process [?ranking procedure?] on the search result page of a internet search engines and thus guides the user to the website of the person using the advertising service [advertiser], this constitutes trademark use.

I am of the opinion that the IPKat blog somehow got this decision wrong when they  labelled it as “Liability for AdWords” but I agree with Uli Hildebrandt when he states that:

The BGH clarifies an issue concerning liability for links. A company that pays commission to another company which has a link to the first company’s offers and infringes a trade mark with this concrete link is itself liable for the link.


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