The Adwords Controversy

Google has long since been involved in the adwords controversy which sought to define whether or not adwords bought and sold were a matter of infringement on the rights of trademark owners everywhere.
European luxury goods maker LVMH (Luis Vuitton) sued Google in France over its AdWords policy allowing third parties, including LVMH competitors, to bid on its trademarked terms as keywords. The case originally arose when marketers bid on “Louis Vuitton” and turned out to be selling counterfeit Louis Vuitton items. The Google’s Adwords Service, is where the advertisers pay a fee so that “sponsored links” to their own websites pop up beside a user’s keyword search results.

Various big brands have been trying for years to get courts to say that Google is somehow liable for trademark infringement if it sells ads based on people doing searches on trademarked keywords. Most courts have rejected this argument — but there was one in France that accepted it and sided with LVMH (owners of brands Louis Vuitton, Moet & Hennessey, among others). That case moved up to the European Court of Justice.


The Louis Vuitton firm alleged that Google Adwords services have breached the European trademark law by allowing the rivals advertisers to bid and to purchase the trademark keywords. The firm said that the continuous use of this practice will sabotage the brands as the internet users searching for trademarked brands such as Louis Vuitton will also see ads of its competitor.

In its defence, Google said that as a service provider it was merely hosting the service and could not be held liable. Apart from that it has also claimed that advertisers using its service did not commit illegitimate use registered trademark.

The European Court of Justice has ruled in favor of Google following a trademark dispute with luxury brand “Louis Vuitton Moet & Chandon” and said, “Google has not infringed trademark law by allowing advertisers to purchase keywords corresponding to their competitors’ trademarks.” This is important because it is a fundamental principle behind the free flow of information over the internet.

The ruling also clarified on the point that the keywords by the users of “Google Adwords Services” will amount to infringement if it causes the confusion over the origin of goods and services.

After this ruling “Google.Inc” may have to sharply monitor the use of trademarked terms as keywords that links internet searches to advertisements. “Google may have to put forward a formula,” an alert to advertisers that they need to clearly show what products they sell.”

In a similar kind of dispute wherein, EBay Inc., that buys keywords from Google and also operates its own internal search, has similarly been sued by brand owners, including Louis Vuitton, in Europe and the United States over its use of keywords.

The decision of European Court of Justice may have implications for other online service providers, such as EBay Inc., who was ordered by a French court last month to pay 200,000 euros ($270,000) for reserving misspelled versions of brand names.

While it’s true that the court found that Google was not guilty, it did say that Google needs to remove ads when companies complain.

That’s more than a loophole; it’s basically an outright win for the brand owners who sued. I guess now everyone ought to be happy!

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