Trade marks and online commerce ICOMP IP Issues and their impact on Internet Commerce 23 October 200

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Trade marks and online commerceICOMP IP
Issues and their impact on Internet Commerce 23
October 2008
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Contents

• General introduction to trade marks, trade mark
  infringement, and related issues
• The use of sponsored links by search engines
• Googles new disparate approach to Adwords in
  the UK/Ireland and the rest of Europe
• A recent Spicy UK case
• Differing views in France, and the ECJ to
  referee
• Consumer protection issues
• A look at cybersquatting and typosquatting /
  domain parking?

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Introduction to trade marks

• Branding (identification in the field)
• Monopoly right
• Harmonised in Europe with Trade marks Directive
• Europe-wide right available (CTM)
• Hard work (e.g. to think of distinctive trade
  mark or to invest in a descriptive trade mark)
• Essential Function to guarantee to the
  consumer the origin of the goods or services to
  which the trade mark is applied

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Who benefits from trade mark protection?

• Trade mark owners
• because there is a monopoly, reputation earned is
  retained
• money pumped into promoting the brand is not
  wasted, nor hijacked by others
• Consumers
• a trade mark provides consumers with an
  opportunity to find a trusted brand something
  they can rely upon to guarantee quality

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Trade mark infringement

• The trade mark proprietor has a monopoly right.
  But what does that mean in practice?
• A trade mark proprietor can prevent use of
• an identical trade mark applied to identical
  goods or services
• a similar trade mark applied to similar goods or
  services where there exists a likelihood of
  confusion on the part of the public and
• Where the registered trade mark has a reputation,
  can prevent use of the trade mark on dissimilar
  goods or services where such use takes unfair
  advantage of or is detrimental to the distinctive
  character or reputation of the trade mark
• Defences / Comparative Advertising (must be in
  accordance with honest practices)

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Trade mark infringement - use

• Must be use in the course of trade.
• Use is not defined, although there is a
  non-exhaustive list of actions which constitute
  use in the legislation. This includes
• affixing the sign to goods or packaging
• offering the goods, putting them on the market or
  stocking them for these purposes under the sign,
  or offering or supplying services thereunderand
• using the sign on business papers and in
  advertising
• Generally now thought that use as a trade mark
  is not always necessary to show infringement, but
  there must be use which interferes with the
  essential function of the registered trade mark.

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Online Trade Mark Infringement

• The same tests must be satisfied to show
  infringement - whether use of a trade mark is
  online or offline
• But the online use of trade marks presents new
  challenges
• automatically generated results by search engines
• invisible use on websites (metatags)
• use by search engines and advertisers in
  sponsored links
• domain names not being used for websites or which
  are not being used commercially
• use by advertising content providers on parked
  domain names
• user generated content

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Sponsored Links

• Search queries entered into a search engine
  produce two different types of results
• natural search results (i.e. which are
  automatically produced as a result of the search
  engines algorithm/cached pages) and
• sponsored search results (i.e. which are produced
  by the search engine at its discretion, usually
  because the search engine has been paid to do so)
• Advertisers can bid for the right to have their
  advertisement/sponsored listing appear when
  certain terms are searched for
• Examples

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Sponsored Links Example Page
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Sponsored Links who does what?

• The Advertiser
• selects the words that will trigger the display
  of the sponsored link (and the words that will
  not)
• decides how much it will pay the Search Engine
  each time the sponsored link is clicked on (the
  higher the bid the more likely it is the link
  will be displayed)
• provides the advertisement text to appear
  underneath the sponsored link
• decides on the content of the website that is
  linked to when the sponsored link is clicked on

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Sponsored Links who does what?

• The Search Engine
• provides the service which causes the display of
  the sponsored link (advertisement) when the
  relevant term or phrase (or linked word) is
  searched for
• sets and enforces the rules for the text that can
  be registered that will
• trigger the sponsored link appearing and
• appear in the sponsored link itself (including
  whether third party trade marks may be
  registered)
• in the case of Google, suggests words that the
  advertiser may wish to register (examples on next
  two slides)

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Google Adwords

• Caused uproar in May this year in the UK and
  Ireland
• Prior to May, Googles policy across all of
  Europe was not to allow registered trade marks
  (which had been notified to Google) to be
  registered as Google Adwords
• However, in May 2008, Google changed its policy
  in the UK and Ireland only to allow any words to
  be registered as Google Adwords
• Google does not allow trade marks to appear in
  the text of the Sponsored Links which appear on
  screen, it only allows them to be registered as
  words which trigger the Sponsored Links
• Yahoo! and Microsoft Live Search have different
  policies

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Problems caused by trade marks triggering
competitors sponsored links

• Trading on anothers reputation a short cut to
  fame
• Consumer confusion (searching for a specific
  brand or product, not generic products)
• Brand owners have to pay for their own trade
  marks to appear when searched for, despite having
  already persuaded (via investment in their
  reputation) consumers to search for their brand

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Why the change?

• Additional Revenue - Google made 16.4 billion
  from advertising in 2007
• No proceedings brought to date against Google in
  the UK (unlike the position in France, Germany,
  Belgium, the Netherlands etc) so perhaps seen
  as a safe jurisdiction
• Not admitted by Google, but decision to change UK
  and Ireland policy came shortly after the UK high
  court decision in Wilson v Yahoo! 2008 EWHC 361
  (20 Feb 2008)

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Wilson v Yahoo!

• Mr Wilson was a mobile caterer and proprietor of
  the Community Trade Mark MR SPICY
• Searches on Yahoo! for MR SPICY brought up
  sponsored links for a UK supermarket
• He took court action against Yahoo! for
  infringement of his CTM
• Yahoo! had not allowed MR SPICY to be
  registered as a keyword but had allowed the
  generic word spicy to be registered
• Yahoo! asked the court to give summary judgment
  in Yahoo!s favour

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Wilson v Yahoo!

• The Judge, Mr Justice Morgan, gave summary
  judgment in favour of Yahoo! and, in doing so,
  decided
• The trade mark MR SPICY was only used by the
  person(s) who typed Mr Spicy into the Yahoo!
  search query box, not by Yahoo! nor the
  advertisers using the Yahoo! Keywords service
• Therefore, even if there had been use by Yahoo!,
  it was use of the ordinary word spicy and not
  Mr Spicy
• Even if Yahoo! had used Mr Wilsons trade mark,
  the court found that Yahoo! was not using the
  mark in terms of indicating the origin of the
  goods (i.e. in accordance with its essential
  function)

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Is Wilson v Yahoo! a safe decision to rely upon?

• No, for the following reasons
• Mr Justice Morgan is not an IP specialist judge
• The Claimant did not have legal representation,
  whereas the defendant was fully armed
• Summary judgment - so not a full trial and no
  evidence
• Weak trade mark and no actual use by Yahoo! of
  the registered trade mark, but only of the
  generic term spicy
• Use of spicy was in accordance with honest
  practices (i.e. by a non-competitor with no
  knowledge of Mr Wilson) Yahoo! did not suggest
  Mr Spicy as a potential keyword to advertisers
• Not a binding precedent as it is a decision of a
  lower court

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French decisions and the ECJ (the referee)

• Decisions in France have gone against Google
• Le Meridian (hotels)
• Louis Vuitton (designer goods)
• Luteciel/Viaticum (flights)
• On 20 May 2008, the French Cour de Cassation, on
  hearing a number of related appeals including to
  the Luteciel/Viaticum decision, referred
  questions to the ECJ

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French decisions and the ECJ (the referee)

• The questions included
• Is the sale of keywords identical or similar to
  a registered trade mark, to advertisers in a way
  that generates links to sites that offer
  counterfeit products, use of a trade mark within
  the Trade marks Directive? And
• If the trade mark is well known, can the owner
  oppose such use?

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Other legal issues related to sponsored links
Consumer Protection

• Unfair Commercial Practices Directive
  implemented across the EC
• General prohibition on the use of unfair
  commercial practices which distort the economic
  behaviour of consumers
• Further prohibition of misleading commercial
  practices including where an act is likely to
  confuse consumers so that they confuse one
  traders product or trade marks with those of a
  competitor
• Specific unfair commercial practice of promoting
  a product similar to a product made by a
  particular manufacturerto mislead the consumer
  into believing the product is made by the same
  manufacturer

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Consumer Protection

• The Unfair Commercial Practices Directive has
  been implemented to provide a private right of
  enforcement in some Member States
• However, only public body enforcement in others
  (e.g. in the UK)
• Action possible?
• A similar action was taken against Google by the
  Australian Competition and Consumer Commission
  for misleading and deceptive conduct in Adwords
  sponsored links

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Cybersquatting and Typosquatting / Domain name
parking

• The registration of domain names which are
  similar to well known domain names and trade
  marks
• Causes confusion similar to the confusion caused
  to consumers by sponsored links
• Generally such registrations constitute trade
  mark infringement, or a breach of domain name
  registration policy (e.g. allowing a UDRP or
  equivalent arbitration complaint to be made)
• But trade mark owners do not have the resources
  to keep pursuing infringers there are huge
  numbers of domain names registered every day,
  with no restrictions on registration.

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Cybersquatting and Typosquatting / Domain name
parking

• In the US, the 1999 Anti-cybersquatting Consumer
  Protection Act (ACPA) provides for significant
  punitive damages to be paid by cybersquatters and
  typosquatters
• But no equivalent in Europe and trade mark
  infringement, unfair competition and UDRP action
  are the options available
• Examples on next two slides

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Why do the typosquatters do it?

• Sometimes (rarely) because of a gripe against the
  trade mark owner (e.g. sucks sites) but normally
  to make money
• Google and other advertising providers provide
  links for the domain name owners to put on the
  websites which, because of their similarity to
  well-known domain names attract a lot of traffic
• A recent survey by McAfee (reported by Benjamin
  Edelman, Harvard) found that Google was the
  provider of links on 80 of the typosquatting
  sites researched
• When the provided links are clicked on, Google
  receives revenue from its advertisers and
  provides that revenue to the cybersquatters and
  typosquatters

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Remedies for trade mark owners

• A class action has been commenced against Google
  by businesses in the United States (Vulcan Golf
  LLC v Google) - 100,000 per infringing domain
  name sponsored by Google is claimed
• Google claims no use is made of trade marks by
  Google itself
• Nothing in EC Trade marks Directive about
  contributory infringement, but there is in the UK
  Trade Marks ActA person who applies a
  registered trade mark.for advertising goods or
  services, shall be treated as infringing that
  trade mark if when he applied the mark he knew
  or had reason to believe that the application of
  the mark was not...authorised

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Remedies for trade mark owners

• In addition, the common law principles of joint
  tortfeasance could apply
• There must be a common design between the
  provider of the links and the domain name
  owner/website operator to infringe trade marks
• Common design?
• Without Google (and link providers like it) the
  typosquatters would not obtain any revenue from
  trade mark infringement they provide the raison
  dêtre for typosquatters and cybersquatters to
  exist

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Summary

• Despite having harmonised trade mark
  legislation within the EU, the legal position is
  not the same in each Member State and, even
  within each Member State, is not clear.
• Clarity from the ECJ is needed as to whether
  search engines allowing (and suggesting) the
  registration of trade marked terms as trigger
  words for sponsored links may be liable for trade
  mark infringement.
• Until then, the UK position in Wilson v Yahoo!
  (and therefore Googles policy change) may not be
  good law and could be susceptible to challenge.
• There is also potential for
• Unfair Commercial Practice type claims if
  consumers are confused by the use of trade marked
  terms and
• legal claims that Google and others like it are
  jointly liable with cybersquatters and
  typosquatters for trade mark infringement.