June 04, 2008, 12:25 PM — Europe's highest court will hear a trademark infringement suit concerning Google's keyword advertising system, a case that ventures into an untested area of law that could impact the company's lucrative ad revenue.
Fashion retailer Louis Vuitton won a lawsuit in France over Google's AdWords system, where advertisers bid for keywords. The keywords are used to place ads related to a person's search terms using Google's search engine or in Web pages with similar content.
AdWords suggests variations of certain keywords to advertisers when they are using the company's interface. Louis Vuitton said the search engine offers terms such as "Louis Vuitton fakes" and "Louis Vuitton replicas," according to Pinsent Masons, which runs the Out-law.com legal blog.
Louis Vuitton alleges the suggestions amount to violation of its trademarks, since Google is essentially selling the marks to which it doesn't not have the right or the consent of brand owner, said Iain Connor, an intellectual property litigator with Pinsent Masons
France's highest court ruled in favor of Louis Vuitton. Google appealed, and the case will go to the European Court of Justice (ECJ) in Luxembourg. The ECJ will make a ruling, which the French court must accept, Connor said. No date for the case has been scheduled, and it could be as long as a year before the ECJ makes a ruling.
The case comes as Google recently changed its policy over trademarks and keywords in the U.K. and Ireland, Connor said. On May 5, Google allowed anyone in those countries to bid on any keywords, the same as the company's U.S. policy, he said.
However, Google has faced litigation in the U.S. over that policy, with courts in California and New York giving conflicting decisions, Connor said.
Previously, trademark owners could notify Google in order to block others from scooping up keywords that represented their trademark.
In Europe, the trademark issue hasn't been addressed by the courts. "There is no case law related to this precise issue in Europe," said Connor, who is not involved in the case.
Whatever the ECJ's ruling, Google will likely have to create a uniform policy on keywords and trademarks that applies to all 27 countries in the European Union. Trademark law has been harmonized in the zone, Connor said.
Google's AdWords program has represented one of the greatest advertising innovations on the Internet, as well as a key source for Google's ever-growing revenue. The company did not respond to a query by deadline.
