Newsletter - TerraLex Connections
By Jan Rasmus Ludwig and Magnus Hirsch, SKW Schwarz, Germany
I. The Issue
Advertising is essential for every company. At present, the advertising landscape as such is undergoing a fundamental change because online advertising are experiencing comparatively high increase rates.1 Even though online advertising had a market share of "only" about 5% in 2010, another noticeable shift of the market share to the disadvantage of classic advertising in print media must be expected shortly given the current growth rates in online advertising.2 In 2010, online advertising had a volume of about EUR 860 mns., and keyword advertising via search machines played an essential role in online advertising. In view of the relevance of keyword advertising for online advertising, it has become clear why a large number of courts all across Europe are addressing the admissibility of keyword advertising under trademark aspects. Throughout Europe, the national High Courts referred cases to the European Court of Justice (ECJ) that led to the well-known “Google France” ruling.
The subject matter of the present Commentary involves two decisions of the German Federal Court of Justice (BGH) which give a first indication how the parameters of the ECJ on keyword advertising are being implemented in Germany. Hence, the starting point of the commentary is the reception of the ECJ decision "Google France."3 With the decision "Google France," the ECJ decided that keyword advertising is trademark infringement if it is used for advertisement that does not enable an average internet user, or enables that user only with difficulty to ascertain whether the goods or services referred to therein originate from the proprietor of the trade mark or an undertaking economically connected to it or, on the contrary, originate from a third party. However, instead of developing uniform, specific guidelines, the ECJ has left to the respective national courts to determine when the use of another's trademark in keyword advertising constitutes a trademark infringement. The ECJ decided that the function of origin of the other party's trademark is affected only if it is not evident to the user at all or only with difficulty where the goods or services advertised originate from.4 According to the "Google France" decision, a trademark infringement is only given in the case the developed transparency requirement is not met.5 The BGH decisions in "Bananabay II" and "Impulsonline" deal with the application of the transparency requirement regarding specific AdWords adverts.
II. The Decisions
All of the decisions regarding keyword advertising are characterized by mostly identical facts. The issue is advertising competitive products, which are superimposed when the third party’s brand is entered into a search machine. These facts also apply to the decisions in "Bananabay II" and "Impulsonline.de." Since each of the decisions has its own unique focus, they will be discussed separately below.
1. Bananabay II – Decision of the BGH
In the “Google France” decision, the ECJ issued guidelines on the feature of use of a trademark in the case of keyword advertising (transparency requirement), but left the interpretation to the national courts. In the "Bananabay II" decision, the BGH applied new parameters for the first time. The BGH had to decide whether the advert shown below meets the requirement of transparency of the ECJ or whether it constitutes an interference with the function of origin of the trademark "Bananabay."6
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Specifically, the BGH was asked to assess whether it is not evident to a regularly informed and reasonably attentive Internet user or evident only with difficulty whether the advertised goods originate from the proprietor of the trademark, from an associated company or a third party. The BGH assumed that, given the specific design of the advert, an Internet user did not have cause to assume a connection between the advertising company and the owner of the trademark.7 One major factor in the assessment of the BGH was that the other party's trademark was contained neither in the text of the advert nor in the relevant line.8 In addition, the BGH based its reasoning on the fact that the user did not establish any commercial connection between the owner of the trademark and the goods advertised in the superimposed advert even though he entered the other party's trademark in the search machine.9 Thus, the BGH repeated its substantiation, which already formed the basis of the prior "pcb" decision.10
All in all, this decision reads like a "free ride ticket" for third parties to use others' trademarks within the framework of Google AdWords; provided the other party's trademark is not contained in the superimposed advert. Apart from that, however, the question is justified - especially given the reference to the "pcb" decision - whether the BGH took the parameters of the ECJ into account sufficiently. The "Google France” decision of the ECJ may certainly be interpreted to the extent that the advertiser is actively instructed to clarify its relationship with the trademark proprietor. In light of the ECJ case law, it should therefore be unambiguous for the user from the specific advert what the relationship is between the advertiser and the proprietor of the trademark. In my view, this guideline must be interpreted in the sense that the advertiser is responsible for positive elucidation.11 However, the BGH is totally blind to this interpretation. This is because an objective and individual looking at the specific advert does not reveal the extent of the relationship between the advertiser and the trademark proprietor. In the present case, all the user could see was that the advert was placed by the proprietor of the Internet domain www.eis.de, because the advertising link refers to this domain. However, it remains totally in the dark whether there is a commercial connection between the trademark proprietor and the advertiser.
According to the "Google France” decision of the ECJ, it is sufficient to assume that the function of origin is impaired if the origin of the advertised product remains vague in the specific advert and it cannot be seen whether there is a commercial connection. If the BHG had consistently applied the guidelines of the ECJ, the BGH should, therefore, have assumed impairment of the function of origin. The BGH, however, used a "trick" to substantiate its deviating judgment. This is because the court assumed that the user has occasion to suppose a commercial connection only if the other party's trademark is contained in the advert. This trick is not convincing since the requirement of transparency established by the ECJ is simply by-passed and disregarded. In this context, it is also of interest that the Austrian Supreme Court of Justice (OGH) assumed a trademark infringement in the decision following the "BertSpechte" case, even though the trademarks concerned were not mentioned in the advert.12 What counted for the OGH was that the requirement of transparency was not satisfied and that it remained vague what the relationship is between the advertiser and the trademark proprietor.13 The theory of the BGH to look at the search term and the superimposed advert separately might be "shaken" shortly in view of the upcoming "Interflora" decision of the ECJ. This is because attorney general Jääskinen is of the opinion that - at least in the case of well known brands - the user is likely to assume from a superimposed advert that the advertiser and the trademark proprietor are commercially related, i.e., maintains a sales cooperation.14 If the ECJ were to follow this assessment, there would be no room for the "trick" of the BGH. The issue of keyword advertising remains full of suspense, and further judgments of the ECJ are to be expected.
2. Impulsonline.de – Decision of the BGH
The "Impulsonline.de" decision is significant regarding the burden of presentation and proof in connection with keyword advertising cases, for it is generally the plaintiff that has to demonstrate and prove the infringement. In other words, the plaintiff bears the burden of proof that a keyword identical or similar to its trademark was used.15 The trademark proprietor cannot always establish with certainty which keywords are used by the advertiser because it is clear that the advertiser booked a certain keyword only if the trademark appears in bold type in the advert. However, the advertiser may design the specific advert independently of the keywords used, especially if it does not use the option "keyword insertion."16 The keyword did not appear in the advert in the "Impulsonline.de" decision. Consequently, the trademark proprietor had no way of knowing which keyword the advertiser actually used. With reference to its prior "pcb" decision, the BGH reconfirmed that the principles of the secondary burden of demonstration and proof are applied in such cases.17 This means that the defendant must disclose which keywords were booked and thus also which keyword triggered the specific advert.18 If the defendant does not meet the requirements of the secondary burden of demonstration and proof, the plaintiff's plea is deemed to have been sustained; in that case, use of an identical or confusingly similar trademark may be assumed.19 In summary, it can therefore be stated that an advertiser generally has two lines of defence. First, the advertiser may deny infringement by presenting and proving that no mark identical or confusingly similar as defined in Sec. 14 (2) German Trademark Act was booked as the keyword in Google. Second, the advertiser can plead that the transparency requirement was satisfied.
III. Practical Consequences
The BGH reconfirmed its case law on keyword advertising in both cases, especially its parameters from the "pcb" decision. Since implementation of the ECJ parameters was eagerly expected, the decisions contain a certainly helpful clarification for the advertising industry - at least for the time being. This is because, according to the opinion of the BGH, an AdWords advert is admissible independently of the keyword used as long as the other party's trademark does not appear in the advert. For such cases, the BGH assumes that the general public has no lead to assume a commercial connection between the advertiser and the trademark proprietor. Therefore, this decision may be interpreted as a renunciation of any obligation of active information to meet the transparency requirement. As a direct consequence, it is no longer the AdWords function "dynamic keywords," but rather the AdWords function "keyword insertion," that is problematic. This is because the advertiser will be given a "free ride ticket" by the BGH if it makes sure that the keywords used do not appear in the advert. Despite the concerns whether the BGH took the parameters of the ECJ from the "Google France” decision into account sufficiently, the case law of the BGH gives the advertising industry great leeway. Since this is a dynamic growth market, this consequence should certainly be welcomed. However, additional course corrections may follow in the future since the parameters provided by the ECJ are interpreted differently in the individual member countries. As a result, every advertiser is well advised to adjust its AdWords campaign with respective national preferences. Against the background of a harmonized trademark law in Europe and an AdWords programme which is practically the same all over the world, this second aspect appears as a complete judicial failure. However, it is the ECJ that is primarily responsible for this outcome, and it remains to be seen whether the ECJ will not be given the opportunity to establish a specific and uniform legal framework for keyword advertising. The "Impulsonline.de" decision does not have comparable significance. It reconfirmed the rules for the burden of presentation and proof in the keyword advertising process. Every advertiser should use the opportunity to defend its advertising as early as on the level of identity or similarity of the trademark used.
1Statistics of Zentralverband der deutschen Werbewirtschaft e.V. (www.zaw.de).
2Statistics of Zentralverband der deutschen Werbewirtschaft e.V. (www.zaw.de).
3ECJ, 20. 3. 2010 – C 236/08, K&R 2010, 320 et seq., – Google France. This decision will not be discussed in detail in the present Commentary; instead, reference is made to the reviews of Henning-Bodewig, GRUR Int. 2011, 592ff.; Ohly, GRUR 2010, 776 et seq.; Ott, K&R 2010, 448-450 and Splittberger, NJW 2010, 2014.
4ECJ, 20. 3. 2010 – C 236/08, K&R 2010, 320 et seq., (LS) – Google France.
5Consenting Henning-Bodewig, GRUR Int. 2011, 592, 596.
6BGH, Judgment of 13.01.2011 – I ZR 125/07 – Bananabay II.
7BGH, Judgment of 13.01.2011 – I ZR 125/07, No. 26 – Bananabay II.
8BGH, Judgment of 13.01.2011 – I ZR 125/07, No. 27 – Bananabay II.
9BGH, Judgment of 13.01.2011 – I ZR 125/07, No. 27 – Bananabay II.
10BGH, Judgment of 22.01.2009 – I ZR 139/07, K&R 2009, 331 No. 24 – pcb.
11Also Henning-Bodewig, GRUR Int. 2011, 592, 596.
12ÖGH, Decision of 21.06.2010 – 17 Ob 3/10, GRUR Int. 2011, 173 – BergSpechte.
13Consenting Henning-Bodewig, GRUR Int. 2011, 592, 594.
14Jääskinen, BeckRS 2011, 80288, No. 48.
15BGH, Judgment of 22.01.2009 – I ZR 139/07; K&R 2009, 328 et seq., – pcb.
16The function "keyword insertion" ensures that the keyword triggering the superimposition appears in the ad-vert.
17BGH, Judgment of 13.01.2011 – I ZR 56/08, No. 21 – Impulsonline.de.
18BGH, Judgment of 13.01.2011 – I ZR 56/08, No. 21 – Impulsonline.de.
19BGH, Judgment of 13.01.2011 – I ZR 56/08, Rz. 21 – Impulsonline.de.