Bananabay or — the ‘overlooked' German AdWord referral

Author: Birgit Clark (Boult Wade Tennant) GmbH v BBY Vertriebsgesellschaft mbH, Case C-91/09, Court of Justice of the European Union, 26 March 2010

Journal of Intellectual Property Law & Practice, doi:10.1093/jiplp/jpq094

The Court of Justice of the European Union (CJEU) has handed down a court order in the German Bundesgerichtshof's AdWord referral, reaffirming its decision in Google France as to when a keyword advertiser's behaviour may amount to trade mark infringement.

Legal context

Article 5(1)(a) Directive 89/104 defines what constitutes trade mark infringement in cases of so-called double-identity: ‘The registered trade mark shall confer on the proprietor exclusive rights therein. The proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade ... any sign which is identical with the trade mark in relation to goods or services which are identical with those for which the trade mark is registered.’

Art 104(3) of the Rules of Procedure of the Court of Justice, inter alia, provides that ‘where a question referred to the Court for a preliminary ruling is identical to a question on which the Court has already ruled, or where the answer to such a question may be clearly deduced from existing case-law, the Court may ... at any time give its decision by reasoned order in which reference is made to its previous judgment or to the relevant case-law’.


Google's AdWord system is another AdWords case, involving the internet search engine provider Google's paid referencing service. Google operates a system called AdWords, which allows advertisements to be displayed under the heading ‘sponsored links’ alongside ‘natural results’ in response to keywords being entered in the search engine. In this article the terms AdWord and keyword are used interchangeably. In contrast to the cases in Google France and Google, only deals with the entitlement of trade mark owners to act against advertisers; it does not deal with Google's liability. Google itself was not part of the proceedings.

The German Referral
The German AdWord referral in GmbH v BBY Vertriebsgesellschaft mbH was originally called Bananabay in Germany (I ZR 125/07). The claimant, BBY Vertriebsgesellschaft mbH, and the defendant,, were both active in the erotic entertainment industry. The claimant, who owned a German trade mark registration for the word BANANABAY, sought to stop's use of that trade mark as an ‘AdWord', claiming trade mark infringement and seeking damages. The court of first instance, the Regional Court Braunschweig (9 O 2386/06), and on appeal the Higher Regional Court of Braunschweig (2 U 24/07) both held in favour of BBY. appealed to the Bundesgerichtshof, which in turn decided to stay proceedings and referred the following question to the CJEU for a preliminary ruling:
Is there use for the purposes of Article 5(1)(a) of Directive 89/104 where a third party provides as a keyword to a search engine operator a sign which is identical with a trade mark, without the consent of the proprietor of that trade mark, so that, on inputting the sign identical with the trade mark as a search term into the search engine, an electronic promotional link to the third party's website advertising identical goods or services appears in an advertising block set apart from the list of search results, that link is marked as a sponsored link and the advertisement itself does not comprise the sign nor contain any reference to the trade mark proprietor or to the products it is offering for sale?

While most spectators believed that the Bundesgerichtshof's question should merit further detailed guidance from the CJEU, the court clearly saw things differently and held that the Bundesgerichtshof's question was ‘almost’ identical to question one in Google France (Joined Cases C-266 to 238/08) of 23 March 2010 which it had already answered. Consequently, the CJEU decided to answer the Bundesgerichtshof's question on AdWord use in a reasoned court under Art 104(3) of the Rules of Procedure of the Court of Justice.

Citing Google France, the CJEU reaffirmed that purchasing a third party's trade mark as a keyword constituted ‘use in the course of trade’ even where the sign purchased as keyword did not appear in the advertiser's ad itself. However, a trade mark proprietor could not oppose use of a keyword which was identical to its mark unless all the conditions set out in Article 5 and in the court's precedents relating to Article 5 were met. In other words, what was decisive was whether the advertiser's use of the keyword was use that was ‘liable to have an adverse effect on one of the functions of the mark’. Referring again to Google France, the CJEU reiterated that the functions of a trade mark not only included the ‘function of indicating origin’ but also other functions. As regards to keyword use, however, the relevant functions to be examined were the function of indicating origin and the function of advertising. Further, ‘AdWord’ use was not liable to have an adverse effect on the advertising function. Consequently's use of BBY's trade mark as AdWord was not liable to have an adverse effect on the advertising function of BBY's mark. The CJEU again stressed that where a keyword purchased by a third party was identical to a competitor's trade mark, the ‘adverse effect’ had to relate to detriment caused to the ‘function of indicating origin’. Once more referring to its decisions in Google France, the CJEU reiterated that a trade mark owner should be entitled to prevent use of its trade mark as a keyword by an advertiser if the advertisement was so ‘vague’ that it did not enable ‘normally informed and reasonably attentive internet users’ to determine whether the goods or services referred to in the advertisement originated from the trade mark proprietor or an undertaking economically connected to it. Whether there was an adverse effect on the function of indicating origin, or a likelihood of such an adverse effect, had to be assessed by the national courts on a case-by-case basis. An adverse affect—and consequently trade mark infringement—would have to be assumed in two circumstances:
(i) where a third party's ad suggests that there is an economic link between that third party and the trade mark proprietor; or
(ii) where an ad is so vague concerning the origin of the goods or services that a normally informed and reasonably attentive internet user is unable to determine, on the basis of the advertising link and the commercial message attached to it, whether the advertiser is an unrelated third party or economically linked to that trade mark proprietor.
In light of the above the CJEU then answered the BGH's referral as follows:
Article 5(1)(a) ... must be interpreted as meaning that the proprietor of a trade mark is entitled to prohibit an advertiser from advertising, on the basis of a keyword identical to that trade mark which that advertiser has, without the consent of that proprietor, selected in connection with an internet referencing service, goods or services identical with those for which that mark is registered, in the case where that advertising 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 by an undertaking which is economically connected to it or, on the contrary, originate from a third party.
Practical significance

The CJEU's answer to the Bundesgerichtshof's question did not come as too much of a surprise and has not really added anything new to the discussion on AdWord use. What was more of a surprise was that the CJEU took the view that the German referral could be answered by way of a mere reasoned order.

Nonetheless, the CJEU's views on AdWords for the most part appear to be a logical extension of the Bundesgerichtshof's advertising and technology friendly precedents in pcb (I ZR 139/07), Beta-Layout (I ZR 30/07) and Bananabay. This author has little doubt that the Bundesgerichtshof will decide that the origin function is not adversely affected bearing in mind that the Bundesgerichtshof already argued in Bananabay and Beta-Layout that it would be a far-flung thought to assume that internet users would make a mental connection between a search term entered and a sponsored link displayed (provided that the sponsored link was visually separated from the ordinary search results and displayed next to these in a special advertising block) or to assume, on the basis of such an advertisement, an indication in relation to the origin of the goods or services advertised. Applying this approach, most AdWord cases will not amount to trade mark infringement as long as the ad is also phrased clearly enough not to fall foul of the CJEU's ‘vague’ criteria and provided that the advertiser sticks to advertising its own goods and services.

The Bundesgerichtshof must now decide whether it wishes to take the opportunity to establish more detailed guidance relating to AdWord use. For the eternally optimistic, there is also still some hope that the CJEU might further clarify some of the open points in response to the outstanding AdWord referral from the Dutch Hoge Raad der Nederlanden (Portakabin, C-558/08) and Arnold J's elegantly precise questions in the AdWord referral from the High Court of England and Wales in Interflora (C-323/09).

1 comment:

  1. OK, this is very confusing for a simple sole like me. Can you condense this into a few words and answer the question; can someone other than Portakabin use the word Portakabin as a keyword in Adwords? Thanks it would be a big help.