Europe's highest court ruled Google Inc did not infringe trademark law by selling keywords to trigger ads after Louis Vuitton and others said the practice undermined their brands. The Court of Justice of the European Union said on Tuesday advertisers were free to buy keywords identical to trademarks of rivals as long as consumers were not confused on the provenance of goods and services by the way ads were displayed online.
The court said that in cases where ads could confuse consumers, brand owners should invoke their rights against the advertisers concerned, not against Google - unless Google failed to act on a complaint or actively manipulated keywords. The ruling validates the AdWords paid-search business at the core of Google's $23 billion online advertising operations, as well as the way competitors like Yahoo! Inc sell ads, and gives brand owners a way to protect their trademarks.
Advertisers often buy brand names of their competitors as keywords to trigger their own ads. Google says the practice is in the interests of consumers, who do not want their search results to be limited to a single brand. Brand owners can also bid for their own brand names as keywords and the order in which sponsored links are displayed online is determined mainly through this auction process.
Google used to block advertisers from buying others' brand names as keywords but changed its policy in North America in 2004 and four years later extended that to Britain and Ireland. It says it will honour valid complaints from brand owners and prevent their rivals from using a trademarked keyword in their ad text.