Yahoo Celebrates, But Adword Row Simmers On

In a headline-grabbing decision last spring, the English High Court favoured Internet search engine provider Yahoo in a dispute about its keyword advertising policy (Victor Andrew Wilson v Yahoo! UK Ltd. & Anr. [2008] EWHC 361 (Ch) ). The result saw a high-profile change in rival Google's adword policy, to the detriment of brand owners on the Internet.

Meet MR SPICY

The dispute arose from Yahoo's keyword advertising policy, which allowed advertisers to pay for sponsored links which appeared at the top of search result screens.

The claimant, Wilson, was a mobile caterer who traded under the name MR SPICY. He discovered that when he typed the name of his business into Yahoo's search engine, sponsored links appeared at the top of the results page for U.K. supermarket chain Sainsbury's and Pricegrabber.com. Wilson had registered MR SPICY as a CTM for foods and catering services, and sued Yahoo for infringement.

In his action, Wilson alleged that Yahoo had sold MR SPICY as a keyword to Sainsbury's and Pricegrabber.com, and that the use of that keyword was causing damage to his business. He argued that in selling that keyword and bringing up sponsored links in searches for MR SPICY, Yahoo had used an identical mark for identical goods and services.
In defence, Yahoo filed evidence showing that it had not sold MR SPICY as a keyword, but rather the word "spicy." This had resulted in the sponsored links being displayed when search enquiries including the word "spicy" were entered. Yahoo denied that it had used the trade mark MR SPICY at all, and argued that, in any event, it had not used it for the registered goods and services. It asserted, moreover, that any use that a court might find had been made could not be described as "trade mark use."

Yahoo sought summary judgment, claiming that there was no realistic prospect of Wilson's claim succeeding at trial.

Turning Up the Heat

The High Court found as a fact that Yahoo had not, indeed, sold the keyword MR SPICY, but rather only the generic term "spicy." In the circumstances, Yahoo could not be said to have used the MR SPICY trade mark at all. Indeed, the only use of MR SPICY was use by Internet users typing MR SPICY in as a search query.

The judge was not persuaded that the search engine's response to such a query, which produced the sponsored links together with a long list of natural search results, could be regarded as use of Wilson's trade mark, either. If the running of the search was "use" of anything, which the judge did not accept, it could not be use of anything more than the keyword sold, namely "spicy."

In case he were held to be wrong, the judge went on to consider the position if in fact Yahoo were regarded as using Wilson's trade mark. In that case, the judge held, there would be no infringement despite the fact that an identical mark had been used for identical goods or services. The use in question was not capable of effecting the essential function of the trade mark, namely to indicate the source of goods or services offered under it. The judge referred to the decision of the ECJ in Arsenal Football Club plc v Reed ([2003] ETMR 19, para. 54), where the Court held that a proprietor could not prohibit the use of an identical mark for identical goods "if that use cannot affect his own interests as proprietor of the mark having regard to its functions."

The judge could "not begin to see how what is described in the search response with reference to Sainsbury's has any impact of an adverse character on Mr Wilson's rights as proprietor of the Community Trade Mark." The sponsored links did not suggest that MR SPICY branded food could be bought at Sainsbury's or was supplied by Sainsbury's. The use, if there was any, was not capable of affecting the origin-indicating function of the MR SPICY trade mark, and was therefore not the type of use that trade mark law could or should prevent.

The Court gave summary judgment for Yahoo and ordered, at the same time, that Wilson's claim be struck out as being totally without merit.

Comment

Wilson's case was not helped by his inefficacy as a self-represented litigant. He was unable to respond to artful arguments by Yahoo's counsel, nor to articulate the details of, and reasoning behind, other adword cases in France where the courts had ruled against Google's open sale of registered trade marks as keywords.

Even if Wilson had been competently represented, however, it is unlikely that he would have scored a different result. On the facts, the only way in which Yahoo could arguably be said to be using MR SPICY was in running a search for that term and producing the search results in response to an Internet user entering that query. It is hard to see how this could successfully be argued to be use of the mark in respect of any goods or services, let alone the foods and catering services for which Wilson's CTM was registered. If it were, then Yahoo would arguably be using-and potentially infringing-any registered trade mark typed into its search enquiry page by Internet users. The possibility that Internet users were themselves using, and infringing, registered marks by simply typing them into search engines is equally a nonsense.

Sensing the inevitability of such logic, within weeks of the High Court's judgment Yahoo's rival Google implemented a new keyword advertising policy in the U.K. and Ireland. Previously Google had blocked the sale of keywords comprising third-party trade marks in these countries. Since the policy change in May, however, Google now freely sells keywords consisting of registered trade marks to any successful bidder and will not interfere with their use of it.

The new policy is controversial, to say the least, and its defensibility is highly arguable. The reasoning in MR SPICY is not directly relevant since the keyword sold was not MR SPICY, but rather the descriptor "spicy." Google's bold stroke has inflamed some industry quarters sufficiently that they are reported to be considering legal action against the sale of trade marks as keywords to third parties. No doubt if such actions are brought, they will test the limits of the MR SPICY reasoning in circumstances where a search engine provider like Google is more clearly "using" the trade mark in the sense of selling a keyword consisting of it, in respect of the provision of advertising services, while the keyword purchaser is arguably "using" it in the sense of relying on it to attract potential customers for its own goods and services. The case for damage and an injunction may be clearer where an identical mark is used.

Time will tell whether such actions are brought and how they fare. For now, brand owners not wishing to litigate can always secure their own keyword protection by bidding for their trade marks as keywords. The principle of paying twice to protect a brand, however, is likely to be inimical to brand owners used to perceiving national and regional trade mark rights as having effect online as well as in the real world. Brand owners may also resent having to enrich Google and its ilk in order to protect their brands from what they perceive as malicious opportunism on the part of the search engine providers. Keyword bidding could raise advertising costs considerably for leading brand owners, and when those brand owners have had enough, a potent legal challenge to Google's new policy may emerge.

Meanwhile, despite Yahoo's victory, the issues raised by the sale of trade marks as keywords are far from settled. In Google France v Vuitton, Google v CNHRR and Google v Viaticum Luteciel, the French Supreme Court recently referred to the ECJ a number of questions highly relevant to whether and how keyword advertising can infringe registered trade mark rights. The references were only made in May and it could be some time before their outcome is known. However, clarity in this area is sorely needed, and MR SPICY is likely to remain a hot topic until it comes.