Introduction to AdWords
AdWords is the advertisement system created by Google. It is Google’s primary source of revenue, and has contributed to Google’s meteoric growth over the last decade.
The system is based on advertisers’ nomination of keywords which, when searched, trigger the display of a short, text-only ad above or down the side of the search result pages. Importantly, the keywords which trigger the display of the advertisement are not shown to the end user; rather, Google uses them to match search terms with a relevant advertisement.
Nominated keywords are given a value by Google’s systems, depending on their popularity amongst other advertisers. Advertisers “bid” on the price they wish to pay for the keyword, to be charged upon either the display of an advertisement or a user’s click on the link in the text of the advertisement.
Trade marks as keywords
A contentious feature of the AdWords system is that advertisers are not prevented from bidding on keywords which are trade marks owned by third parties. Owners of word trade marks, especially those who have registered their marks in their principal markets may, not unreasonably, think that without their authorisation, Google should not be able to sell the use of their word marks to third parties or that other suppliers should not be able to purchase from Google the right to have their trade marks lead potential customers to a competitor’s advertisement. Trade mark owners, think again.
The implications of Google’s lack of controls over this use of valuable marks are still in the process of being considered by the courts. To date at least, court decisions have not been of much comfort to trade mark owners.
In view of Google’s worldwide influence (and the potential for Australian advertisers to reach a worldwide audience through AdWords), this alert briefly considers the position in international jurisdictions before addressing the position in Australia.
There is no clear position in the United States at this time. Although a number of cases involving Google have been brought to the US courts, many have been concluded through out-of-court settlements, establishing no precedent.
Generally, US trade mark owning plaintiffs rely on the Lanham (Trademark) Act (15 U.S.C.), which contains provisions relating to trade mark infringements. Two major focus areas have been whether the trade mark has been used “in commerce” by Google or a third party advertiser, and whether the AdWords use of the trade mark leads to confusion in the minds of consumers.
The US cases concerning trade marks used as keywords in search terms vary widely in their application and do not provide a consistent statement of principle on which advertisers or trade mark owners may rely. The key cases include Playboy Enterprises, Inc. v. Netscape Communications Corp., in which the 9th Circuit Court of Appeals held that infringement due to “initial interest confusion” arose, in the circumstances, from consumers’ belief that the banner ads displayed with the results of their search for the plaintiff’s registered marks were sponsored by or associated with the plaintiff. Conversely, in 1-800 CONTACTS, Inc. v. WhenU.Com and Vision Direct, Inc., the District Court of the Southern District of New York held that WhenU’s triggering of the display of an advertisement by search keywords including 1-800 CONTACTS’ trade mark did not amount to “use” required by the Lanham Act in order to constitute infringement. Most recently, in Network Automation, Inc. v. Advanced Systems Concepts, Inc., the 9th Circuit Court of Appeals held that the “likelihood of confusion” was insufficient to found a case in trade mark infringement, finding that use of a trade mark as a keyword only (and not in the content of an advertisement) did not constitute an infringement of the mark.
In the United Kingdom, the 2013 decision of Interflora Inc v Marks and Spencer PLC clarified that it is the responsibility of the advertiser to ensure its advertisement states that the advertiser is not associated with the owner of the trade mark which the relevant AdWord used to generate the ad.
In France, the current position is that search providers may make trade marks available to advertisers. However, care must be taken by advertisers to ensure consumers are not confused by the use of the trade marks in the resulting search results. Further, service providers may be held liable for failing to promptly remove or prohibit access to unlawful data.
The 2013 High Court decision in Google Inc v Australian Competition and Consumer Commission makes it clear that the advertiser is responsible for the content of advertisements displayed on a user’s search results page.
The ACCC contended that Google contravened s 52 of the Trade Practices Act 1974 (Cth) by publishing or displaying sponsored links and in so doing, that it engaged in misleading and deceptive conduct.
Google argued that it is merely a conduit of information and accordingly, that it had not made the representations which were contained in the advertisements.
The majority of the Court (French CJ, Crennan and Kiefel JJ) held that Google was not in contravention of the Act, as it “did not author the sponsored links; it merely published or displayed, without adoption or endorsement, misleading representations made by advertisers”.
In reaching this decision, the majority referred to Google’s AdWords Terms and Conditions, which caused the advertiser to be contractually responsible for the content of their advertisement. Relevantly, the use of any trade mark, service mark, trade name or logo in a way that is likely or intended to cause confusion about the owner or authorised user of such marks, names or logos was not permitted under the Terms and Conditions unless authorised by Google.
The ACCC argued that Google was not merely a conduit but had created the sponsored advertisements. In response, Google claimed it was acting on instructions from advertisers and could not have intimate knowledge of the business relationships of each of its advertisers. The majority sided with Google’s submissions, holding that, “the advertiser is the author of the sponsored link … each relevant aspect of a sponsored link [being] determined by the advertiser”.
Heydon J discussed the conduct of Google and noted that “there is no basis on which it could be concluded that ordinary and reasonable members of the relevant class would have regarded Google as adopting the advertisements”. His Honour went on to state that “Google created the picture which the user saw on the screen. It put in place the technology which enabled the advertisements to be displayed. But it did not create ‘the message’ sent by means of that technology.”
Heydon J further noted that “if a person repeats what someone else has said accurately, and does not adopt it, there is nothing misleading in that person’s conduct”.
The decision in Google v ACCC makes it clear that the advertiser is responsible for the advertisements displayed as the result of a user’s search request. The search engine provider is merely a “conduit” for providing the resultant advertisements.
Given the enormous advertising revenues derived by search engine companies, including from AdWords and other key word technologies, trade mark owners should not expect those companies to voluntarily change their practises. The current state of case law is to the effect that search engine companies offering to the highest bidder keywords that may be trade marks owned by third parties does not constitute trade mark infringement.
The onus is on advertisers to ensure that their advertisements are not misleading or deceptive and that they do not amount to use of a trade mark which would cause confusion to the typical search engine user.
Options open to trade mark owners include:
- registering their trade marks in at least their key target markets. Registration will provide a much stronger basis for infringement action against third party advertisers;
- trying to secure use of keywords that are the same as or deceptively similar to their trade marks, where those keywords are available and affordable;
- monitoring results of searches for phrases containing the trade mark and where an advertiser is infringing a trade mark, engaging with that advertiser to have the infringing use stopped; and
- where an advertiser is engaging in trade mark infringement, requesting the search engine company to take action under its terms and conditions to terminate the advertiser’s use of the keyword. It may be in that case that the trade mark owner could obtain use of the keyword for itself.
Google’s total 2012 revenue was $46bn, of which $43.7bn was derived from advertising. See http://investor.google.com/financial/tables.html, accessed July 2013.
See Government Employees Insurance Co. v. Google, Inc., 330 F.Supp.2d 700 (E.D. Va. Aug. 8, 2005); Google, Inc. v. American Blind and Wallpaper Factory, Inc., 2005 U.S. Dist. LEXIS 6228 (N.D. Cal. Apr. 18, 2007); Rescuecom Corp. v. Google Inc. 562 F.3d 123 (2nd Cir., 2009); Rosetta Stone Ltd. v. Google, Inc., 676 F.3d 144 (4th Cir., 2012).
354 F.3d 1020 (9th Cir. 2001).
309 F.Supp.2d 467 (S.D.N.Y., 2003-12-22), reversed in part and remanded, F.3d—2d. Cir., 27 June 2005.
638 F.3d 1137 (9th Cir. 2011).
 EWHC 1291 (Ch).
Google France SARL v. Louis Vuitton Malletier SA, 2010 ECJ EUR-Lex LEXIS 119 (23 March 2010).
 HCA 1