Google wins EU ruling in fake luxury goods case

[March 23, 2010]  BRUSSELS (AP) -- Google Inc. won a key EU court ruling Tuesday that says it did not violate luxury goods trademarks by allowing counterfeiters to buy brand names as advertising links -- but could face legal action if it doesn't pull problem ads swiftly.

The world's most used search engine won some legal protection against future cases after the EU's highest legal authority said it could not be held liable for advertisers' requests to place ads -- as long as it removes them when it is told the ad misuses a trademark.

The company is not completely in the clear, however. The European Court of Justice said the French companies who took the case -- headed by LVMH Moet Hennessy Louis Vuitton -- could still claim for compensation in a French court if it rules that trademark misuse damages their brands.

The EU court left future decisions on Google's liability to national courts, saying they should examine whether the search engine's role in accepting ads directly on its web site is "neutral ... pointing to a lack of knowlege of, or control over, the data which it stores."

"If it proves to be the case that it has not played an active role, that service provider cannot be held liable for the data which it has stored at the request of an advertiser unless ... it failed to act expeditiously to remove or to disable access to the data," a court statement said.

LVMH, the company behind Marc Jacobs bags, Dior perfumes and TAG Heuer watches -- said the ruling showed that Google could not fully escape its responsibility.

It said Google could face legal action if it knowingly sells keywords that infringe a trademark.

"This decision represents a critical step towards the clarification of the rules governing online advertising, of which LVMH is one of the foremost clients," said the company's vice president Pierre Gode. "We are committed to working with all parties, including Google, to eradicate illicit online practices."

Google's senior legal counsel Harjinder S. Obhi said some companies were trying to extend trademark law to cover keywords bought by online advertisers.

"This case is not about us arguing for a right to advertise counterfeit goods," he said. "Trademark rights are not absolute," he said. "Ultimately they want to be able to exercise greater control over the information available to users."

He said Google's policies forbid advertising of counterfeit goods, describing them as "a bad user experience," and that the company works with brand owners to identify and deal with counterfeiters.

Google makes most of its revenue by selling advertising triggered by keywords. When someone searches for "vintage cars" or visits a partner site that mentions those words, advertising for a vintage car dealer may appear to the side. In some cases, a keyword that is a company's brand name can trigger an ad for a competitor or even counterfeiters.

The French companies complain that Google broke the law by accepting ads using a brand name without permission. They fear that would allow counterfeiters to buy a keyword such as "Louis Vuitton" and use it to sell fake bags.

Google has been repeatedly sued for trademark violations in courts around the world, and it generally prevails or settles cases without changing its practices. In the United States and most other countries, Google typically accepts trademarks used as those keyword triggers, but it places limits on what can appear in ads themselves.

But in many European countries, including France, Italy and the Netherlands, Google does restrict the use of trademarks as keywords. It will typically strike ads, however, only after receiving a complaint from the trademark owner and conducting a review.

[Associated Press; By AOIFE WHITE]

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