Europe's Top Court hands Google a Trademark Victory

European HIgh Court hands Google AdWords VictoryGoogle (GOOG) bagged a legal victory before Europe's highest court Tuesday in a trademark infringement case centered on the search giant's AdWords service.

LVMH, the French conglomerate which owns such notable luxury brands as Louis Vuitton and Dom Pérignon, took issue with Google's practice of allowing advertisers to purchase keywords from Google's AdWords that allegedly represented LVMH's registered trademarks. AdWords delivers specific advertisements depending on the keywords that Internet users enter into a Google search bar. For LVMH, the dispute concerned potential customers receiving ads from companies selling knock-offs of its branded goods when searching for its trademarks.

In its ruling, the European Court of Justice weighed the applicability of trademark law as applied to an online setting and what liability a paid referencing service such as Google's AdWords bears when it comes to advertisers purchasing keywords that contain trademark names.

The court found a paid referencing service provider cannot be held liable for data it stores at the request of an advertiser, providing it hasn't obtained any knowledge that the data, or advertiser's activities, were unlawful.

Google: It's "Not About Us Arguing for a Right to Advertise Counterfeit Goods."

"Today, the Court confirmed that Google has not infringed trade mark law by allowing advertisers to bid for keywords corresponding to their competitors' trade marks. It also confirmed that European law that protects internet hosting services applies to Google's AdWords advertising system. This is important because it is a fundamental principle behind the free flow of information over the internet," Google said in a statement on its site.

The Internet giant noted in a not-so-subtle dig: "Contrary to what some are intimating, this case is not about us arguing for a right to advertise counterfeit goods. We have strict policies that forbid the advertising of counterfeit goods; it's a bad user experience. We work collaboratively with brand owners to better identify and deal with counterfeiters."

Europe's high court, however, will still hold advertisers' feet to the fire. Advertisers will be prohibited from using keywords that are identical to trademarks if Internet users can't determine whether the goods or services referenced in their ads are from the business that holds the 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," Pierre Gode, LVMH senior executive vice president, said in a statement. "We are committed to working with all parties, including Google, to eradicate illicit online practices and to promote a framework that fosters the continued growth of the digital economy."
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