Update 66: October 19, 2009

1. ECJ: Advocate General says use of trademarks as keywords is ok!

Google is before the European Court of Justice (ECJ) in connection with a French case in which a number of companies, including Louis Vuitton complained that Google had infringed their trademark rights by allowing advertisers to use company trademarks as keywords. The winner in the latest round: Google. An adviser to Europe’s highest court said that Google’s controversial practice was not illegal under European law. Google mays allow advertisers to select the keywords and also display ads for searches involving the keywords.

The opinion contains some interesting statements on the questions whether there is a likelihood of confusion or not:

"86.      By comparing ads with natural results, the parties assume that natural results are a proxy for ‘true’ results – that is to say, that they originate from the trade mark proprietors themselves. But they do not. Like the ads displayed, natural results are just information that Google, on the basis of certain criteria, displays in response to the keywords. Many of the sites displayed do not in fact correspond to the sites of the trade mark proprietors.

87.      The parties are influenced by the belief to which I referred at the outset – that if an internet user seeks something in Google’s search engine, the internet user will find it. However, that is not a blind belief; internet users are aware that they will have to sift through the natural results of their searches, which often reach large numbers. They may expect that some of those natural results will correspond to the site of the trade mark proprietor (or an economically linked undertaking), but they will certainly not believe this of all natural results. Moreover, sometimes they may not even be looking for the site of the trade mark proprietor, but for other sites related to the goods or services sold under the trade mark: for example, they might not be interested in purchasing the trade mark proprietor’s goods but only in having access to sites reviewing those goods.

88.      Google’s search engine provides help in sifting through natural results by ranking them according to their relevance to the keywords used. There may be an expectation on the part of internet users, based on their assessment of the quality of Google’s search engine, that the more relevant results will include the site of the trade mark proprietor or whatever site they are looking for. However, this is nothing more than an expectation. Confirmation only comes when the site’s link appears, its description is read, and the link is clicked on. Often the expectation will be disappointed, and internet users will go back and try out the next relevant result."

Trade marks which have a reputation enjoy special protection as compared with ordinary trade marks: their use can be prevented not only in relation to identical or similar goods or services, but also in relation to any good or service that takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark. This special protection for trade marks which have a reputation does not depend on there being a risk of confusion on the part of consumers. But still, no trademark violation by Google, because:

In my opinion, it's too early for Google to celebrate. The Advocate General's opinion definitely is a huge victory, but the European Court of Justice still has to follow it. It often does, but e.g. last year in another internet law case, where it had to decide whether a service provider operating exclusively on the Internet is under an obligation to communicate its telephone number to clients prior to the conclusion of a contract, it did not (http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:62007J0298:EN:HTML). The discussion about the use of trademarks as keywords has been going on for nearly a decade now, it has produced more than 100 judgements world-wide and uncountable articles on the subject and still, the Advocate General came up with some new legal considerations. I would expect some further surprises in the European Court of Justice judgement, although I find it likely that Google will win again.

So let's assume Google is not infringing trademark rights by allowing advertisers to buy keywords: In June 2009, Google has liberalized its trademark policy in 190 countries to conform it to its policy in the US, Canada, Ireland and the UK. Google does not block the sales of trademarked keywords in these countries. It is very likely that following a victory in the Adword lawsuit Google will liberalize its trademark policy in the EU member states, too. Maybe with one - at first sight surprising - exemption: France. No court there sided with Google in the AdWords lawsuits, although some found that Google did not commit a trademark violation. Instead they based Google's liability on the common civil principle of fault (Section 1382 of the Civil Code, which provides that "Any act whatever of man, which causes damage to another, obliges the one by whose fault it occurred, to compensate it.") So French courts might still find a way around a Google friendly decision by the European Court of Justice and there might be one more battle ahead for Google in France.

There is one more important point of the Advocate General's opinion, that is hidden in Footnote 72: We have an ongoing discussion in many EU member states about the liability of search engines for search results that lead to infringing content. The Advocate General says, that in his opinion a search engine may fall under the liability exemption provided in respect of "caching" in Article 13 of the E-Commerce-Directive 2000/31. That would pretty much exempt search engines from liability. If the European Court of Justice would side with this opinion, this would be another  important victory for search engines. But this point has no importance for the outcome of the AdWords lawsuits, so it remains to be seen if the ECJ makes some obiter dictum statements.
 

2. Author's Guild v. Google - The latest developments

In short:

New in legal resources

• Peguera, Miquel, The DMCA Safe Harbors and Their European Counterparts: A Comparative Analysis of Some Common Problems (September 4, 2009). Columbia Journal of Law & the Arts, Forthcoming. Available at SSRN: http://ssrn.com/abstract=1468433

• Hausman, Jerry A. and Sidak, J. Gregory,Google and the Proper Antitrust Scrutiny of Orphan Books (August 2009). Journal of Competition Law & Economics, Vol. 5, No. 3, p. 411, 2009. Available at SSRN: http://ssrn.com/abstract=1462282

• Garon, Jon M.,Searching Inside Google: Cases, Controversies and the Future of the World’s Most Provocative Company (August 25, 2009). Available at SSRN: http://ssrn.com/abstract=1461463

Update 65: September 1, 2009

1. Search engine liability in the UK and elsewhere

According to a high court judge in London, Google is not the publisher of defamatory comments that appear in its search results.

The case has been brought by London based Metropolitan International Schools (MIS), which runs distance learning courses. The school argued that postings in the forum of the website Digital Trends were defamatory and that Google should be held liable because links to these postings appeared in its search results and the snippets also consisted out of these defamatory comments. MIS also asked the judge for an injunction, preventing the display of search results that suggest it is involved in scam, without the need to provide Google with the URL of the infringing content in the future.

The court did not agree: Google is merely a conduit to information, not a publisher in its own right: "When a snippet is thrown up on the user's screen in response to his search, it points him in the direction of an entry somewhere on the Web that corresponds, to a greater or lesser extent, to the search terms he has typed in. It is for him to access or not, as he chooses. It is fundamentally important to have in mind that the Third Defendant has no role to play in formulating the search terms. Accordingly, it could not prevent the snippet appearing in response to the user's request unless it has taken some positive step in advance. There being no input from the Third Defendant, therefore, on the scenario I have so far posited, it cannot be characterised as a publisher at common law. It has not authorised or caused the snippet to appear on the user's screen in any meaningful sense. It has merely, by the provision of its search service, played the role of a facilitator."

This is the first judicial analysis of search engine liability for defamation under UK law. Although the decision is brilliant for search engines and as a Google spokesman put it "reinforces the principle that search engines are not responsible for content that is published on third-party web sites", an important question remains unanswered:

In the MIS case, Google removed the links to the defamatory comments after notification. The judge hinted that there still is a responsibility of search engines to take down content after receiving a complaint about libellous material. He did not say how fast search engines must act and how effective the take down system must work: "There are some steps that the Third Defendant can take and they have been explored in evidence in the context of what has been described as its "take down" policy. There is a degree of international recognition that the operators of search engines should put in place such a system (which could obviously either be on a voluntary basis or put upon a statutory footing) to take account of legitimate complaints about legally objectionable material. It is by no means easy to arrive at an overall conclusion that is satisfactory from all points of view. In particular, the material may be objectionable under the domestic law of one jurisdiction while being regarded as legitimate in others. In this case, the evidence shows that Google has taken steps to ensure that certain identified URLs are blocked, in the sense that when web-crawling takes place, the content of such URLs will not be displayed in response to Google searches carried out on Google.co.uk. This has now happened in relation to the "scam" material on many occasions. But I am told that the Third Defendant needs to have specific URLs identified and is not in a position to put in place a more effective block on the specific words complained of without, at the same time, blocking a huge amount of other material which might contain some of the individual words comprising the offending snippet. It may well be that the Third Defendant's "notice and take down" procedure has not operated as rapidly as Mr Browne and his client would wish, but it does not follow as a matter of law that between notification and "take down" the Third Defendant becomes or remains liable as a publisher of the offending material. While efforts are being made to achieve a "take down" in relation a particular URL, it is hardly possible to fix the Third Defendant with liability on the basis of authorisation, approval or acquiescence."

What also makes the decision a must read, is the mentioning of several other lawsuits about search engine liability in other countries, most of them even I had not heard about before:

"There was also a Dutch decision in the District Court of Amsterdam on 26 April 2007: Jensen v Google Netherlands. An attempt was made to obtain an injunction to prevent Google from displaying the search results displayed on a search of the claimant's name (since there were a number of sex websites). The court observed that:

"Google has made it sufficiently clear that it has no (preventive) involvement with or influence over the contents of the links to the websites and with or over the contents of the websites which are automatically obtained as search results after entering of, in the case in hand, the search term Jensen + Urmia + Brigitte."

Attention was drawn to the "technical, automatic and passive nature" of the technical processes involved (i.e. of crawling, index-linking and ranking). Google was not expected to accept responsibility for the outcome of a search instruction or the content of the search results. It is to be noted, however, that the court relied in part upon the lack of knowledge on the part of Google that the information was wrongful."

5. In short

• A french company is suing Google over its Google Maps offering, because Google lets companies use its web mapping services for free: "Their strategy is to capture the market and squeeze out the competition by creating a monopoly for itself," See: Google Maps accused of unfair competition in France

• The Goddard v. Google case (see Update 61) finally got dismissed without leaves to amend, Goddard v. Google, Inc., 5:08-cv-02738-JF (N.D. Cal. July 30, 2009). For details see Goldman, Eric, Google Not Liable for False Ads--Goddard v. Google, Technology & Marketing Law Blog

• The National Civil Court No. 75 in Buenos Aires (Juzgado Nacional en lo Civil No. 75) July 29 held Google and Yahoo! liable for content posted by third parties, rejecting the search engines' contention that they were mere intermediaries and therefore not responsible for the actions of pornographic and female-escort websites that posted pictures of a model and actress without her consent (Da Cunha v. Yahoo de Argentina, Juzg. N., No. 99620/2006, 7/29/09). See Google, Yahoo Fined In Argentina Because Searches On Band Name Leads To Porn Sites, Techdirt

• The Court of Justice of the European Communities has announced that the date for the publication of the Advocate General's Opinion in Cases C-238 to 238/08 Google France and Google Inc. v Louis Vuitton Malletier is to be 22 September.
  Two Google AdWords lawsuits in the U.S. were terminated by request of the plaintiff (voluntary dismissal): Jurin v. Google, Inc., 2:09-cv-03934-GHK-E (C.D. Cal. voluntarily dismissed July 23, 2009) and Ascentive v. Google, Inc., 2:09-cv-02871 (E.D. Pa. voluntary dismissal July 30, 2009)).

• For the latest news on the putative nationwide trademark owner class action lawsuit against Google over AdWords, see: Goldman, Google Goes on Offensive in AdWords Trademark Lawsuit--Google v. John Beck Amazing Profits; Google, Inc v. John Beck Amazing Profits, LLC, C09 03459 (N.D. Cal. complaint filed July 27, 2009). And there are more new lawsuits against Google, brought by Flowbee (see Goldman, Flowbee Latest Trademark Owner to Sue Google--Flowbee v. Google, Flowbee International, Inc. v. Google, Inc., 2:09-cv-00199 (S.D Tex. complaint filed Aug. 13, 2009) and Rosetta Stone (Rosetta Stone Ltd. v. Google, Inc., 1:09-cv-00736-GBL-JFA (E.D. Va. complaint filed July 10, 2009). For more information see: Goldman, Eric, Ninth Lawsuit Against Google Over AdWords--Rosetta Stone v. Google, Technology & Marketing Law Blog)

New in legal resources

• Schubert, Maximilian / Ott, Stephan, AdWords - Schutz für die Werbefunktion einer Marke, MarkenR 2009, 338-347

• Engels, Gabriele, Keyword Advertising - Zwischen beschreibender, unsichtbarer und missbräuchlicher Verwendung, MarkenR 2009, 289-297

• Well-Szönyi, Catherine, AdWords: Die Kontroverse um die Zulässigkeit der Verwendung fremder Marken als Schlüsselwort in der französischen Rechtsprechung, GRUR Int. 2009, 557-565

• Ohly, Ansgar, Keyword-Advertising auf dem Weg von Karlsruhe nach Luxemburg, GRUR 2009, 709-717

• Knaak, Keyword Advertising, GRUR Int. 2009, 551- 557

• Hoeren, Thomas, Anmerkung zu BGH – Bananabay, MMR 2009, 328-329

• Hoeren, Thomas, Anmerkung zu BGH – Beta-Layout, MMR 2009, 331

• Hoeren, Thomas, Anmerkung zu BGH – PCB, MMR 2009, 333-334

• Voigt, Paul, Datenschutz bei Google, MMR 2009, 377-382

• Elhauge, Einer R.,Why the Google Books Settlement is Procompetitive(August 26, 2009). Harvard, John M. Olin Center for Law, Economics, and Business Discussion Paper No. 646. Available at SSRN: http://ssrn.com/abstract=1459028

• Longdin, L. (2007). Hyperlinking and copyright infringement. New Zealand Business Law Quarterly, 13, 33-46

   

Update 64: July 13, 2009

1. The High Court in London refers questions on AdWords to the ECJ

Interflora launched proceedings against M&S in December 2008 to stop M&S bidding on its protected 'INTERFLORA' trade mark as an AdWord on the Google search engine. The High Court in London  has decided to refer certain questions to the European Court of Justice for determination. In his judgment, Mr Justice Arnold comments that Google's decision to operate a different policy in the UK and Ireland to that in the rest of Europe is "fairly remarkable given that the relevant law is, or should be, essentially the same throughout Europe.”

For more information see Outlaw, ECJ rulings on Google keywords might not resolve controversy, warns High Court

The Interflora/M&S ruling

A number of national courts around Europe have already requested preliminary rulings from the European Court of Justice on a number of the issues arising out of Google Adwords:

• Case C-236/08 (Google France v Louis Vuitton Malletier), Reference from the Cour de Cassation:
  "(1) Must Article 5(1)(a) and (b) of First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks and Article 9(1)(a) and (b) of Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trade mark be interpreted as meaning that a provider of a paid referencing service who makes available to advertisers keywords reproducing or imitating registered trade marks and arranges by the referencing agreement to create and favourably display, on the basis of those keywords, advertising links to sites offering infringing goods is using those trade marks in a manner which their proprietor is entitled to prevent?
  (2) In the event that the trade marks have a reputation, may the proprietor oppose such use under Article 5(2) of the directive and Article 9(1)(c) of the regulation?
  (3) In the event that such use does not constitute a use which may be prevented by the trade mark proprietor under the directive or the regulation, may the provider of the paid referencing service be regarded as providing an information society service consisting of the storage of information provided by the recipient of the service, within the meaning of Article 14 of Directive 2000/31 of 8 June 2000, so that that provider cannot incur liability until it has been notified by the trade mark proprietor of the unlawful use of the sign by the advertiser?"
   

• Case C-237/08 Google France v Viaticum, Luteciel, Reference from the Cour de Cassation:
  "(1) Must Article 5(1)(a) and (b) of First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks be interpreted as meaning that a provider of a paid referencing service who makes available to advertisers keywords reproducing or imitating registered trade marks and arranges by the referencing agreement to create and favourably display, on the basis of those keywords, advertising links to sites offering goods identical or similar to those covered by the trade mark registration is using those trade marks in a manner which their proprietor is entitled to prevent?
  (2) In the event that such use does not constitute a use which may be prevented by the trade mark proprietor under the directive or [Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trade mark], may the provider of the paid referencing service be regarded as providing an information society service consisting of the storage of information provided by the recipient of the service, within the meaning of Article 14 of Directive 2000/31 of 8 June 2000, so that that provider cannot incur liability before it has been informed by the trade mark proprietor of the unlawful use of the sign by the advertiser?"
   

• Case C-238/08 Google France v CNRRH, Reference from the Cour de Cassation:
  "(1) Does the reservation by an economic operator, by means of an agreement on paid Internet referencing, of a keyword triggering, in the case of a request using that word, the display of a link proposing connection to a site operated by that operator in order to offer for sale goods or services, and which reproduces or imitates a trade mark registered by a third party in order to designate identical or similar goods, without the authorisation of the proprietor of that trade mark, constitute in itself an infringement of the exclusive right guaranteed to the latter by Article 5 of First Council Directive 89/104/EEC of 21 December 1988?
  (2) Must Article 5(1)(a) and (b) of First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks be interpreted as meaning that a provider of a paid referencing service who makes available to advertisers keywords reproducing or imitating registered trade marks and arranges by the referencing agreement to create and favourably display, on the basis of those keywords, advertising links to sites offering goods identical or similar to those covered by the trade mark registration is using those trade marks in a manner which their proprietor is entitled to prevent?
  (3) In the event that such use does not constitute a use which may be prevented by the trade mark proprietor under the directive or [Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trade mark], may the provider of the paid referencing service be regarded as providing an information society service consisting of the storage of information provided by the recipient of the service, within the meaning of Article 14 of Directive 2000/31 of 8 June 2000, so that that provider cannot incur liability before it has been informed by the trade mark proprietor of the unlawful use of the sign by the advertiser?"
   

• Case C-278/08 Die BergSpechte Outdoor Reisen und Alpinschule Edi Koblmüller GmbH v Günter Guni and trekking.at Reisen GmbH, Reference from the Austrian OGH:
  "(1) Must Article 5(1) of the First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks ('Directive 89/104') be interpreted as meaning that a trade mark is used in a manner reserved for the proprietor of the trade mark if the trade mark or a sign similar to it (such as the word component of a word and figurative trade mark) is reserved as a keyword with a search engine operator and advertising for identical or similar goods or services therefore appears on the screen when the trade mark or the sign similar to it is entered as a search term?
  (2) If the answer to Question 1 is yes:    
  (a) Is the trade mark proprietor's exclusive right infringed by the utilisation of a search term identical with the trade mark for an advertisement for identical goods or services, regardless of whether the accessed advertisement appears in the list of hits or in a separate advertising block and whether it is marked as a 'sponsored link'?  
  (b) In respect of the utilisation of a sign identical with the trade mark for similar goods or services, or the utilisation of a sign similar to the trade mark for identical or similar goods or services, is the fact that the advertisement is marked as a 'sponsored link' and/or appears not in the list of hits but in a separate advertising block sufficient to exclude any likelihood of confusion?
   

• Case C-558/08 Portakabin Ltd v Primakabin BV, Reference from the Hoge Raad der Nederlanden:
  "(1)(a) Where a trader in certain goods or services ('the advertiser') avails himself of the possibility of submitting to the provider of an internet search engine an adword [when advertising via the internet, it is possible to pay to use 'adwords' on search engines such as Google. When such an adword is keyed into the search engine, a reference to the advertiser's website appears either in the list of webpages found, or as an advertisement on the right-hand side of the page showing the results of the search, under the heading 'Sponsored links'] which is identical to a trade mark registered by another person ('the proprietor') in respect of similar goods or services, and the adword submitted - without this being visible to the search engine user - results in the internet user who enters that word finding a reference to the advertiser's website in the search engine provider's list of search results, is the advertiser 'using' the registered trade mark within the meaning of Article 5(1)(a) of Directive 89/104/EEC? 
  (1)(b) Does it make a difference in that regard whether the reference is displayed in the ordinary list of webpages found; or in an advertising section identified as such? 
  (1)(c) Does it make a difference in that regard whether, even within the reference notification on the search engine provider's webpage, the advertiser is actually offering goods or services that are identical to the goods or services covered by the registered trade mark; or whether the advertiser is in fact offering goods or services which are identical to the goods or services covered by the registered trade mark on a webpage of his own, which internet users (as referred to in Question 1(a)) can access via a hyperlink in the reference on the search engine provider's webpage? 
  (2) If and in so far as the answer to Question 1 is in the affirmative, can Article 6 of Directive 89/104, in particular Article 6(1)(b) and (c), result in the proprietor being precluded from prohibiting the use described in Question 1 and, if so, under what circumstances? 
  (3) In so far as the answer to Question 1 is in the affirmative, is Article 7 of Directive 89/104 applicable where an offer by the advertiser, as indicated in Question 1, relates to goods which have been marketed in the European Community under the proprietor's trade mark referred to in Question 1 or with his permission?
  (4) Do the answers to the foregoing questions apply also in the case of adwords, as referred to in Question 1, submitted by the advertiser, in which the trade mark is deliberately reproduced with minor spelling mistakes, making searches by the internet-using public more effective, assuming that the trade mark is reproduced correctly on the advertiser's website?  
  (5) If and in so far as the answers to the foregoing questions mean that the trade mark is not being used within the meaning of Article 5(1) of Directive 89/104, are the Member States entitled, in relation to the use of adwords such as those at issue in this case, simply to grant protection - under Article 5(5) of that directive, in accordance with provisions in force in those States relating to the protection against the use of a sign other than for the purposes of distinguishing goods or services - against use of that sign which, in the opinion of the courts of those Member States, without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark, or do Community-law parameters associated with the answers to the foregoing questions apply to national courts?"
   

• Case C-91/09 Eis.de GmbH v BBY Vertreibsgesellschaft mbH, Reference from the BGH:
  "Is there use for the purposes of Article 5(1)(a) of Directive 89/104/EEC where a third party provides as a keyword to a search engine operator a sign which is identical with a trade mark, without the consent of the proprietor of that trade mark, so that, on inputting the sign identical with the trade mark as a search term into the search engine, an electronic promotional link to the third party's website advertising identical goods or services appears in an advertising block set apart from the list of search results, that link is marked as a sponsored link and the advertisement itself does not comprise the sign nor contain any reference to the trade mark proprietor or to the products it is offering for sale?"
   

• The High Court in London has not issued its questions yet.

2. Microsoft files click-fraud complaint

Microsoft has filed a civil complaint in United States District Court in Seattle over click fraud and is seeking at least $750,000 in damages. The complaint alleges, that by engaging in a widespread scheme that generated invalid clicks on links to online ads that were displayed in response to search requests for the game World of Warcraft and auto insurances on Microsoft’s network, defendants disrupted the advertising campaigns of their competitors, obtained increased user traffic for their own ads at a much lower cost than they could have otherwise, and caused substantial damages to Microsoft, which has lost revenues and expended substantial money and resources to remedy the effects of defendant’s conduct. According to Microsoft, the company credited nearly 1,5 million US-dollar to auto insurance and WoW advertisers in direct response to the click fraud.

Section 230 of Title 47 of the United States Code exempts service providers like Google from liability for content posted by third parties. The lawsuit will almost certainly be dismissed on that basis.

4. Netherlands: Webmaster can be held liable for Google snippet

On his web site, Joris van Hoboken mentiones an interesting preliminary judgement of the court in Amsterdam. A snippet in the Google result list suggested that the plaintiff was bankrupt, resulting in telephone calls from several users and a regional newspaper. Usually one would expect a lawsuit against Google, but in this case, the plaintiff went after the web master, who had written a text that was completly legal and tried to hold him responsible for the misleading combination of the sentences by Google. The court agreed, because:

- plaintiff had suffered damages by the snippet

- plaintiff had informed the defendant about the problem and asked him to fix it

- defendant had optimized his web site for search engines

- defendant could easily have changed his web site so that the snippet would also have changed.

What about freedom of expession? If, at all, one can be held resonsible for the snippet, it is Google. The court can't punish a web master, only because he optimizes his web site and has some knowledge about the functioning of search engines. He has no direct influence on the wording of the snippet. Even if he had changed his web site, there is no guarantee that the snippet would have changed too. If he had written "unable to pay his bills" instead of "bankrupt", where would be the advantage in a snippet suggesting the plaintiff was unable to pay his bills. If the defendat had to name the plaintiff in his text (for what reason whatsoether), how can a judge say that this has to be changed because of the conduct of an unrelated company (Google)? The defendant has appealed the decision.

5. USA: Search Engines ordered to stop misleading mortgage relief ads

The Making Home Affordable Program aims at helping eligible home-owners to refinance or modify their mortgages, so that they can afford to stay in their homes. The official website (http://makinghomeaffordable.gov) provides information about the program. Starting in April 2009 misleading ads appeared on search engines. When consumers searched for "making home affordable", ads were shown that displayed the web address http://makinghomeaffordable.gov. But when they clicked on the ad, they were not directed to the government web site, but instead to another web site offering loan modification services for a fee. The FTC filed a lawsuit against unknown parties, because the defendants are not identified in the ads. At their request, the District Court for the District of Columbia issued a temporary restraining order that requires four search engine providers (among them Google and Yahoo) to identify those who placed the ads and to refuse ads containing http://makinghomeaffordable.gov or any other domain name containing .gov.

The documents related to the case can be found at: http://ftc.gov/os/caselist/0923147/index.shtm.

6. The Thumbnail Dilemma continues in Europe

In the article Green light for search engines to use thumbnail images? I have provided an overview over the legal situation concerning image search engines. I came to the conclusion that it is well established in the USA that the creation of thumbnails, small low resolution versions of the original, is fair use in the meaning of Section 107 of the U.S. Copyright Act. In Germany however, differing court opinions could not yet provide operators of picture search engines with the necessary legal certainty.

With this posting I want to summarize the further developments since the writing of the article in 2007.

1. USA

There have been no reports about new cases dealing with the thumbnail issue. But it's worth mentioning, that starting from the beginning of 2008, Google has been experimenting with the incorporation of graphical ads with image search results (See e.g. Google adding display ads to image search, http://news.cnet.com/8301-10784_3-9947326-7.html).

In determining what constitutes fair use a court has to consider inter alia the purpose of the use including whether it is commercial or not. So far this factor usually has not been interpreted against search engines, because they don't use the images in an aestethic manner. Instead they help index and improve access to images on the web thus providing a new and transformative use. The commercial nature of search engines so far did not warrant another result, but the legal position of Google might be weaker in possible future lawsuits with the ads beside the picture search results. But it's still unlikely that this will be enough to swift the balance of the fair use test in favor of the copyright owners.

2. Germany

But then the court came up with a solution to dismiss this specific lawsuit. The plaintiff was engaged in search engine optimization. Under these circumstances, the court found that the plaintiff had attracted crawlers and was estopped from raising claims against search engines!

To sum up, it would have been better to consider the search engine optimization under the aspect of "implied consent". The use of metatags shows that the copyright owner wanted her works to be found. So it would be consequent to assume, she impliedly consented to the necessary copyright uses by search engines.

So to conclude, statutory limitations on copyright do not apply in the thumbnail context. Picture Search engines rely on the weak "implied consent" defense. The only Upper Court decision so far has rejected this argument and the regional court of Hamburg decision pointed to the even greater problem that occurs when the copyright owner did not grant any consent to the use of his picture on the web.

The German legislator alone can not solve the problem, because Art. 5 of the InfoSoc Directive prevents the instruction of further limitations aimed at allowing free digital usage (Directive 2001/29/EC of the European Parliament and the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society, EC OJ (2001) L-167 p. 10). It is up to the EU legislator to find a reasonable solution to the thumbnail dilemma for all EU member states.

7. In short

• No update without new AdWords lawsuits in the USA:
  Stratton Faxon v. Google, Inc. (New Haven Superior Ct. complaint filed May 27, 2009). For more information see: Goldman, Eric, Another Lawsuit Over Google AdWords--Stratton Faxon v. Google, Technology & Marketing Law Blog
  Soaring Helmet Corp. v. Bill Me Inc., 2:2009cv00789 (W.D. Wash. complaint filed June 9, 2009). The Justia page. For more information see: Goldman, Eric, Google Sued Again for Trademark Infringement--Soaring Helmet v. Leatherup.com, Technology & Marketing Law Blog
  Jurin v. Google, Inc., CV 09-03934 (C.D. Cal. complaint filed June 2, 2009). For more information see: Goldman, Eric, Seventh Lawsuit Over Google AdWords--Jurin v. Google, Technology & Marketing Law Blog
  Ascentive, LLC v. Google, Inc., 2:09-cv-02871-JS (E.D. Pa. complaint filed June 25, 2009). For more information see: Goldman, Eric, Sixth Lawsuit Filed Over Google AdWords, Plus an Assault on Google's Organic Search Results--Ascentive v. Google, Technology & Marketing Law Blog. Ascentive also claims that Google broke the law when, after a dispute, it refused to list its web site in the natural search listings any longer and did no longer allow Ascentive to participate in the AdWords program. Ascentive tried to persuade Google to revoke the decision, but did not succeed, not even in gaining the information why Google did this. Two emails from Google only stated: "Unfortunately, we will not be reversing our decision regarding the suspension of your account. Please respect our decision and as noted in our Terms and Conditions, Google reserves the right to terminate advertisements for any reason." and "As mentioned in our previous email, your Google AdWords account has been suspended due to multiple policy disapprovals. We are unable to revoke your account suspension, and we will not accept advertisements from you in the future. Please note that our support team is unable to help you with this issue, and we ask that you do not contact them about this matter."

• An advert that appeared in search engine results to promote an IQ test has been banned by the UK's advertising watchdog, the Advertising Standards Authority (ASA), for failing to disclose in the text of the ad that participants would be charged to receive their results. See Outlaw, Search engine ad for IQ test banned over hidden cost / The adjudication
   

8. New in Legal Resources

• Pordesch, Ulrich / Seitz, Katja / Steffan, Jan / Steidle, Roland, Chrome mit Kratzern, DuD 2009, 47-52

• Backu, Frieder, Anmerkung zu BGH - AdWords, CR 2009, 326-328

• Bohne, Michael / Krüger, Alexandra, Das "Settlement Agreement" zwischen Google und der Author's Guild als Leitbild einer europäischen Regelung, WRP 2009, 599-607

• Ott, Stephan, Bildersuchmaschinen und Urheberrecht, ZUM 2009, 345-354

Update 63: May 29, 2009

1. USA: Suit over AdWords budget limits ends with settlement

A class action law suit against Google will only make lawyers rich and leave advertisers with advertising credit. Want proof? Google has settled a lawsuit filed by advertisers (CLRB Hanson Industries of  Minnesota and Howard Stern of New Jersey) who claimed they were charged for more ads through the AdWords system than they had agreed to pay. The lawsuit, filed in 2005 in Santa Clara Superior Court in California, sought damages, restitution, and injunctive relief to remedy Google’s practice of (1) charging its AdWords advertisers up to 120% of their per day daily budget on any given day (Plaintiffs’ “120% claims”); and (2) charging AdWords customers who paused their campaigns more than their per day Daily Budget times the number of days their campaigns were not paused during the billing period.

Under the terms of the proposed Settlement Agreement, Google has agreed to pay $20,000,000 in a combination of cash and AdWords Credits. Both plaintiffs will receive $20,000; Google agreed to pay their lawyers more than $5 million. Other affected advertisers will get AdWords credits. Google argued that it had only overcharged advertisers to make up for days when it under-delivered ads, but still chose to end the litigation with a settlement. A spokesman said: “Google believes the claims are without merit, but we are pleased to have the litigation behind us and to move forward with our business objectives.”

CLRB Hanson Industries v. Google, 5:05-cv-03649-JW (settlement papers filed March 26, 2009).

The couple already aksed the judge to reconsider their dismissed lawsuit. Some excerpts from their motion for reconsideration:

"This case is about every little guy, once again being trampled upon by the big shoe of big business. With nowhere to turn but the American Courts, he is cast away to endure the pinpricks of trespass that bleed our American liberty to death. Whether the trespass is by a foreign king, or the royalty of big business, does not matter. The Borings, such as our American forefathers in millennia past, are entitled to proclaim, 'Google, Don't Tread On Me.'"

2. Jones Day, Blogshopper settlement

3. Does Google violate antitrust laws by eliminating competition?

Vertical search is an expanding market where a lot of money can be made. The term "vertical search" refers to more or less specialized search engines for specific topics, such as Google News for news or YouTube for videos. There are already more searches conducted at YouTube or eBay than at Yahoo in several countries. TradeComet also operates a specialized search engine for B2B goods and services. To promote its web site TradeComet used the Google AdWords program and was quite successful at the beginning. Officials even meet with Google to further increase the effectiveness of the ad campaigns. In December 2005 Google praised Trade Comet as "site of the week." In May 2006, however, Google raised the minimum bids for keywords on which TradeComet bid. Instead of 5-10 cents, several keywords were only available at a minimum price of 5-10 dollars. These ad rates were way too expensive for the plaintiff to continue promoting itself within Google's online marketing network. So this move strangled plaintiffs primary source of search traffic, resulting in substantial drops in traffic and revenue (about 90%). Google explained to TradeComet that the increase was due to its poor landing page quality.

TradeComet alleges that Google manipulates its auctions to favor certain advertisers like business.com over others. Google establishes minimum pricing thresholds that can differ by advertisers based on criteria , such as "Landing Page Quality", that is exclusively in Google's control. It is impossible to know how Google actually picks the winners and losers of its ad actions. In the eyes of TradeComet officials, Google learned that its search engine was a potential competitor. The lawyers stated that, “Google understood the threat that vertical search engines posed to its business mode.” Hence Google increased the bid rates for advertisement for the company by as much as 10,000 percent.

The suit could be a real danger to Google. So far, no court has said that Google has a monopoly. But the courts only considered an online, not a smaller search advertising market. After the aquisition of DoubleClick Google has strenghtened its position in the online advertising market and remarks by the Federal Trade Commission lead to the conclusion that the relevant market indeed is sponsored search advertising only. And on that market, Google probably has a monopoly share.

4. USA: Hyperlinks to Competing Products on web site with mark

The U.S. District Court for the Middle District of Pennsylvania held January 12, 2009 that an online company may have initially confused consumers by providing links to its products on a web site despite listing another company as a "featured brand" and denied a motion for summary judgement.

Babyage.com had created a Leachco "featured brand" webpage in 2007. It displayed the "Leachco" trademark and included a section of the page entitled "Pregnancy Pillows". In the text, "Today's Mom Cozy Comfort" and "Serenity Star," denoted
clickable hyperlinks that, when selected, took the viewer to webpages containing non-Leachco products, including BabyAge's Cozy Comfort pillow, a lower-priced competitor of Leachco's Back'n'Belly pillow. Leachco argues that this webpage content constitutes an unlawful "bait and switch" whereby prospective customers are "baited" by Leachco's brand into visiting the Leachco "featured brand" webpage on the BabyAge Website, baited into pursuing a Leachco pregnancy pillow, and then "switched" to non-Leachco pregnancy pillows by the above-mentioned hyperlinks provided on the webpage.

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