Portakabin and Google AdWords: ECJ ruling in sales of used goods

The Court of Justice of the European Union (ECJ) has ruled in the Dutch keyword advertising case of Portakabin v Primakabin. In this case the goods were legitimate but the issue was under what circumstances second-hand sellers could use the original mark to advertise sales of used goods.

Background

Portakabin owns the Benelux trade mark PORTAKABIN for the following goods:

class 6 – metal buildings, parts and building materials

class 19 – non-metal buildings, parts and building materials

Primakabin sold and let new and second-hand mobile buildings, both its own and those made by Portakabin.

Primakabin purchased the keywords ‘portakabin’ and the misspellings of it ‘portacabin’, portokabin’ and ’portocabin’. The resulting advertisements displayed alongside those terms when a consumer searched using Google initially stated “new and used units” but was changed to “used portakabins”.

Portakabin sued for trade mark infringement and lost at first instance on the grounds that the use was legitimate. Portakabin succeeded in gaining an injunction on appeal but decided to appeal in any event because the court had ruled that Primakabin did not ‘use’ the marks in a trade mark sense. The Hoge Raad der Nederlanden (The Supreme Court of the Netherlands) referred the matter to the ECJ.

Questions referred for clarification

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 [a keyword] … which is identical to a trade mark registered by another person (“the proprietor”) in respect of similar goods or services, and the [keyword] 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 …?

(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?

(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 … 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(a), 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 [keywords], 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 [keywords] 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?

Does the use constitute infringement?

The ECJ examined Article 5(1) of Directive 89/104 and the case law interpreting that legislation which entitles the owner of a trade mark registration in the European Union to prevent third parties not having his consent from using in the course of trade:

(a) an identical sign in relation to goods or services which are identical to those for which the trade mark is registered, where the use of the sign affects, or is liable to affect, one of the functions of the trade mark, in particular its essential function to guarantee the origin of the goods or services but also the functions of communication, investment and advertising;

(b) an identical or similar sign in relation to goods or services which are identical or similar to those for which the trade mark is registered where there is a likelihood of confusion.

The ECJ referred to its guidance in Google France (iPit post here), Die Bergspechte (iPit post here) and L’Óreal v eBay (iPit post here). The novel aspect of this case related to whether resellers of legitimate goods could bid on the trade mark and under what circumstances.

Article 6 – descriptive use

The ECJ noted that Article 6 of Directive 89/104 entitled third parties to use competitors’ trade marks as:

…indications concerning the kind, quality, quantity, intended purpose, value, geographical origin, the time of production of goods or of rendering of the service, or other characteristics of goods or services…

…provided he uses them in accordance with honest practices in industrial or commercial matters“.

However, it is for the national court to determine whether the use is descriptive and honest.

Article 7 – exhaustion of rights

Article 7 of Directive 89/104 provides that the trade mark owner’s right to prohibit all third parties from using the mark is exhausted where goods have been placed on the market in the European Economic Area under that trade mark by the proprietor or with his consent, unless there are legitimate reasons for him to oppose further commercialisation of the goods.

Legitimate reasons include where :

  1. the advertisement seriously damages the reputation of the mark, for example by virtue of the way the goods are presented or its quality;
  2. gives the impression that there is a commercial connection between the advertiser and trade mark owner;
  3. the goods sold alongside the genuine goods, by virtue of their volume, their presentation or their poor quality, risk seriously damaging the image which the proprietor has succeeded in creating for its mark.

Summary

The ECJ ruled:

The national court, which must assess whether or not there is such a legitimate reason in the case before it:

– cannot find that the ad gives the impression that the reseller and the trade mark proprietor are economically linked, or that the ad is seriously detrimental to the reputation of that mark, merely on the basis that an advertiser uses another person’s trade mark with additional wording indicating that the goods in question are being resold, such as ‘used’ or ‘second-hand’;

– is obliged to find that there is such a legitimate reason where the reseller, without the consent of the proprietor of the trade mark which it uses in the context of advertising for its resale activities, has removed reference to that trade mark from the goods, manufactured and placed on the market by that proprietor, and replaced it with a label bearing the reseller’s name, thereby concealing the trade mark; and

– is obliged to find that a specialist reseller of second-hand goods under another person’s trade mark cannot be prohibited from using that mark to advertise to the public its resale activities which include, in addition to the sale of second-hand goods under that mark, the sale of other second-hand goods, unless the resale of those other goods, in the light of their volume, their presentation or their poor quality, risks seriously damaging the image which the proprietor has succeeded in creating for its mark.

Unfortunately, the ECJ declined to give guidance as to whether organic search results i.e. links which are not advertisements, constituted infringement.

All iPit posts on Google AdWords can be found here.

Advertisements

What do you think?

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s