Trademarks on the Internet

Internet trade mark related cases can have a significant impact on the way in which businesses operate online. Trademark disputes are a dominant feature of the Internet’s legal landscape and occur  in connection with a variety of technologies including domain names, search engines, and keyword advertising. Courts have considered a  wide range of trademark internet related disputes involving:

1. domain name disputes
2. use of adword purchased trademark keywords
3. metatags
4. banner ads
5. Framing
6. Infringing hyperlinks
7. Deeplinking
8. Use of trademarked images and/or text displayed on a webpage


Google Search Engine Marketing and trademark infringement

Search engines are a useful tool which is intended to help classify and locate information available on the internet, with internet resources which have been indexed being retrieved by users through entering keywords into  a graphical user interface.

The most recent disputes over internet trade marks arising from internet search technologies relates to the practice of search engines presenting sponsored advertising along with with search results which appear as a result of the use of keywords entered by users in a search query.

Google provides a suite of online services and applications to users of the internet, with their principal source of revenue being derived from advertising through their Google Adwords Program.

When the Google search engine performs a search,  it displays to the user two types of links to third party webpages in the search results. The first type are known as natural or “organic” links, consisting of links to website which are assessed as relevant to the search query by Google’s algorithm and sorted in order of relevance.

The second type of link are “sponsored links”, which are a form of advertising, and are displayed because a website operator has paid for them to appear.  They appear either at the top and/or on the right hand side of the search results page.  Sponsored links are clearly identified and kept separate from organic search results. A sponsored link is displayed when a user interrogates the search engine by typing in one or more keywords which have been selected and purchased by the advertiser in return for the payment of a fee.

A sponsored link has three elements, the first being the underlined heading which functions as a hyperlink. When a user clicks on it their browser transports them to the advertiser’s website.   The heading may or may not consist of or include a trademarked keyword.  The second element comprises promotional text which may or may not use a trademarked keyword, whilst the third component is the advertiser’s website address.

The advertiser pays money each time a user clicks on the hyperlink in its sponsored link and is directed to their website, the total amount paid being on a cost per click (CPC) basis for each keyword purchased, subject to a maximum daily limit stipulated by the advertiser. Because more than one person can purchase a particular keyword, there is an auction and  bidding process whereby the advertiser who bids the highest cost per click will be awarded the right to have it’s sponsored link displayed in the highest position.

An advertiser can select keywords unaided, but often use Google’s Keywords Suggestion Tool to select appropriate keywords for their advertising strategy.

Google’s AdSense and AdWords trademark policy

Google’s Adsense and AdWords trademarks policy provides for trade mark owners to submit complaints about trademark infringement by advertisers.  Google requires information from trade mark owners regarding where their trade mark is valid and for what kinds of goods and/or services.  Google’s policy and complaints investigation process applies only to sponsored links.  In respect of countries falling outside these countries which includes Australia a different policy will apply.  For all other trademark related concerns arising out of information which appears in Google’s search results users are instructed to direct their complaints to the website owner’s webmaster directly.

Google’s Adword Policy in Respect of Sponsored Links states that whether Google  investigates use of trademarks in ad text only or in ad text and keywords depends on what region the trademark owner asserts trademark rights in.

Google will only investigate and remove trademarks used by third parties which appear in their ad text only in certain countries or regions.  Outside the United States if Google determines that an advertiser is using trademarks in ad text they will require the advertiser to remove the trademark and prevent them using it in the future.  Google won’t investigate the use of keywords in these regions.

On the other hand, Google is prepared to extend its powers to investigate and remove registered trade marks used by a third party in ad text, keywords or both in these regions.

The mere use of the trademarked keyword in the second list of countries will trigger an investigation by Google. When Google receive a complaint from a trademark owner, their review is limited to ensuring that the advertisements at issue are not using a term corresponding to the trademarked term in the ad text or as a keyword.  If, upon an investigation, Google finds that a trademark is being used in an offending way, they will require the advertiser to remove the trademarked term from the ad text or keyword list and  prevent them using the trademarked term in the future.

At least according to  Google’s official policy Australian trademark owners whose competitors purchase their trade mark for use either as a keyword or within ad text, can file a trademark complaint with Google pursuant to their policy, who will make a determination whether they will remove the trademark as ad text or a keyword.

If a complaint to Google is unsuccessful it is still open to Australian trade mark owners to enforce their trademark rights against either Google and/or their competitors in a court of law.  There have been many lawsuits filed in the United States and Europe against Google spanning a period of approximately a decade which consider whether it  should be permitted to sell keywords consisting of trademarked keywords to a advertisers.

To date there has not been any litigation in Australia against Google for trademark infringement in relation to sale of trademarked keywords to advertisers.

Search Results Influenced by Geographical Location

The results yielded by a particular search depend upon the geographical location from which the search is executed, as google serves its results and advertisements based upon the user’s physical IP address.  Therefore a US based user using and a French user using  will obtain different results. There are beta programs in existence which will show Google search results from various countries around the world.

Applying the Google Policy, any third party is able to bid for keywords registered as trademarks even where they operate in relation to the same or similar goods or services as the trademark owner of the keyword.  There have been many cases litigated over the use of trademarked keywords and more broadly use of trademarks online. Whilst trademark law is territorial in nature, the internet doesn’t respect geographical boundaries, and the law is still adapting in addressing the unique issues in this unchartered wilderness.

Google has become a popular target of ongoing litigation as an online information provider, in respect of trademark infringement, unfair competition, false advertising, and dilution for referencing brand owners’ trademarks. Google has also become a frequent flyer in the system for online copyright infringement in respect of thumbnail images of copyrighted search results triggered by the interrogation of their search engine. (See Perfect 10 Inc v Google 2007)

In the relatively recent case of  Louis Vuitton Malletier (LVMH) v Google France the European Court of Justice held that Google was not liable for allowing advertisers to bid on trademarked brands.

Numerous companies including Louis Vuitton had previously taken action against Google alleging that they had infringed their trademark rights by permitting advertisers to use company trademarks as keywords.

The European Court of Justice did indicate however that the advertiser has a clear obligation to make it clear that they are not  associated or commercially affiliated with the trademark holder.  This case has been seen as finally settling the  legality of paid search marketing and Google’s liability as an online service provider within that process.

Under European law Google can continue to allow advertisers to select the keywords for their adwords and continue to display them without incurring any liability.  After the ECJ’s ruling, Louis Vuitton can’t prevent use of it’s trademark by Google unless it is able to  prove that Google has played an active role in a way which would give them active knowledge or control over the way the data is stored.  However, the Court did not provide any further detail as to what degree of control or what state of knowledge would be required to render Google liable

Use of Trademarks in Metatags

In the case of Playboy Enterprises v Terri Welles, the Plaintiff  filed a trademark complaint against Terri Welles, former playmate of the year 1981, and self-employed model, for using on her webpage, trademarks belonging to the Plaintiff, namely ‘Playboy’, ‘Playmate of the Year’, and ‘Playboy of the Month’ within the title of her page, the link page, in metatags of her website, and for using a repeating watermark “PMOY81″ on each of her webpages. Playboy argued that the use of the trademarked terms were likely to cause confusion amongst websurfing customers who were likely to be misled into believing there was some association, affiliation or endorsement between Playboy and Welles, despite the fact that Welles had posted prominent disclaimers at the bottom of each of her webpages to the effect that her site was not in any way associated with PEI. Wells successfully argued that her use of these terms was “fair use” and that she was using the trademarked terms in a descriptive sense to both describe and identify herself (as the former 1981 Playboy Playmate) rather than in a trademark sense to denote trade origin.

Use of Trademarks on Webpages

In the Australian case of Ward Group Pty Ltd v Brodie Stone PLC, the Federal Court of Australia considered for the first time the issue of trademark infringement on the internet in respect of sales from a website which originated out of Australia. The issue of when Courts are able to assert jurisdiction over another country’s website differ in the US and Australia. The US Courts are providing most of the case law at the moment, and employ a test known as the ‘minimum contacts’ test.

In the Ward Brodie case, the companies in dispute had previously been related companies, but that relationship ended. The companies went their separate ways, on the basis that both companies would confine their activities to within their respective territories. The Australian company discovered that the UK company was selling their products through a number of third party websites, along with a range of other products which appeared on their site. The website was clearly not ‘targeting‘ Australia or Australian customers, however the dropdown order box consisted of an option to have products shipped to Australia as a destination and one of the webpages also had a currency exchange converter which allowed the price of the goods to be quoted in Australian dollars. There wasn’t any evidence that the websites had ever sold any Restoria to Australian consumers. The Plaintiff lawyers placed orders for the product through the webiste, and having received the orders commenced legal action against the UK company for trademark infringement. To infringe a trademark in Australia the Plaintiff had to establish use of the trademark in Australia. The question for the court was a) had there been use of the Restoria TM by virtue of the use of the dropdown box and currency converter appearing on the website? and b) Had there been use of the TM in Australia by virtue of the shipping of the product to Australia?

The Court assessed whether the use of the Restoria mark on the website constituted use of the trademark in Australia in the sense of use of the trademark in the course of trade in Australia? Merkel J held that the features of the website mentioned above were not enough to constitute use of the trademark in Australia in the course of trade. There is a consensus that this decision was partly driven by policy reasons, as if all courts adopted the reasoning that every time a trader puts a trademarked product on the internet to engage in ecommerce, they would run the risk of infringing third party trademarks in countries which they hadn’t even heard of. Online traders would be in a position where they had to search thirty or more countries to make sure they weren’t infringing any trademark rights in that country which would have a chilling effect on ecommerce. The Judge held there was ‘not enough’ to evince a specific intention to market to Australian consumers, specifically, as oppposed to the world at large. This raises the question for all online traders as to ‘what would be enough?‘ to indicate an intention to ‘target’ consumers in a particular jurisdiction and thus be held liable for trademark infringement. In a number of overseas cases foreign courts have asserted jurisdiction over businesses trading online in another country.

In V&S Vin & Spirit Aktiebolag, AB v Absolut Beach Pty Limited,   Absolut Beachwear, a dynamic and successful small business based in Sydney sold their clothing products through their website which was capable of accepting orders from other countries. After three years of operation, the business was forced to cease trading when it received correspondence from companies with an interest in the ABSOLUT Vodka trademark in five different countries threatening to sue them for trademark infringement.

The company had formerly received letters at the time of registering their trademark application for the name Absolut Beach from the Swedish company Vin and Spirit , however the Swedish company who initially opposed their registration, chose to abandon their challenge at that point in time. Absolut Beach had been primarily serving a local clientele and hadn’t done any business in the United Kingdom, with only a small mail order service in the US. Yet the trademark owner still launched proceedings for trademark infringement and passing off from these overseas jurisdictions to effectively shut the company down, after placing and receiving orders from Absolut Beachwear in the UK accompanied by a brochure.

Absolut applied for a stay of the hearing in the UK court until the Australian proceedings had been heard “where the true battle was“, however their application was unsuccessful because of the “possibility however trivial that the Plaintiff’s application may succeed“. The demonstrates the unique opportunities the global electronic marketplace offers to new companies wishing to penetrate new markets and promote their goods to a local and/or global clientele.

On the other hand,  it has also shows that the expanded  scope for international trademark disputes to arise over the internet due to the collision between national law and international presence. Whilst trademark law is inherently territorial, the internet is indifferent to geographical boundaries, and conceptually defined spaces do not exist in the virtual world.

The prospect of defending trademark infringement in Australia alone is daunting enough for most businesses let alone being exposed to aggressive global litigation by well resourced powerful brands. It is important to be mindful of the implications of how to structure your website, given the increase in trademark disputes over the internet as ecommerce develops and business names, jurisdictions and local and international trademarks which previously co-existed harmoniously continue to clash.

Businesses operating online should therefore consider how to best structure their site depending on the reach of their activities, and make a decision as to whether they feel it necessary to use software that specifically blocks some countries in any dropdown lists on their websites.  The effect of including a country as a possible destination for goods to be shipped to may  eliminate any potential liability for trademark infringement by a foreign entity.  There is a lot of overseas case law in this area where the sale of even one item by a business into another jurisdiction has been deemed sufficient to evince an intention to ‘target‘ a jurisdiction, rendering that business subject to the jurisdiction of overseas trademark litigation.

Disclaimer:  This site is intended to operate purely as an informational  resource, a general overview of intellectual property and other related legal issues arising online.   It isn’t a substitute for professional legal advice from a lawyer certified to provide legal advice in your jurisdiction.  Neither is it intended to create an attorney-client  relationship.   The law varies in each jurisdiction and we do not warrant the accuracy, completeness or usefulness of any material you read here.

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