Ad Words is a paid referencing
service offered by Google where
advertisers can buy one or more
keywords — which may be trademarks — to obtain placing of an
advertisement link to its site
when the keyword is entered as a
request in the Google search
engine. The advertisement and/
or link usually appears under the
heading “sponsored links” to the
side of or above the results generated by the search engine.
The European Court of Justice
(ECJ) recently released its eagerly
awaited rulings (C-236/08,
C-237/08, C-238/08) on questions referred by the French
Court of Cassation on Google’s
Ad Words service in three joined
cases, one of which involves
Louis Vuitton. The French courts
found Google liable for the trademark infringement at first
instance and on appeal.
The ECJ held that Google’s
Ad Words service did not infringe
trademark rights in Europe, but
also held that advertisers’ use of
a competitor’s trademarks as
keywords for the AdWords service could constitute trademark
infringement.
The decision turned on what
constitutes trademark “use.” Google was not held liable for trademark infringement as, according
to the ECJ, Google was not using
HENRY
LUE
&JENNIFER
KO
the trademarks in the course of
trade. Providing the service to create and display the advertisement,
and being paid to do so, did not
constitute use of the trademark.
By contrast, an advertiser who
employed a trademark as a keyword may be using the trademark
in the course of trade, and in that
case would be liable where use of
the trademark as a keyword had
an adverse effect on the trademark’s function of indicating origin. This is so even though the
keyword may not appear in the
advertisement. A case-by-case
analysis is required to determine
if there has been an adverse effect.
The ECJ also ruled that a ser-
vice provider could not be liable
for data stored at the request of an
advertiser where the service pro-
vider has not played an active role
of such a kind as to give it “know-
ledge” of the data stored, unless it
obtained knowledge of the unlaw-
ful nature of the data or of the
advertiser’s activities and failed to
act expeditiously to remove or to
disable access to (i.e. take down)
the data concerned.
Henry Lue is a partner and
Jennifer Ko is an associate at
Dimock Stratton LLP in Toronto.
Both practise intellectual property
law and litigation.
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Continued From Page 9
sumer protection legislation. In some
cases, the issues raised are entirely
novel; in others, it is a question of how
to apply long-standing rules to this new
form of commerce.
The fundamental question boils
down to one of trust. For example,
about one half of all Canadians surveyed
expressed hesitation about using their
credit cards to make online purchases
because of security concerns. Even
shoppers who had purchased online
said that they were still worried about
using their credit cards when purchas-
ing via the Internet.
The goal of competition enforcement
in this area, therefore, is to combat the
types of practices that can undermine the
integrity of online shopping and thus
erode consumer confidence in e-com-
merce as a viable and competitive option.
Fraud
The Internet opens up a wealth of
information to consumers. Unfortu-
nately, the free flow of information
online also means greater opportunity
for all forms of fraudulent marketing.
The Canadian Competition Bureau esti-
mates that Internet scams have risen an
alarming 77 per cent since 2005, costing
the Canadian economy millions of dol-
lars each year. Some of the most popular
scams involve advertisements for jobs
that promise high income for little
effort; bogus promotions for health care
products touting “breakthrough” results;
fraudulent business or investment
opportunities; and supply and merchan-
dise scams that result in billings for
products that were never ordered or
ordered but never received.
Endorsements and testimonials
Endorsements and testimonials are
commonplace in advertising because
they allow advertisers to promote their
products on the basis of recommenda-
tions from third parties. However, the
explosion in popularity of social media
and other Internet forums (such as
blogs) can now make it difficult for con-
sumers to decide when a review or
endorsement is truly independent.
Recognizing the importance of this
issue, the U.S. Federal Trade Commis-
sion (FTC) issued revised guidelines in
2009 to address online endorsements.
According to the FTC, bloggers and sim-
ilar “word of mouth” marketers must
disclose any “material connections” they
have to the seller, including if they
received free samples in exchange for
providing a review.
The Competition Bureau has not yet
updated its own analogous guidelines to
deal specifically with online endorse-
ments, but the general rule that applies
in Canada is also that endorsements
must disclose any relationship between
the endorser and the advertiser.
Disclaimers
The use of disclaimers is another
issue that takes on added and particular
importance with the advent of online
commerce. Generally speaking, it is
appropriate to use disclaimers to clarify
what otherwise might be an ambiguous
representation or to support an other-
wise incomplete claim.
The concern with disclaimers used on
websites is that they be as clear and con-
spicuous as possible. For example, the
Competition Bureau suggests that online
disclaimers be placed, where possible, as
close to and on the same screen as the
representations to which they relate, and
that they be presented in technology-
neutral format so that consumers can
view them regardless of the particular
hardware or software being used. Dis-
claimers may also have to be repeated on
multiple pages of a website.
Spam
Canada ranks fourth in the world in
terms of producing spam (or unsolicited
junk e-mail), but is one of only four
OECD countries (and the only one in
the G8) without specific spam legisla-
tion. Legislation was introduced in the
last session of Parliament to address
this shortcoming, but “died” on the
order page when Parliament was pro-
rogued in December 2009 and has not
yet been re-introduced.
The proposed legislation sought to
prohibit sending (or causing or permit-
ting to be sent) commercial electronic
messages without the recipient’s express
or implied consent. The proposed legis-
lation also contained prohibitions
directed at the use of “spyware” and
other means to illicitly obtain private
information without consent (such as
“phishing”). The proposed legislation
would also have amended the Competi-
tion Act to expressly extend the various
prohibitions against misleading adver-
tising to electronic messages and to
introduce a private action for damages
suffered as a result of any contravention.
Mark Katz is a partner in the Compe-
tition & Foreign Investment Review
Group of Davies Ward Phillips & Vine-
berg LLP in Toronto.
