Google PLAs and Trademark Protection in the EU—An Impending Conflict?

While AdWords are ads placed for a certain search term by an advertiser, PLAs are displayed for a selection of searches for which they are deemed “relevant” by an algorithm run by Google based on prior user behavior. These developments gave rise to some concern as to whether consumers can differentiate between organic search results and advertising.

While possible search engine user confusion is a matter of general concern from a consumer protection perspective, it is particularly worrying for the brand owners whose trademarks are used to trigger advertising. Edible Arrangements, a franchise business well-known in the United States for its decorative fruit arrangements, sued Google in 2018 for trademark infringement at the U.S. District Court for Connecticut in connection with various ads displayed in response to searches for “Edible Arrangements.” These included, notably, Google PLAs for various third-party fruit arrangements very similar in appearance to those sold under the Edible Arrangements brand.

Edible argued that Google’s advertising practices gave rise to an actionable likelihood of confusion, claiming more than 200 million USD in damages. While a judgment on the merits of Edible’s claim would doubtless have made an important contribution to the development of U.S. trademark law on keyword advertising, this was not to be. Google managed to compel arbitration of Edible’s claims based on the dispute resolution agreement in Google’s general advertising terms that Edible had accepted when the company itself became an advertiser on Google.

Given the broad scope of Google’s arbitration clause and the indispensability of advertising on Google for most brand owners, a ruling from the U.S. Courts on PLAs seems highly unlikely, therefore. However, Google’s general advertising terms applicable in the EU do not contain mandatory arbitration clauses. This gives rise to the question of how claims similar to that of Edible Arrangements would have been treated by courts in the EU. The recent decisions of the German Federal Court (Bundesgerichtshof) in Ortlieb I and Ortlieb II shed some light on how Google PLAs might be treated by the German courts.

The Ortlieb cases arose from a dispute between Ortlieb Sportartikel GmbH, a mid-sized German company, and Amazon concerning search results on Amazon.de. Amazon, which prides itself in offering customers the widest possible selection of goods, employs a complex search algorithm that generates results based not only on text matches in product descriptions but also prior customer behavior. This means that when a customer searches for a given trademark on Amazon they are often presented with products affiliated with the trademark and third-party products.

In Ortlieb I, the Federal Court clarified that these algorithmically generated product listings must be assessed under the same legal standard as AdWords. While the Munich Higher Regional Court had distinguished search results on e-commerce platforms from keyword advertising, the Court held that whether a given search result is infringing must be assessed according to the Court’s two-part test derived from the judgments of the Court of Justice of the European Union (CJEU) on the subject of keyword advertising, namely:

• Can the consumer distinguish third-party advertising from the trademarked search term on the basis of general knowledge; or
• Does the design of the third-party advertising make it sufficiently clear that it is not related to the trademarked search term?

This test is highly flexible and must be applied on a case-by-case basis, with the outcome naturally varying in the function of the trademark impacted and the specific text and design of the advertising in question.

The Court also held that the commercial user of that trademark is the party that selects which listings are displayed. Consequently, where this choice is made by an algorithm operated and controlled by a platform, liability for infringement lies with that platform. Given that the search terms triggering Google PLAs would appear to be determined in a functionally similar way by a Google-operated algorithm, the reasoning of the Federal Court seems equally applicable to them as well.

Further, the second judgment of the Federal Court in the same dispute is relevant to the manner in which Google displays PLAs. In Ortlieb II, the Federal Court clarified that infringement is likely to occur where the consumer is primed into expecting that only products related to the trademark search term will be displayed. The case concerned AdWords taken out by Amazon.de inviting consumers to look for Ortlieb bags and other products on Amazon.

The Federal Court agreed with the Munich Higher Regional Court in finding that because the AdWords ad referred exclusively to Ortlieb, it gave rise to the expectation that by clicking on the ad the consumer would see only Ortlieb products (especially since the ad displayed a URL mentioning Ortlieb specifically). This expectation was subsequently betrayed when the consumer arrived at the search results for “Ortlieb” on Amazon.de containing related and third-party products. The resulting confusion was seen as actionable in the eyes of the court.

Notably, the outcome of this case differs from the Keine-vorwerk-vertretung case decided in 2018, where the Federal Court permitted the use of the Vorwerk trademark in AdWords by an unaffiliated reseller who also sold third-party products under trademark exhaustion principles. This can be explained by the fact that while in Keine-vorwerk-vertretung the AdWord referred primarily to the reseller as a company, in Ortlieb II the AdWord referred to Ortlieb products specifically, leading to an expectation that only these would be displayed.

These judgments are problematic for Google PLAs in Europe, and brand owners will be delighted about their ability to protect and enforce their trademarks from infringement in PLAs.

Thomsen Trampedach, our center of excellence for online brand protection, is a specialist in monitoring and enforcing trademark rights online, including in Paid Ads, such as Google PLAs [1]. For more information on Google PLAs and trademark protection, contact our team today.

[1] Questel does not provide any legal services. Legal services are provided by independent IP attorneys on the basis of a separate engagement agreement between you and, if you wish to, a partner IP attorney firm.