Preliminary Ruling on the Geographical Scope of Keyword Advertising

In its recent preliminary ruling, the European Union Court of Justice provides guidance on when a national court has jurisdiction when a trademark has been infringed in Google keyword advertising.

The Court of Justice of the European Union has issued a preliminary ruling (C‑104/22) on the trademark infringement in Google keyword advertising and national court’s jurisdiction. The case involves a Finnish company, Lännen MCE Oy, and two German companies, Berky GmbH and Senwatec GmbH & Co. KG, which are part of the same group. The dispute before the Finnish Market Court (MAO:2020/29) concerns valuable dredging machines and their keyword marketing using the Finnish company’s registered EU trademark (EUTM). Properta acts as plaintiff’s representative in the case.

The defendants used the trademark, WATERMASTER, without plaintiff’s consent as an AdWords keyword on a Google website under the .fi domain. Additionally, the trademark was used as a keyword on the Flickr image-sharing service. The use of the trademark in Google keyword advertising was followed by information about the defendants’ machines as alternatives to the plaintiff’s dredging machines. The defendants’ own website did not specifically mention Finland as one of the countries in which the machines were available for delivery. The preliminary ruling concerned whether the infringement had been committed in Finland or was threatened to occur in Finland, making the Finnish Market Court competent to handle the matter.

According to the European Union Trademark Regulation, proceedings relating to the infringement of EU trademarks may, in addition to the courts of the Member State in which the plaintiff is domiciled, be brought in the courts of the Member State in which the act of infringement has been committed or threatened (Article 125 (5)). Therefore, the plaintiff’s position was that it could bring an infringement action against the defendants in the EU trademark court of the Member State where the consumers and traders to whom such advertising or sales offers are targeted are located. The defendants’ position, on the other hand, has been that the infringement has not been committed in Finland and that the Finnish Market Court lacks jurisdiction. The defendant stated that it has not mentioned Finland as a country in which the machines were available for delivery on its website. The Market Court held that the rule of interpretation was unclear and referred the matter to the ECJ for a preliminary ruling on the assessment of the geographical scope of an infringement.

The preliminary ruling referred to a previous decision by the Court in which the alternative jurisdiction referred to in the Trademark Regulation was confirmed (C‑172/18 ‘AMS Neve’). The owner of an EU trademark has been given the right to bring an action in the courts of the Member State where the infringement has been committed or threatened.

In addition, the Court stated that the jurisdictional basis expressed by the wording “member state in which the act of infringement has been committed [or threatened]” is linked to the active conduct of the infringer. Referring to the above, the Court also stated that active conduct should be considered to include the payment by a company to the operator of an internet search engine who uses a top-level domain of a Member State to display a link to the company’s website for the public in that Member State and thus enable a specific target audience to have access to its goods. Such paid indexing is a sufficient connection to the Member State to which it is targeted. Therefore, the Court confirmed in its preliminary ruling that, when determining the jurisdiction of a national court in a dispute concerning infringement of an EU trademark, the Member State whose national top-level domain is used by the search engine (Google) to display the allegedly infringing advertisements on its website, regardless of whether the trader explicitly and unambiguously mentions that Member State as one of the areas to which the goods could be delivered, must be taken into account. On the other hand, regarding the assessment of natural indexing of images with metadata tags in an image sharing service (Flickr), the Court stated that jurisdiction does not arise directly in that court unless other factors indicate that such natural indexing is targeted at an audience located in a Member State.

The preliminary ruling clarifies EU trademark holders’ right to resort to the jurisdiction of a national court against third parties who unfairly exploit paid keyword advertising based on registered EU trademarks, even if the infringement does not necessarily involve any active measures targeting that country, such as other information displayed on the website. For other companies engaging in paid keyword advertising, the preliminary ruling is a good reminder that the exploitation of a competitor’s trademark to enhance visibility can constitute infringement. Therefore, caution should be exercised with such practices.