AdWords advertising may constitute trademark infringement (Beate Uhse)

Some time ago, the Court of Justice of the European Union (EuGH) established in several decisions the principle that the use of third-party trademarks as keywords (AdWords) for the context-based display of advertisements is not use as a trademark and therefore does not constitute trademark infringement. However, this does not apply without qualification, as the Federal Court of Justice (BGH) clarified in its judgment of 20.02.2013 (I ZR 172/11 – BEATE UHSE).

Whether the use of third-party signs or trademarks as an AdWord infringes that sign depends to a significant extent on how the advertisement is designed. If the internet user targeted by the advertisement cannot distinguish whether original goods or third-party products are being advertised, the origin-indicating function of the trademark is impaired. This constitutes trademark infringement without further ado. This may also apply if the trademark is not mentioned in the advertisement text itself.

In the case decided, a competitor of Beate Uhse (eis.de) used the trademark "BEATE UHSE" as a keyword for its own advertisement, which was also recognisable as such, on Google. The trademark proprietor then sued the competitor for an injunction, relying on the ground that it was not clearly apparent from the advertisement that it did not originate from it and that the use of its very well-known trademark exploited the advertising function (= attractiveness) thereof.

The court's decision

In the court's correct assessment, a trademark with average distinctiveness or reputation differs from a well-known trademark in that the latter has a significantly increased attractiveness and reputation. For this reason, well-known trademarks are privileged in that they are protected not only against confusion but also against the exploitation or impairment of the reputation associated with them. The use of a well-known trademark as an AdWord can therefore constitute trademark infringement even when its reputation is exploited or impaired in an unlawful manner.

In the court's assessment, this is the case when the advertiser exploits the pull effect of the well-known trademark in order to benefit from its attractiveness and reputation (= advertising function). This includes, among other things, the exploitation of the economic efforts of the trademark proprietor in creating and maintaining the brand image (= investment function). This applies in particular in cases where imitations of the original product are offered using the third-party trademark as a keyword or where the product is presented in a negative light.
Since these aspects were not taken into account by the appellate court (Higher Regional Court (OLG) Frankfurt/Main) and no findings were made on this matter, the Federal Court of Justice (BGH) remitted the case and clarified that the principle remains that the use of the third-party trademark is always justified when it does not entail any impairment of the trademark functions (origin function, advertising function, investment function) and the sign is neither watered down nor tarnished.

Conclusion

The judgment shows that one cannot simply adopt the position that the use of third-party trademarks as AdWords is per se permissible under the decisions of the Court of Justice of the European Union (EuGH). Rather, each individual case must be examined carefully. This applies in particular to well-known trademarks, where it may be difficult to reliably assess the degree of reputation in the borderline area between well-known and "normal" trademarks without consumer surveys. This inevitably leads to a certain lack of precision.