The French Supreme Court reaffirmed that a company is allowed to use its competitor's trademark as a keyword in Google's paid referencing service AdWords.
The case involved two competitors, Cobrason and Solutions, which both sell video and hi-fi products online. When an Internet-user typed "Cobrason" into the website www.google.fr, a commercial link to Solutions was displayed, as well as a message stating "Why should you pay more?". Cobrason sued Solutions as well as Google France and Google, Inc. on the grounds of unfair competition and misleading advertising.
The Paris Court of Appeal1 held Solutions and Google, Inc. jointly liable on the grounds of unfair competition and misleading advertising and awarded a total amount of 100,000 Euros to compensate the loss sustained by Cobrason. It dismissed all claims against Google France on the grounds that Google, Inc. was the only contracting party and hosting provider of the website www.google.fr and that Google France was only a sub-contractor who assisted Google, Inc. with respect to the French users.
The French Supreme Court annulled this decision on three grounds:
First, with regard to the court's finding that Google, Inc. technically contributed to the acts of unfair competition committed by Solutions, the Supreme Court held that Google, Inc. benefitted from the limited liability regime of providers of hosting services according to Article 6-I-2 of the Law Relating to Confidence in the Digital Economy (LCEN). This is consistent with the interpretation adopted by the European Court of Justice in the AdWords case2.
Second, with regard to the unfair competition claims, the Supreme Court found that the Court of Appeal had not established a risk of confusion between Cobrason's and Solutions' websites. By doing so, the court implicitly stated that the mere purchase of the word "Cobrason" as a keyword in a referencing service was not sufficient to hold Solutions liable for unfair competition. Unless there was a risk of confusion for the average Internet user, unfair competition could not be established.3 The Supreme Court further stated that soliciting a competitor's clients was not in itself unlawful, unless it constituted an unfair behavior.
Finally, the Supreme Court held that the Court of Appeal did not establish misleading advertising, pursuant to one or several of the conditions in Article L. 121-1 of the French Consumers Code. Neither the display of a link to Solutions' website nor the message "Why should you pay more?" were misleading and constituted a risk of confusion as to whether (or not) the companies were economically connected.
This decision of the Supreme Court is in line with the interpretation adopted by the CJEU which intends to promote competition. Although it is now clear that a company is allowed to use its competitor's trademark as a keyword in a paid referencing service, companies should nevertheless be extremely careful so as to avoid confusing the average Internet user.
3 It should be noted that French courts often consider that sponsored links from the AdWords service do not give rise to any risk of confusion as they are clearly separated from the normal search results and easily identifiable, e.g. French Supreme Court, decision of 25 September 2012, no. 11-18.110; Lyon Court of Appeal, decision of 22 March 2012, no. 10/03392
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