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The French Supreme Court Confirms the Use of a Competitor’s Trademark as Keyword

In a recent decision dated 29 January 2013 (http://www.legifrance.gouv.fr/affichJuriJudi.do?oldAction=rechJuriJudi&idTexte=JURITEXT000027024140&fastReqId=405377599&fastPos=1), the French Supreme Court reaffirmed its position regarding Google’s paid referencing service, AdWords.

This particular case involved two competitors, Cobrason and Solutions, which both sell video and hi-fi products online. Cobrason noticed that when an Internet-user types “Cobrason” on the website www.google.fr, a commercial link concerning its competitor, Solutions, was displayed as well as a message stating “Why should you pay more?”. Cobrason thus sued its competitor, Solutions, as well as Google France and Google Inc. on the grounds of unfair competition and misleading advertising.

In a decision dated 11 May 2011, which gave rise to the decision of the Supreme Court, the Paris Court of Appeal first of all dismissed all the claims relating to Google France, on the grounds that Google Inc. was the only contracting party as well as the hosting provider of the website www.google.fr. Google France is a sub-contractor, which mission is merely to assist with respect to French users. As such, Google France has no power whatsoever.

The Paris Court of Appeal then 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.

The French Supreme Court, in its abovementioned decision of 29 January 2013, quashed the decision of the Paris Court of Appeal on three grounds.

Firstly, it quashed the provisions of the decision which considered that Google Inc. technically contributed to the acts of unfair competition committed by Solutions. According to the French Supreme Court, the Paris Court of Appeal should have dealt with the argument according to which Google Inc. should benefit from the limited liability regime of providers of hosting services as defined by Article 6-I-2 of the Law dated 21 June 2004 relating to Confidence in the Digital Economy (LCEN). The French Supreme Court decision is, therefore, consistent with the interpretation adopted by the CJEU on 23 March 2010 in the AdWords case (C-236/08 to C-238/08, Google Inc., Google France vs. Louis Vuitton Malletier and others).

Secondly and to establish unfair competition, the French Supreme Court stated that the Paris Court of Appeal should have established a risk of confusion between Cobrason’s and Solutions’ websites. By doing so, the French Supreme Court implicitly states that the fact that Solutions bought the word “Cobrason” as keyword in a referencing service is not in itself sufficient to hold Solutions liable for unfair competition. Unless there is a risk of confusion for the average Internet user, unfair competition is not established. It should be noted that French courts have often considered that the sponsored links resulting from the AdWords service do not give rise to any risk of confusion as they are clearly separated from the normal search results and, as such, are easily identifiable (e.g. Supreme Court, 25 September 2012 (no. 11-18.110); Lyon Court of Appeal, 22 March 2012 (no. 10/03392)). In addition, the French Supreme Court stated that soliciting a competitor’s clients is not in itself unlawful, unless an unfair behaviour can be established.

Finally, the French Supreme Court considered that the Paris Court of Appeal did not properly establish the existence of misleading advertising pursuant to one or several of the elements laid down in Article L. 121-1 of the French Consumer Code. Neither the display of a link to Solutions’ website nor the message stating “Why should you pay more?” are sufficient to establish misleading advertising and a risk of confusion, for an average Internet user, as to whether or not the two companies are economically connected.

This decision of the French Supreme Court is clearly in line with the interpretation adopted by the CJEU which intends to promote competition. If 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.