Google’s legal liability for AdWords
In a judgment handed down on September 23, 2013, Madrid commercial court no. 9 has clarified the rules on the liability of Google AdWords for selling keywords matching registered trademarks.
In the case heard by the court, a claim was filed against Google Ireland, Ltd. under Unfair Competition Law 3/1991 (the LCD). In particular, the claimant argued that allowing competitors to buy keywords in AdWords matching registered trademarks constituted misuse of the business efforts of another (article 11 LCD), cooperation with acts of confusion (article 6 LCD) and an infringement of legal rules (article 15 LCD) by Google.
AdWords enables advertisers to choose one or more keywords so that if they match the words searched by users on Google, a promotional link to the advertiser’s website appears next to the search results. The link appears under the wording “Ad related to…” and is accompanied by a short commercial message. AdWords is an automatic, neutral and passive service, since Google is not involved in the decision-making process. The advertisers are the ones who choose the keyword, write the commercial message and insert the link to their website.
The judgment dismisses the claim due to the claimant’s lack of standing to sue, since the claimant filed the claim as an individual, but did not trade directly as such, since it was shown that he did so through his companies. However, the judge also analyzes the merits of the case with great technical rigor in order to demonstrate the unfounded nature of the claims made.
Commercial court no. 9’s judgment draws mainly on the interpretation laid down by the Court of Justice of the European Union (in cases such as Google France SÀRL and Google Inc. v. Louis Vuitton Malletier and Viaticum SA, Luteciel SÀRL –C-236/08–; SABAM v. Netlog NV –C-360/10–; and SABAM v. Scarlet Extended SA –C-70/10–) and reaches three hugely significant conclusions:
- For the first time in Spain, it is expressly recognized that in AdWords, Google merely provides a hosting and linking service and, consequently, benefits from the liability exclusion rules in articles 16 and 17 of Information Society Services and E-Commerce Law 34/2002, of July 11, 2002 (“LSSI”). In other words, Google’s liability in relation to AdWords will only be triggered if it has actual knowledge and does not proceed to diligently remove the illegal content.
- Intermediaries cannot be imposed an obligation to monitor content, since it would infringe article 15 of the E-Commerce Directive which prohibits the Member States from imposing on information society service providers, such as Google, Bing, Facebook or Yahoo!, a general obligation, when providing the services covered by the Directive, actively to seek facts or circumstances indicating illegal activity.
- The actual knowledge needed to trigger the liability of information society service intermediaries requires notification of a decision by a competent body finding the content to be illegal, unless the content in question is manifestly illegal, which was not the case in the judgment examined here.
The practical conclusion drawn by the judgment is that Google is not liable for any illegality derived from keywords bought by competitors in AdWords. In all cases, the advertisers are liable if the prerequisites imposed by the Trademarks Law or the Unfair Competition Law are met. This is demonstrated by the court proceedings brought by trademark owners based on the LCD in relation to AdWords, and resulting in judgments upholding liability (judgment at first instance dated December 22, 2011 in the Masaltos case, and the judgment of the Granada Provincial Appellate Court dated March 16, 2012 in the Barrisol case).
Upholding the claim would have created a serious obstacle to the development of the information society and e-commerce in Spain, because it would have imposed a content-monitoring obligation on Internet intermediaries prohibited by the E-Commerce Directive.
Garrigues Telecommunications & Media Industry Group