The IP Court of Palermo on trademark infringement in AdWords ads and relevant ISP liability

With ruling of 7 June 2013 in joined Cases no. 11626/08 and 11627/08, the Court of Palermo (IP Section) issued a decision on trademark infringement through the use of well-known Google “AdWords” service, as well as on the relevant liability of the Internet Service Provider (“ISP”) providing the service.

The proceedings were commenced because the company Sicily By Car (“SBC”) used the trademark “Maggiore” as a keyword in its AdWords ads. Such use was in fact challenged by the companies Maggiore Rent S.p.A. and Maggiore Finanziaria di Partecipazioni S.r.l., respectively the holder and licensee of the trademark in issue, the first of which was active in the same field as SBC. In turn, SBC sued the companies Google Inc., Google Ireland Ltd. and Google Italy S.r.l. (collectively “Google”), claiming that they should hold it harmless against any liability should it be found liable for trademark infringement.

In the decision in issue, the Court of Palermo firstly analyses the more recent European case-law on trademark infringement in analogous cases, with particular reference to the Interflora ECJ decision in C-323/09 (which recently led the UK Judge to find in favour of Interflora, against Marks & Spencer’s use of the “Interflora” trademark in its AdWords ads). Based on the criteria set forth by such case-law, the Court then assesses whether the use of the “Maggiore” trademark by SBC in its AdWords ads should be prohibited because it adversely affects one or more of the following trademark functions: i) the function of indicating origin; ii) the advertising function; iii) the “investment” function.

The Courts immediately denies any adverse effect on the trademark’s advertising function, based on the findings of the Interflora ECJ decision in relation to keyword advertising. On the other hand, the Court finds that the function of indicating origin was indeed affected when SBC used the trademark with the “dynamic keyword insertion” function offered by AdWords: in such case, in fact, the “Maggiore” trademark was shown in the title of the SBC ads, thus creating a risk of confusion amongst the public and a risk of association between the companies’ products and services. In such case (but not in case of mere use of the trademark as a keyword in AdWords ads), the Court also finds that the investment function, i.e. the function to “to acquire or preserve a reputation capable of attracting consumers and retaining their loyalty“, is adversely affected as well. In light of these findings, the Courts condemns SBC to pay the damages caused exclusively by the advertising campaigns which used the “dynamic keyword insertion” function as above.

As regards Google’s liability, the decision denies any liability stating that the ISP in issue only provides hosting services without checking the information uploaded by the users, in line with Section 16 of Legislative Decree no. 70/03 (which implemented the EC e-commerce Directive no. 2000/31/EC). In this situation, on the one hand Google is not obliged to monitor the users’ ads, pursuant to Section 17 of the same Legislative Decree; on the other hand, in the case at issue no evidence was provided that Google, once informed of the illicit acts in issue, did not take any action, as Google had instead promptly blocked any association between the SBC ads and the trademark in issue, in addition in absence of a court order.

The ISP liability issue has actually been often faced by the case law in recent years: see, amongst the others, our posts here, here and here on this blog.