The American company Edible Arrangements recently took Google to the American courts for selling AdWords to its competitors. Edible Arrangements alleges that it has suffered damages and is claiming more than $ 200 million in compensation from Google.
Edible Arrangements was founded by a florist who also incorporates his art in fruit baskets. The company supplies fruit baskets that look very similar to a bouquet of flowers. This is a huge success and today there are more than 1200 Edible Arrangements stores worldwide.
Obviously, competition never stands still and there are now several companies selling similar fruit baskets. To attract visitors to their websites, these competitors purchase AdWords (keywords for advertisers) from Google. When a search is submitted for this word, the advertiser's ad appears at the top of the search results. They also indicate that these are sponsored results. The regular search results are then displayed under these paid results. Google earns billions of dollars every year from selling AdWords.
Brand owners are often less happy about this. Competitors regularly buy Adwords in the form of third-party brand names to market their products. Consumers can benefit from this because they are alerted to the competitor’s product in this way. This can benefit the competition. However, as you can imagine it is not always clear to consumers whether an advertisement originates from a trademark owner or a competitor.
Edible Arrangements now states that the sale of Edible Arrangements as AdWord causes consumers to get confused. It is not clear to them whether they are dealing with advertisements from Edible Arrangements or from a competitor. Moreover, the reputation of the brand is being compromised. It is now up to the judge in Connecticut to rule whether Edible Arrangements have indeed suffered more than $200 million in damages.
The European Court of Justice has already spoken out about AdWords on a regular basis (see, among others, the CJEU judgments on Google France and Interflora/M & S). For example, the Supreme Court of the European Union has ruled that there is no infringement if the use of a trademark such as AdWord is non-misleading at the time.
When it is immediately clear to a consumer that it is an advertisement from a competitor, there is no question of infringement, because there is no question of being misled. However, if it is not clear to a consumer whether the advertiser is a third party with respect to the trademark owner, the function of the trademark guarantee of origin is impaired and an infringement exists.
The European Court of Justice has emphasised in these cases that the use of brands such as AdWords promotes healthy competition, provided that this is done in a non-misleading manner. The fact that a trademark owner may be forced to invest more money in advertisements is in principle therefore irrelevant. Finally, the European Court of Justice has ruled that Google does not use the trademark itself and is therefore not committing an infringement. Only parties that purchase a third-party brand like AdWord are committing an infringement at the time of misleading use.
In the European Union, Edible Arrangements would thus successfully be able to take action against the purchasers of the AdWords when a misrepresentation exists regarding the commercial origin of the products. We are curious about how the American judge will rule on the present case.