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Yahoo! wins sponsored links ruling in High Court

Businessman's lawsuit 'totally without merit'

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Yahoo! did not infringe a businessman's rights by displaying adverts for other companies when users entered his trade marks as search terms. The High Court dismissed a lawsuit against the web giant as being "totally without merit."

The trade mark was not used by anyone other than the user who entered the trade mark term into the search engine, ruled Mr Justice Morgan.

Yahoo! UK and its sister company, Overture, were sued by Victor Wilson, owner of a London-based catering business. Wilson sells snacks at festivals under the name 'Mr Spicy', a name that he registered as a Community Trade Mark for some food and hospitality-related goods and services.

Wilson sued Yahoo! because he discovered that typing 'Mr Spicy' into Yahoo!'s UK search engine triggered sponsored links for Sainsbury's supermarket and price comparison site PriceGrabber.co.uk. He said this infringed his trade mark rights.

The text of the adverts made no reference to 'Mr Spicy'. Evidence showed that both companies had sponsored the ordinary English word 'spicy' but, contrary to Wilson's belief, neither had sponsored the term 'Mr Spicy'.

Yahoo! acknowledged that entering the term 'Mr Spicy' could trigger adverts for companies that sponsored the word 'spicy' due to its word-matching technology. Wilson said that this was also trade mark infringement.

Yahoo! asked for summary judgment, arguing that it had not 'used' Wilson's trade mark or that any use by Yahoo! did not amount to 'trade mark use'.

Mr Justice Morgan accepted Yahoo's arguments.

"The trade mark in this case is not used by anyone other than the browser who enters the phrase 'Mr Spicy' as a search query in the defendants' search engine. In particular, the trade mark is not used by the defendants. The response of the defendants to the use of the trade mark by the browser is not use of the trade mark by the defendants," he wrote.

He continued: "That is enough to decide the case in the defendants' favour. But the matter does not stop there. If, by some process of reasoning, one were to hold that the search engine's response to the words used by the browser was, itself, use by the defendants, in my judgement, it is not use of the mark 'Mr Spicy'. What, instead, is being used is the English word 'spicy' as it appears in that phrase."

Mr Justice Morgan referred to a ruling of 2003 that discussed the meaning of 'trade mark use' at length. It was issued in a case brought by Arsenal Football Club against a street vendor called Matthew Reed, over Reed's sales of unofficial Arsenal-branded merchandise.

The court in the Arsenal case explained some limits on the rights of a trade mark owner: "The proprietor may not prohibit the use of a sign identical to the trade mark for goods identical to those for which the mark is registered if that use cannot affect his own interests as proprietor of the mark having regard to its functions."

Mr Justice Morgan said Yahoo!'s case fitted that explanation "very comfortably and clearly".

"Mr Wilson is not able to prohibit the use of the words 'Mr Spicy' even when they are being applied to goods identical to those for which the mark is registered if that use cannot affect his own interest as proprietor of the mark having regard to its functions," he wrote.

He pointed out that the text of the adverts complained of made no reference to Wilson's business. "There is a reference to Sainsbury's," he wrote. "It does not say that all food sold at Sainsbury's has Mr Wilson's trade or business as an origin. It is not pretending that Sainsbury's food all comes from Mr Wilson's trade or business, MR SPICY." Thus he concluded that the text of the ads could not have an adverse impact on Wilson's trade mark rights.

The ruling suggests that Yahoo! would not infringe Wilson's trade mark even if Sainsbury's had sponsored the term 'Mr Spicy'. Mr Justice Morgan wrote: "There can be no objection to Yahoo, if this is what they want to do, to solicit from third parties the use by those third parties, in return for payment, of a keyword 'Mr Spicy' if they are going to attach 'Mr Spicy' to goods and services different from those protected in Mr Wilson's case."

He did not comment on the right of Yahoo! to sell as a keyword a trade mark that enjoys protection across a wider range of goods and services and/or greater distinctiveness. Nor did he discuss whether or not Sainsbury's might infringe the mark by sponsoring 'Mr Spicy' as a term.

The ruling does imply that the text of the advert is relevant, though Mr Justice Morgan did not discuss whether or not Yahoo! would infringe Wilson's trade mark if the text of Sainsbury's advert was such that users might be confused.

Dismissing Wilson's case, Mr Justice Morgan described Yahoo!'s actions as being "a million miles away" from use of Wilson's mark in relation to goods or services which are identical or similar to those protected by his mark.

Wilson represented himself in court. He told the court that he thought he could win on the basis of two French court rulings against Google. In one of these, the hotel chain Le Meridien Hotels and Resorts asserted control over the keyword 'meridien' (French for the ordinary English word meridian). In the other, travel agencies Luteciel and Viaticum asserted control over the terms 'bourse des vols' (flight market) and 'bourse des voyages' (travel market).

Yahoo! was represented by the law firm Bird & Bird and barrister Benet Brandreth.

Bird & Bird partner Peter Brownlow said: “For a number of years we have been waiting for a UK decision on whether or not the use of keywords for sponsored search results amounted to trade mark infringement. The judgement of Mr Justice Morgan has now clarified the position as regards search engines.” http://www.out-law.com//default.aspx?page=8916

Copyright © 2008, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

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