Google sells the name "Vuitton," among other things, to anyone who wishes to buy it -- and use it to direct internet searches to the buyer's own website via a "sponsored link." Some of these sponsored links may lead to auctions offering Vuitton products, others may lead to Vuitton competitors, still others may lead to Vuitton product reviews, and many (most troubling to Vuitton) lead to counterfeits. It's all up to the keyword buyer; Vuitton itself plays no part in the buying and selling of its name as a Google AdWord.
Today the European Court of Justice, in a much-anticipated decision regarding Vuitton's challenge to Google's sale of trademarked terms as AdWords, found that the practice does NOT constitute trademark infringement -- so long as Google plays only a "neutral" role in the exchange. (The press release, a bit quicker to read than the decision, is here.)
According to the ECJ, this means that Google is off the hook if it can show that its storage of data as AdWords is "merely technical, automatic, and passive," indicating that the company lacks knowledge of or control over the particular terms stored by advertisers. In other words, Google can't deliberately compose an email to potential AdWord clients offering a bargain on the name "Vuitton" but is free to allow buyers to purchase that or any other word as a search term leading to a sponsored link. If Google actually learns that a specific advertiser is using an AdWord for nefarious purposes, however, Google is required to remove or disable access to the advertiser's link or face liability.
Advertisers who purchase others' trademarks as keywords, however, don't get off quite so easily. As in any other unauthorized use of a trademark, if the AdWord buyer arranges for Google to display an ad that confuses the searching public as to the origin of goods or services, the advertiser would be liable for infringement.
Now that the ECJ's ruling has issued, the case goes back to the French Cour de cassation, which certified the questions to the central body in the first place. It's a testament to the ECJ's diplomatic skills that both sides are likely to claim victory, although Google is presumably happier with the result than are Vuitton and its fellow litigants, a travel agency and a matchmaking service whose trademarks have also been sold as Google AdWords. (Lawsuits do make for strange, er, bedfellows.)
Of course, the ECJ's decision is far from the last word on trademarks as search terms. Just last month a French court found eBay liable for buying misspellings of "Vuitton," often used by counterfeiters, to create links. Then there's Tiffany's still-pending appeal against eBay in the U.S., which also includes an argument regarding the use of the jeweler's name as a search term. The list goes on.
And interestingly, my own Google search for "Vuitton" about 5 seconds ago generated not a single sponsored link, so perhaps Google is more cautious -- or more responsive to trademark owners' complaints -- than its litigation posture might suggest.