The French Supreme Court reaffirmed that a company is allowed to use its competitor's trademark as a keyword in Google's paid referencing service AdWords.
The case involved two competitors, Cobrason and Solutions, which both sell video and hi-fi products online. When an Internet-user typed "Cobrason" into the website www.google.fr, a commercial link to Solutions was displayed, as well as a message stating "Why should you pay more?". Cobrason sued Solutions as well as Google France and Google, Inc. on the grounds of unfair competition and misleading advertising.
The Paris Court of Appeal1 held Solutions and Google, Inc. jointly liable on the grounds of unfair competition and misleading advertising and awarded a total amount of 100,000 Euros to compensate the loss sustained by Cobrason. It dismissed all claims against Google France on the grounds that Google, Inc. was the only contracting party and hosting provider of the website www.google.fr and that Google France was only a sub-contractor who assisted Google, Inc. with respect to the French users.
The French Supreme Court annulled this decision on three grounds:
First, with regard to the court's finding that Google, Inc. technically contributed to the acts of unfair competition committed by Solutions, the Supreme Court held that Google, Inc. benefitted from the limited liability regime of providers of hosting services according to Article 6-I-2 of the Law Relating to Confidence in the Digital Economy (LCEN). This is consistent with the interpretation adopted by the European Court of Justice in the AdWords case2.
Second, with regard to the unfair competition claims, the Supreme Court found that the Court of Appeal had not established a risk of confusion between Cobrason's and Solutions' websites. By doing so, the court implicitly stated that the mere purchase of the word "Cobrason" as a keyword in a referencing service was not sufficient to hold Solutions liable for unfair competition. Unless there was a risk of confusion for the average Internet...