Thursday, 24 January 2008

Google Adwords Condemned for Trademark Infringement

Court of Appeal of Aix en Provence (2nd Chamber), 6 December 2007, TWD Industries v. Google France, Google Inc

Google Inc is incorporated in the US and exploits a programme called Adwords, which displays banner advertisements (‘commercial links’) when a particular search item is entered in the Google search engine. This activity generates a major part of a search engine’s income. Google France was incorporated in France in 2002.

TWD commercialises a software product under the name Remote-Anything, a name that it registered as a trademark in 2005. TWD Industries sued Google Inc and Google France, claiming that when a research is carried out with the keywords ‘Remote-Anything’, commercial links are displayed which send the users to websites of companies that commercialise identical and competing products. The High Court of First Instance of Nice dismissed TWD Industries’ action. They then lodged an appeal.

The Court of Appeal of Aix en Provence first states that Articles L.713-2 and L.713-3 of the Intellectual Property Code prohibit 1- the reproduction, use or affixing of a mark or the use of a reproduced mark for goods or services that are identical to those designated in the registration, and 2- if there is a likelihood of confusion in the mind of the public, a) The reproduction, use or affixing of a mark or use of a reproduced mark for goods or services that are similar to those designated in the registration, and b) The imitation of a mark and the use of an imitated mark for goods or services that are identical or similar to those designated in the registration. The Court ruled that the use of the keyword ‘Remote-Anything’ in connection with the same types of products as those protected by the trademark, without the authorisation of the owner of the trademark, is an act of infringement of the said trademark.

In the present case, the Court of Appeal underlined that Google Inc and Google France played an active role, and may not be considered as mere ‘technical providers’. As they displayed advertisement messages in the form of commercial links for advertisers who pay them for these services, they may be held liable under trademark law. In particular, they may be held liable, as they approved the chosen keywords (a choice which is made by the advertisers with Google’s assistance). They are supposed to verify that the commercial links do not infringe any rights of third parties. Moreover, they may not allege that prior verification is impossible for supposedly material, legal and economic reasons. The Court adds that even if it were established that it is impossible to verify, Google Inc and Google France would have to either simply abandon this activity or bear the consequences.

In fact the Court of Appeal reversed the High Court’s decision, ruling that Google Inc and Google France had committed acts of infringement of the trademark in question. The Google companies were condemned to pay 15.000 euros in damages to TWD Industries.


Monday, 21 January 2008 Condemned For Selling Books Without A Delivery Charge

High Court of First Instance of Versailles (3rd Chamber), 11 December 2007, Syndicat de la Librairie Française v. Société (obs. J.-B. Auroux, in RLDI 2008/33, n° 1118)

The 10th August 1981 Act (‘Loi Lang’) obliges book retailers to fix the sale price of books at a price between 95 and 100% of the price set by the publisher or the importer. This means that a bookstore may not reduce the price of books by more than 5%. The French Association of bookstores took action against (Amazon in France) for selling books on its website without a delivery charge, and for having offered gift tokens to its clients for opening an account. The Association claimed that infringed the 1981 Act and that its behaviour constituted unfair competition.

The Association argued that the gift tokens constitute an illegal sale with incentives to purchase as well as a rebate exceeding the maximum 5% reduction authorised by the law, and unfair competition for the independent bookstores that comply with the legislation. The Association also claimed that free delivery constitutes an illegal sale with incentives to purchase, and possibly a sale at a loss, and in any event unfair competition. argued that it had stopped offering gift tokens in 2003 in order to appease the situation, and that free delivery does not constitute an incentive, but is a normal way to commercialise its products, the very essence of the attractiveness of its business.

The High Court of First Instance of Versailles considered that the 5 euro gift tokens, offered to welcome new clients buying goods for an amount of at least 10 euros, constitutes a price rebate exceeding the rebate authorised by the law, where the purchase price amounts to less than 100 euros.

With regard to the free delivery, the Court recalls that Article L.121-35 of the Consumer Code provides that ‘All sales or offers for sale of goods or any provision or offer to provide services made to consumers and giving entitlement, free of charge, immediately or at the end of a fixed period, to a bonus consisting of products, goods or services, if these are identical to those forming the subject of the sale or the service provision, are prohibited.’ The Court considered that the free delivery generates a sale at a loss for the books sold at a low price, and constitutes unfair competition for traditional bookstores. The Court therefore ruled that the operation is illegal, and ordered to cease selling the books without a delivery charge, with a 1.000 euros daily fine for delay in performance. was also condemned to pay the Association damages.

In an email sent to its clients, explained that the irony of this condemnation is that the aim of the 1981 Act is to preserve cultural diversity and to give the bookstores the means to offer a wide selection of books, and not only best-sellers. also notes that France is the only country in the world in which Amazon has been condemned for such practices. It announced that it has lodged an appeal against the judgement and that in the meantime it would continue to deliver books free of charge. It has also put a petition and a newsgroup on the matter online.


Sunday, 20 January 2008

Recording Agreements: the Obligation to Promote the Albums Released

Cour de cassation (Social Chamber), 26 September 2007, n°06/42.575 (obs. Costes L., in RLDI 2008/33, n°1119)

In application of a recording agreement, the two members of a French band called ‘Native’ had granted the exclusive rights to their recorded performances to BMG France, with an obligation to record at least three albums.

The first two records, released in 1993 and 1997, were successful. One of the members of the band recorded a third album alone. Released in 2002, this album was a commercial failure. The artist brought the case before the labour court, competent to handle litigation relating to recording agreements concluded between record companies and performers. The labour court condemned the record company to the payment of 200.000 euros damages for breach of contract, considering that it had not carried out the necessary promotion when the album was released.

The Court of Appeal upheld the decision, on the basis that the record company had not accompanied the release of the album with a ‘new promotion’ and that the record was released in abnormal conditions. BMG France brought the case before the Cour de Cassation, the French Supreme Court for civil and criminal matters.

BMG France claimed that a record company, which has to perform the recording agreement in good faith, has no obligation to guarantee a result regarding the conditions in which the record is released. BMG France argued that the promotion of a record depends on whether the radio and television stations decide to broadcast the record or not. It also argued that the artist had on several occasions refused to record a single that was supposed to back the promotion of the album, thus violating its contractual obligations.

In its decision dated 26 September 2007, the Supreme Court dismissed BMG France’s arguments. The Court ruled that the Court of Appeal had rightly considered that the record company had not justified the carrying out of a new promotion operation for this third album, apart from one programme on the radio and another on television, whereas this contractual obligation was not disputed.

A record company does not have an obligation to guarantee the success of an album, but has to be able to prove that it used all necessary means to promote the album.


Friday, 18 January 2008

Heineken Ordered to Stop Advertising on its Website

High Court of First Instance of Paris, Summary Order, 8 January 2008, ANPAA v. Heineken

The National Association for the Prevention of Alcoholism and Addiction (ANPAA) brought a case before the President of the High Court of First Instance of Paris against Heineken, claiming that the advertisement for its beer on its website is illegal. It argued that Article L.3323-2 of the Public Health Code does not allow advertisement for alcohol on a website. Indeed, Article L.3323-2 sets out a restrictive list of types of media on which publicity for alcohol is permitted. In particular, advertising may be carried out in the written press (except for the press intended for youth), through sound broadcasting (a decree sets the radio stations that are authorized to broadcast and at what time), by way of posters, signs and objects in certain shops/stores, in the conditions set by a decree… But the law does not mention websites.

Moreover, the association claimed that, by offering attractive elements on its site, such as games and sound animations, Heineken crossed the boundaries set out by Article L.3323-4 of the Public Health Code, which provides that authorized adverts for alcohol may not mention anything other than factual information, such as the percentage of alcohol, the origin, the name, the ingredients etc.

The President, in his summary order, considered that the advertisement carried out by Heineken through the broadcasting of electronic messages on the website, uses a media that is not on the restrictive list provided by Article L.3323-2 of the Public Health Code. He therefore ordered Heineken to remove all messages within 3 weeks following the notification of the decision, with a 3.000 euros daily fine for delay in performance.

This decision could have serious consequences for companies that sell wine and other types of alcohol on their websites. Heineken has lodged an appeal against this summary ruling.