The issue tackled in this review concerns the legality of a third party´s use of another´s trademark, without the trademark holder´s permission, on an internet search engine. In other words, trademark infringement on the internet.
The judgement of the Supreme Court of the 20th of April 2022 (No. 330/2022) establishes that the unauthorised use of a registered trademark by a third party within the framework of an internet search engine, under specific conditions, does indeed constitute a violation of trademark rights.
The facts of the case dealt with by the judgement are, in a nutshell, the following:
1) The company Grupo Ilusión de Ortodoncistas, S.L. (“GIO”) is the holder of the trademark “Clínicas Ortodoncis”.
2) The company Laboratorio Nicolás, S.L. (“LN”) is the holder of the trademark “Vital Dent” and franchisor of Vital Dent
3) When entering the words “Clínicas Ortodoncis” into the Google search engine, amongst the search results (“Google Adwords”) displayed were advertisements related to Clínicas Ortodoncis, in which, however, the website address of the holder of the trademark Vital Dent appeared, as well as the contact number.
4) Clicking on said advertisements opened a page with the Vitaldent logo, although under the header “Clínicas Ortodoncis”. Furthermore, if one typed into the search engine the brand “clínicas ortodoncis”, the webpage of Vital Dent
5) The results obtained were “adwords” and not “organic search results”, a consequence of the fact that the advertiser owning Vital Dent´s webpage had bought the keyword “Clínicas Ortodoncis” from Google.
GIO brought an action against LN (Vital Dent), based on the infringement of the registered trademark “Clínicas Ortodoncis”, as well as on acts of antitrust (acts that go against the good faith provided for in Article 4 of the Law of Unfair Competition, acts of confusion of Article 6, acts of exploitation of the reputation of another of article 12, acts of confusion due to the risk of association of article 20 and acts of deception of article 25).
We shall focus on the fundamental question regarding trademark infringement through said acts.
It is interesting to note the Supreme Court’s reasoning with regard to the challenging party’s defence argument, in that the doctrine of the Court of Justice of the European Union endorses the legitimate use by a third party of the name of a registered trademark in the key words in the Google Adwords search advertising service, because the distinctive sign of the trademark is not used in this act, but only the name (“ortodoncis”), which constitutes a diminished distinctiveness, the prohibition of which violates the free competition of articles 5.2 of Directive 89/104 and 9.1c) of Regulation 40/94 (Case C-323/09 and case C-94/2017). The supreme court dismisses the case presented for various reasons:
- In spite of the above judgements, the Supreme Court based its argument on the judgement of the Court of Justice of the European Union of 23rd March 2010 regarding the joined cases C-236/08 and C-238/08 (the “Google France” case), which establishes the doctrine which is behind the case object of the judgement. It cites that in the aforementioned judgement of the Court of Justice of the European Union it was declared that said articles should be understood in the sense that the holder of a trademark is authorised to prohibit a third party (advertiser) from selecting or storing a keyword which is identical or similar to the trademark, without the consent of the holder of the trademark in the context of a referencing service on the internet, and from advertising products or services which are identical to those for which the trademark was registered, when said advertising does not allow or hardly allows the average internaut to determine whether the products or services included in the advertisement originate from the holder of the trademark or from a company financially linked to the trademark holder or whether, on the other hand, they originate from a third party. In support of this judgement, the Supreme Court cites the doctrine of the Interflora case (C-323/09), which refined the criterion of the aforementioned judgment, in the sense that this prohibition of the trademark holder can be extended to cases in which such unauthorised use of the trademark leads to the impairment of one of the functions of the trademark, i.e.: the indication of origin, its purpose as an investment or the advertising function.
- In light of said doctrine, and when applied to the case in question, the Supreme Court deemed proven the following:
(1) Vital Dent contracted the Adwords service;
(2) The name applied for constituted the trademark of the plaintiff; and
(3) the services offered by the plaintiff and the defendant were identical.
Taking into account that the advertisement with the link to the Vital Dent website was preceded by the mention of “Clínicas Ortodoncis” the court considered that unauthorised use of the trademark had taken place without consent from its holder in order to identify identical services, undermining the indicative function of the entrepreneurial origin of the offered services, taking into account that the average internaut is not capable of determining whether the services of the advertisement originate from the holder of the trademark, or from a company financially linked thereto, or even from a third party.
As for the damages caused to the plaintiff, it is noteworthy that the judgement confirmed the sentence to pay the amount equivalent to 1% of the defendant’s turnover , in application of article 43.5 of the Trademark Act and the Judgement of the Supreme Court 351/2011 of 31st May in which the possibility of applying damages directly is established without the need for evidence, when this is expressly provided for in the law. The presumption of the amount of damages to be paid by the infringer of a trademark right provided for in article 43.5 of the Trademark Law operates precisely in order to establish the financial damage and the loss of profit in cases that are very difficult to quantify, under penalty of finally being left without compensation due to the impossibility or great difficulty involved in the calculation. On the other hand, the Supreme Court warns that the aforementioned turnover of the defendant must refer to all of the services illicitly indicated, that is to say, all of those which are proven in the proceedings to have been advertised by means of infringement of the plaintiff’s trademark, without it being necessary to distinguish which services were effectively provided as a result of the advertisement and which were not.
Eduardo Vilá
Vilá Abogados
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8th July 2022
