Google vs. LVMH

Google Inc. may have to more aggressively monitor the use of trademarked terms as keywords that link Internet searches to advertisements after a European Union court ruling today.

The ruling raises questions about whether Google, the owner of the most popular internet search engine, will have to alter the business model that drove sales to $23.7 billion last year. The company stores ad content on its systems, which the court today said may make Google liable for trademark breaches if national judges find it plays an “active role” in creating the promotions.

The decision is the first time the EU’s top court has ruled on the rights of companies such as LVMH to prevent search engines in the 27-nation region from distributing protected names as keywords. It doesn’t change how Mountain View, California-based Google sells the ads, which made up 97% of revenue last year.

Instead, Google may have to monitor ads linked to searches for terms that are trademarked to avoid the risk that national judges will rule against it. That may be a large workload for Google and other online companies. About half of all online searches involve brands or specific products.

The decision left it to national courts to analyze on a case by case basis whether the role played by Google is OF A MERE TECHNICAL, AUTOMATIC and PASSIVE NATURE.

The decision may have implications for other online service providers, such as EBay Inc., which last month in a dispute with LVMH was ordered by a French court to pay 200,000 euros ($270,000) for reserving misspelled versions of brand names.

LVMH will use the ruling “to show that online referencing services such as Google and EBay do play an active and not a passive role,” said Pierre Gode, vice-president of Paris-based LVMH.

“Our objective is not to cause a bloody combat or to break up the Internet, we just seek an access with intelligence,” Gode said.

Advertisers may face more lawsuits by LVMH and other brand owners after the court said that advertisers who buy protected keywords for ads on search engines without identifying whose products they sell will be liable for trademark breaches.

This part of the ruling may force Google to change their business model.

In some countries, mainly in Europe, Google blocks names from being chosen as keywords once it’s received proof that they are protected trademarks. This isn’t the case in about 190 countries, including the U.K., Ireland and the U.S., following a change of its policy in June to give users more choices.

Google and LVMH have been fighting for seven years in France over Internet searches linked to trademarks. Google is appealing a Paris court’s 2006 ruling in favor of LVMH claims that the U.S. search engine provider breached its trademarks.

LVMH sued Google in 2003 and the Paris Central Court three years later ordered Google to pay 300000 euros for trademark infringement.