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March 23, 2010 12:14 PM

Herbert Smith Gets a Partial Win for Google in the E.U.

Posted by Zach Lowe

The world of Internet law has been on fire with major rulings in the last few months, with every crucial decision seemingly raising as many thorny legal questions as it answers. Today's biggie: The European Union's highest court has ruled that Google (represented by Herbert Smith) does not infringe on trademarks when it sells company names and other trademarked phrases to competitors of those companies for advertising purposes, according to The Wall Street Journal and Bloomberg

The lead plaintiff in the case, the ultralitigious (in the area of Internet law and trademarks, anyway), LVMH Moet Hennessy Louis Vuitton, had charged Google with infringing on its trademarks by selling trademarked phrases to sellers of counterfeit luxury goods. The company feared that such sellers could buy the rights to advertise along the side of search results that show up when a Google user types in "Louis Vuitton" or other trademarked names, according to the AP and the WSJ. The luxury goods maker won a similar case in the EU last month against the online auctioneer eBay; in that case, LVMH charged that eBay paid search engines like Google for the right to have eBay links pop up in ads next to search results those search engines produce when users type in common misspellings of company names. As we've reported, LVMH claimed counterfeit sellers buy the right to have their ads pop up when users misspell words such as "Vuitton."

Back to today's ruling at the European Court of Justice: Google and some IP folks are hailing the ruling as a huge victory for Google, which had argued that it should not be held liable for any infringement, since it merely acts as the host board for advertisements in a free marketplace. "The decision to click or not to click belongs to who?" Herbert Smith partner Alexandra Neri said at trial last year, according to the Guardian. "Clearly to the Internet user." The court largely agreed, holding that Google's practice of selling trademarked terms does not amount to infringement.

But the victory is not complete, according to other legal experts. The court left the door open for companies to win damages from Google if they can prove the search engine giant knowingly accepts ads from counterfeit sellers and moves slowly to have those ads removed. National courts will have to sort out that issue, The AP says. But it appears companies will have a difficult time winning damages if Google can prove its system for placing the initial ads is automated, and that the company takes fast steps to have counterfeit ads taken down. (Google says it forbids the advertising of counterfeit goods.)

Neri did not return a message seeking comment.

It has been quite a couple of months for Google in the E.U. As we've reported, an Italian court last month convicted three Google executives on charges that the company violated a disabled student's privacy rights when users posted video of teenagers making fun of that student on Google's old video-sharing site. Antitrust authorities all also investigating charges that Google is artificially lowering the placement of its chief search engine rivals in user search results. 

Most of the other high-profile battles involving Internet giants and luxury goods makers, including LVMH, have focused on whether online auctioneers, including eBay, should be held liable for the sale of counterfeit goods on those auction sites. Rulings have been mixed around the world, and the U.S. Court of Appeals for the Second Circuit has yet to publish its ruling on a closely watched case in which Tiffany sued eBay. Arnold & Porter is advising Tiffany in that case; Weil, Gotshal & Manges is advising eBay.

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