Sunday, September 1, 2013

Domain Names, Metatags & Comparative Advertising

CJEU in summer decided an very interesting technology related case - Belgian Electronic Sorting Technology (BEST) C-657/11. The case might have strong consequences for both the domain name dispute resolution and search engine optimization - SEO (assuming that metatags still matter at least a little bit).

The BEST case is an unfair competition case. The referring Belgian court wanted to know whether
[..] seeks to ascertain whether Article 2(1) of Directive 84/450 and Article 2(a) of Directive 2006/114 must be interpreted as meaning that the term ‘advertising’, as defined by those provisions, covers, in a situation such as that at issue in the main proceedings, first, the registration of a domain name, second, the use of such a [domain] name and, third, the use of metatags in a website’s metadata.
The CJEU first reminded us how broad the definitions of advertising are.
34      Article 2(1) of Directive 84/450 and Article 2(a) of Directive 2006/114 define advertising as a representation in any form made in connection with a trade, business, craft or profession in order to promote the supply of goods or services.

36      In order to determine whether a particular practice constitutes a form of advertising within the meaning of those provisions, account must be taken of the purpose of Directives 84/450 and 2006/114, which is, as is apparent from Article 1 in each of those directives, to protect traders against misleading advertising and its unfair consequences and to lay down the conditions under which comparative advertising is permitted.

39      Consequently, the term ‘advertising’, within the meaning of Directives 84/450 and 2006/114, cannot be interpreted and applied in such a way that steps taken by a trader to promote the sale of his products or services that are capable of influencing the economic behaviour of consumers and, therefore, of affecting the competitors of that trader, are not subject to the rules of fair competition imposed by those directives.
Then CJEU comes up with an answer that a domain name registration per se is not advertising, but use of a domain name and use of metatags is. The crucial part is following:
42      With regard, first, to the registration of a domain name, it should be noted that, as the Advocate General states in points 48 and 49 of his Opinion, that is nothing other than a formal act by which the body designated to manage domain names is asked to enter, in exchange for payment, that domain name into its database and link internet users who type in that domain name only to the IP address specified by the domain name holder. The mere registration of a domain name does not automatically mean, however, that it will then actually be used to create a website and that, consequently, it will be possible for internet users to become aware of that domain name.

43      In the light of the purpose of Directives 84/450 and 2006/114, referred to in paragraphs 36 to 38 above, such a purely formal act which, in itself, does not necessarily imply that potential consumers can become aware of the domain name and which is therefore not capable of influencing the choice of those potential consumers, cannot be considered to constitute a representation made in order to promote the supply of goods or services of the domain name holder, within the meaning of Article 2(1) of Directive 84/450 and Article 2(a) of Directive 2006/114.
"constitutes, at most, a restriction on the communication opportunities of that competitor"

44      Admittedly, as BEST submits, the registration of a domain name has the consequence of depriving competitors of the opportunity to register and use that domain name for their own sites. However, the mere registration of such a domain name does not in itself contain any advertising representation, but constitutes, at most, a restriction on the communication opportunities of that competitor, which may, where appropriate, be penalised under other legal provisions.

Advocate General says in his opinion, nothing else than the Court does. The registration is purely formal act and does not guarantee any use of a domain name. The question I was asking myself when reading these lines was, what would the court say then about pure registration in the context of the trade mark use? Of course, use in commerce is broader than advertising use, which is of relevance here. But if CJEU thinks that the registration "constitutes, at most, a restriction on the communication opportunities of that competitor" that may be "penalised under other legal provisions", I doubt that it can be really the trade mark law that can do this job.  

Google France for instance told us that use in commerce requires that the "third party uses the sign in its own commercial communication". However, if the CJEU believes that a pure domain name registration is nothing else than a formal act, then what commercial communication can we talk about? Yet, one can argue that a registration as a restriction on communication of competitors is in fact a way of acting in commerce. Nevertheless, this does not remove my doubts, because there are plenty of restrictions on communication that competitors usually have to deal with, and only some, not all of them, are in fact acts done in commerce (think of a private person putting a legitimate poster about company next to its advertising poster). Hence any restriction still needs to be an act in commerce. So you are back in the square one.

I know that different jurisdictions have different views on this issue, so it might be interesting to read your comments on this. Of course, lot of domain name disputes involve some kind of use of the domain name. But number of those that involve mere registrations is also not negligible. German practice, as far as I am aware, uses protection of names (§ 12 BGB), which does not depend on any use in commerce, for exactly these reasons.

But back to the CJEU decision:

45      Next, as regards the use of a domain name, it is common ground that one issue in the main proceedings is that Visys uses the domain name ‘www.bestlasersorter.com’ to host a website the content of which is identical to the usual websites of Visys, accessible under the domain names ‘www.visys.be’ and ‘www.visysglobal.be’.

46      Such use is clearly intended to promote the supply of the goods or services of the domain name holder.

48      Furthermore, such use of a domain name, which makes reference to certain goods or services or to the trade name of a company, constitutes a form of representation that is made to potential consumers and suggests to them that they will find, under that name, a website relating to those goods or services, or relating to that company. A domain name may, moreover, be composed, partially or entirely, of laudatory terms or be perceived, as such, as promoting the goods and service which that name refers to.

52      Finally, with regard to the use of metatags in a website’s metadata, it is common ground that one issue in the main proceedings is that Visys inserted into the metadata, and therefore into the programming code of its websites, the metatags ‘Helius sorter, LS9000, Genius sorter, Best+Helius, Best+Genius, ... Best nv’, which correspond to the names of some of BEST’s goods and to the acronym of its trade name.

53      Such metatags, consisting of keywords (keyword metatags), which are read by the search engines when they scan the internet to carry out referencing of the many sites there, constitute one of the factors enabling those engines to rank the sites according to their relevance to the search term entered by the internet user.

54      Accordingly, the use of such tags corresponding to the names of a competitor’s goods and its trade name will, in general, have the effect that, when an internet user looking for the goods of that competitor enters one of these names or that trade name in a search engine, the natural result displayed by it will be changed to the advantage of the user of those metatags and the link to its website will be included in the list of those results, in some cases directly next to the link to that competitor’s website.

56      In the majority of cases, an internet user entering the name of a company’s product or that company’s name as a search term is looking for information or offers on that specific product or that company and its range of products. Accordingly, when links to sites offering the goods of a competitor of that company are displayed, in the list of natural results, the internet user may perceive those links as offering an alternative to the goods of that company or think that they lead to sites offering its goods (see, by analogy, Joined Cases C‑236/08 to C-238/08 Google France and Google [2010] ECR I-2417, paragraph 68). This is particularly the case when the links to the website of that company’s competitor are among the first search results, close to those of that company, or when the competitor uses a domain name that refers to the trade name of that company or the name of one of its products.

57      In so far as the use of metatags corresponding to the names of a competitor’s goods and its trade name in the programming code of a website has, therefore, the consequence that it is suggested to the internet user who enters one of those names or that trade name as a search term that that site is related to his search, such use must be considered as a form of representation within the meaning of Article 2(1) of Directive 84/450 and Article 2(a) of Directive 2006/114.

58      Contrary to what is argued by Mr Peelaers and Visys, it is irrelevant in that regard that the metatags are invisible to the internet user and that they are directly addressed not to that user, but to the search engine. It suffices to note in that regard that, according to those provisions, the concept of advertising expressly encompasses any form of representation, and therefore including indirect forms of representation, particularly where they are capable of influencing the economic behaviour of consumers and, therefore, of affecting the competitor whose name or goods are referred to by the metatags.

Did it occur to you that a legitimate website selling spare parts under e.g. www.spareparts-brand.eu constitutes not only advertising, but also comparative advertising?
Art. 2(c) of the 2006/114/EC Directive: ‘comparative advertising’ means any advertising which explicitly or by implication identifies a competitor or goods or services offered by a competitor;
As the definition does not require comparison, but only identification, domain name in a form of www.spareparts-brand.eu needs to comply with Art. 4 of the 2006/114/EC Directive. Luckily, Art. 4 sets out conditions only in respect to comparison itself ("as far as the comparison is concerned, be permitted when the following conditions are met"), so non-comparative uses won't be concerned with any requirements.

This issue can be, however, more complicated with metatags. Because they arguably make an indirect comparison between the goods. This is even more obvious if you compare it with Toshiba v. Katun C-112/99 case, where Katun used Toshiba's product numbers ("In order for there to be comparative advertising within the meaning of Article 2(2a) of Directive 84/450 as amended, it is therefore sufficient for a representation to be made in any form which refers, even by implication, to a competitor or to the goods or services which he offers. It does not matter that there is a comparison between the goods and services offered by the advertiser and those of a competitor"). Under Art. 4, such comparison has to fulfill following criteria in order to be permitted:
  • is not misleading (Art 4 (a))
  • compares products intended for same purpose (Art 4 (b))
  • objectively compares material, relevant, verifiable and representative features (Art 4 (c))
  • does not discredit competitor‘s marks, products, etc. (Art 4 (d))
  • relates to products with same designation of origin (Art 4 (e))
  • does not take unfair advantage of the reputation of a trade mark, trade name or other distinguishing marks of a competitor (Art 4 (f))
  • does not present products as imitations (Art 4(g))
  • does not create confusion (Art 4 (h))
It is a question of its own, whether improving the placement of own goods next to goods of the competitors in the natural search results (not AdWords) can be misleading (CJEU, seems to be generally fine with that in § 54-55 above). The crucial conditions here, however, are rather 'taking of unfair advantage' and 'objective comparison' elements. To what extent can you say that metatags objectively compare its goods with those of a competitor? In Toshiba v. Katun Court said:

it appears that Katun would have difficulty in comparing its products with those of Toshiba Europe if it did not refer to the latter's order numbers. It also seems clear from the examples of Katun's lists of spare parts and consumable items set out in the order for reference that a clear distinction is made between Katun and Toshiba Europe, so that they do not appear to give a false impression concerning the origin of Katun's products.
In this sense, indicating in metatags that competitors product corresponds in quality or features to my products, can be justified in some circumstances. However, taking of unfair advantage might be more of concern for the metatag user. Toshiba v. Katun is again very relevant:

50. As regards product numbers used by an equipment manufacturer to identify spare parts and consumable items, it is not established that, in themselves, that is to say when they are used alone without an indication of the manufacturer's trade mark or the equipment for which the spare parts and consumable items are intended, they are identified by the public as referring to the products manufactured by a particular undertaking.

51. They are in fact combinations of numbers or of letters and numbers and it is questionable whether they would be identified as product numbers of an equipment manufacturer if they were not found, as in the present case, in a column headed ‘OEM product number’. Likewise, it may be wondered whether those combinations would enable the manufacturer to be identified if they were not used in combination with his trade mark.

52. However, it is for the national court to determine whether the equipment manufacturer's product numbers in question in the case before it are distinguishing marks within the meaning of Article 3a(1)(g) of Directive 84/450 as amended, in the sense that they are identified as coming from a particular undertaking. In order to do so, it will have to take into account the perception of an average individual who is reasonably well informed and reasonably observant and circumspect. Account should be taken of the type of persons at whom the advertising is directed. In the present case, those persons appear to be specialist traders who are much less likely than final consumers to associate the reputation of the equipment manufacturer's products with those of the competing supplier.
I guess this will be no problem in case of metatags usually, because they try to use signs that are used as keywords and hence probably distinguishing enough.

54. An advertiser cannot be considered as taking unfair advantage of the reputation attached to distinguishing marks of his competitor if effective competition on the relevant market is conditional upon a reference to those marks.

55. Further, the Court has already held that a third party's use of a mark may take unfair advantage of the distinctive character or the reputation of the mark or be detrimental to them, for example by giving the public a false impression of the relationship between the advertiser and the trade mark owner (see the judgment in BMW, cited above, paragraph 40).
This again turns the question to the end presentation in the natural results. But the § 54 shows, that using metatags that are necessary for such indication in competition, might be justified.

56. As stated in paragraph 39 above, the indication of an equipment manufacturer's product numbers alongside a competing supplier's product numbers constitutes a positive statement that the technical features of the two products are equivalent, that is to say, it is a comparison within the meaning of Article 3a(1)(c) of Directive 84/450 as amended.

57. It is, however, necessary to determine also whether that indication could cause the public to associate the equipment manufacturer, whose products are those identified, with the competing supplier, in that the public might associate the reputation of that manufacturer's products with the products of the competing supplier.
So if the sole reason to use the metatags is to indicate that competitor also exists, without offering products of same quality or kind, the taking of unfair advantage will occur.

58. In order to make that determination, the overall presentation of the advertising at issue must be considered. The equipment manufacturer's product number may be only one of several indications in it relating to that manufacturer and his products. The trade mark of the competing supplier and the specific nature of his products may also be highlighted in such a way that no confusion or association is possible between the manufacturer and the competing supplier or between their respective products.
Similar line of thought, i.e. protection against the public associating the reputation of that competitor’s products with the products distributed by the metatag user, can be distilled also from Siemens v VIPA 59/05 CJEU case:

17      It is apparent from the order for reference that, by adopting the core element of the Siemens order number system, VIPA is informing the public that the two products in question have equivalent technical features. There is, therefore, a comparison of the material, relevant, verifiable and representative features of the goods within the meaning of Article 3a(1)(c) of Directive 84/450 (see Toshiba Europe, cited above, paragraph 56).

18      It is necessary, however, to determine whether its adoption could cause the public at whom the VIPA’s advertising is directed to associate the manufacturer of the controllers at issue in the main proceedings, and their add-on components, with the competing supplier, since the public might associate the reputation of that manufacturer’s products with the products distributed by that supplier.

19      Firstly, it should be noted that the products at issue in the main proceedings are intended for a specialist public, which is much less likely than final consumers to associate the reputation of Siemens products with that of products distributed by VIPA (see, to that effect, Toshiba Europe, cited above, paragraph 52).

20      Next, the fact that VIPA uses its own acronym in the first part of its order numbers, and states in its catalogue that those numbers correspond to those of the Siemens programme modules, makes it possible for a distinction to be made between VIPA’s and Siemens’ respective identities and does not give a false impression either as to the origin of VIPA products or of there being any association between those two companies (see, to that effect, Toshiba Europe, cited above, paragraph 59).

21      Lastly, it is clear from the file lodged at the Court that the figures and numbers forming the core element of the order number refer not only to the nature of the product concerned but also to its utilisation in the control system. Those numbers and figures must be programmed into the assembly system to operate the controller.

22      With regard to the benefit to the advertiser and the consumer procured by the adoption of a distinguishing mark in identical form to be taken into consideration, the Court has already held that comparative advertising is designed to enable consumers to make the best possible use of the internal market, given that advertising is a very important means of creating genuine outlets for all goods and services throughout the Community (see Case C-44/01 Pippig Augenoptik [2003] ECR I-3095, paragraph 64).
In summary, the metatags can not be perceived as per se wrongful. As usually, it also depends on the reasons and circumstances how they were implemented. The important lesson, however, is, that it is a matter of the Union law to decide if a use of metatags is legitimate (= full harmonisation). Hence, German, English or Slovak law can not rely only on its provisions of e.g. trade name law to decide the cases, but have to take the Directive into account. The Directive that is probably a little bit more liberal, than some Member States courts tend to be.

Hence one little advice for SEO companies: Do think of these possible consequences before you stuff the website of your client with all the sexy and useful keywords.

2 comments:

Fred von Lohmann said...

Seems to me that everyone would benefit from a reminder that metatags are basically irrelevant to search engines. See Eric Goldman's post from 2011 for the full explanation.

Huťko said...

Thanks Fred for your comment!

I completely agree on the technological side (see the ironic opening paragraph "assuming that metatags still matter at least a little bit"), but the question rather is to what extent does the ineffectiveness of the practice change also its legal consequences. The fact that it changes incentives for somebody to pursue a case is obvious. But you see, there are still plaintiffs that did not get it.

From the EU law perspective on comparative advertising, you could e.g. argue that there is no indirect comparison, because search engines just ignore these signs. But for this, you would have to rule out any effect whatsoever, something probably no judge would want to sign. Moreover, the general issue when IP rights get involved, is that even if "keyword metatags [are] as the tree that falls in the forest when no one is around to hear it", this does not necessarily change entire the infringement analysis. Consider formal EU trade mark infringement test, which does not care if your use of a sign was effective at all (or if anyone have seen your use), or whether you caused any damage to the right holder. It's all tested on the abstract level. Unfair competition is usually more flexible and the harm have to be usually proven ..

I don't say that ineffectiveness have no relevance whatsoever, but that it does not make the whole practice necessarily legal under all circumstances.

Best,
Martin