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01 July 2013
The Committee for Unfair Competition recently found that the purchase and use of a competitor's trademark as a Google Adword was in breach of good business practice.
The Committee of Unfair Competition acts as an arbitration board and issues advisory opinions in cases where there has been a breach of the Marketing Control Act. The committee cannot instruct a party to take action or to cease activity; however, most upstanding businesses will follow its recommendations and stop their infringing activity. The committee's decision also often carries weight if a case proceeds to court.
The committee is not entitled to award legal costs or damages. The committee's proceedings are in writing, which means that they are speedier and cheaper than judicial proceedings.
In several cases the committee has ruled on the general unfair competition standard (Section 25 of the Marketing Control Act), which applies where an advertiser has made use of a competitor's rights, even in the absence of a risk of confusion. The committee's recent decision regarding use of trademarks as Google AdWords may also be viewed as affirmation that the Marketing Control Act is applicable as an independent legal basis for trademark-related claims. However, the committee emphasised that it was not in a position to consider whether the purchase and use of a trademark as an AdWord constitute use of a trademark according to the Trademark Act; rather, its jurisdiction entitles it only to determine whether the common practice of purchasing a competitor's trademark as an AdWord is in line with good practice under the Marketing Control Act.
By emphasising this distinction, the committee differentiated this present case from previous European Court of Justice decisions regarding AdWord-related topics in relation to the interpretation of the EU Trademark Directive and the EU E-commerce Directive (Joined Cases C-236/08, C-237/08 and 238/08) and Case C-323/09. The committee further emphasised that the Marketing Control Act and the unfair competition legislation are not harmonised within the European Union/European Economic Area.
The issue arose between competitors in the home furniture market. Defendant Teppeland AS purchased and used the TEPPEABO trademark as a Google AdWord. Teppeabo AS claimed that this action and the use of its trademark as an AdWord constituted a breach of good business practice among traders, according to Section 25 of the Marketing Control Act. Teppeabo further claimed that the use of its trademark as an AdWord breached Section 30, which prohibits the use of protected trademarks in any way that is likely to cause confusion in the marketplace. Teppeabo also claimed that the use constituted misleading advertising under Section 26.
The committee found that the use of TEPPEABO as an AdWord did not constitute misleading advertising; nor was it likely to cause confusion. However, the committee did find that the use of the claimant's established trademark as a "hidden doorway" for network traffic to Teppeland's website constituted unreasonable use of Teppeabo's efforts and fell within the scope of Section 25 of the Marketing Control Act.
The committee stressed that the goodwill in a trademark, which results from the trademark owner's marketing efforts, is what causes the internet user to use the term as a search term in the first place. Therefore, exploitation of this goodwill should not be allowed unless the trademark owner has given its consent to such use or is given reasonable compensation. Thus, Teppeland's unauthorised use constituted taking unfair advantage of Teppeabo's reputation and efforts, and was considered to be a breach of good business practice.
The committee's decisions are not legally binding and, in order to determine the prevailing law, this case or similar cases must be tried before the ordinary courts. However, this decision was well reasoned and should carry weight in a later court case.
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