AIRBUTLER: Austrian Supreme Court holds advertiser liable for content of dynamic search ad, in a ruling of wider interest

Briefing

The Austrian Supreme Court has ruled that the use of a third party trade mark in a Google Dynamic Search advert can constitute trade mark infringement by the advertiser. This was so even though the commissioned advertising method independently and automatically used the third party's trade mark without the advertiser's permission and the advertiser was not able to prevent every trade mark infringement in advance.

What has happened?

The AIRBUTLER case concerns the liability of an advertiser for the unauthorised use of a third party’s trade mark to advertise its own product where that advert was automatically generated using Google Dynamic Search Ads.

Google describes dynamic search adverts as follows, "When someone searches on Google with terms closely related to the titles and frequently used phrases on your website, Google Ads will use these titles and phrases to select a landing page from your website and generate a clear, relevant headline for your ad." In other words, the advertiser does not dictate which words are used in the advert headline and cannot black-list certain words (although it can ensure that an advert is not generated if certain keywords are used).

The advertiser using the dynamic search ad was ruled to be liable for trade mark infringements caused by the algorithm of the dynamic search ad. Neither the knowledge of the trade mark infringement nor the culpability of the advertiser was considered to be relevant for the evaluation of liability. Only the advantage to the advertiser was found to be essential for the attribution of liability. An advertiser must take the advantages and disadvantages of the use of dynamic search ads.

The Austrian Supreme Court also ruled that the advertiser is responsible under Austrian trade mark law for the fact that Google lists product names together with words that are confusingly similar to a third party's trade mark.

This is an important ruling which extends the liability of trade mark owners for the use of third party trade marks in keyword advertising.

Want to know more?

The AIRBUTLER case is the first decision of the Austrian Supreme Court on dynamic search ads which it says represents a subcategory of keyword advertising.

Dynamic search ads are based on terms created from content on the advertiser's website by an algorithm. Based on titles and frequently used phrases on the website, the dynamic search ads will select a landing page and generate a clear and relevant headline for the ad. Therefore, the advertiser does not choose the terms and phrases for the advertising headline.

For the legal assessment of the attribution of liability pursuant to sections 51 – 54 of the Austrian Trademark Protection Act, the Austrian Supreme courts referred to the case law on the use of advertising agencies and section 18 of the Austrian Unfair Competition Act. These provide that, even if a company does not specify the content and form of an advert or even if it expressly waives content specifications, the company is liable as long as it has the legal possibility to prevent or remedy the infringement.

The company can prevent or remedy the infringement by withdrawing the order from the advertising agency at any time. Furthermore, the company can influence the tool’s (ie the algorithm’s) selection of terms or phrases by creating an exclusion list.

In the case of the unauthorised use of a third party’s trade mark, liability was considered by the Austrian Supreme Court to be excluded only if a normally informed and reasonably attentive internet user easily recognises that the goods or services advertised do not originate from the owner of the trade mark or from a company economically associated with it.

The Austrian Supreme court ruled that this was not the case in the relevant ad, "Airbutler – devices with top test results" (Airbutler – Geräte mit top Testergebnissen). According to the Supreme Court, the ad would create the impression that it originated from the owner of the AIRBUTLER trade mark itself or an economically or organisationally connected company. This impaired the function of the trade mark as an indication of origin.

By using the advertising technology dynamic search ads, the advertiser was considered not to be relieved from the outset of its obligation not to engage in advertising that infringes a third party’s trade mark. This cannot be altered by the fact that the advertiser was limited in its influence on the content due to the technical design of the advertisement.