Google eyed by European Parliament Report on misleading and aggressive advertising

The European Parliament has approved a report recommending that the European Commission introduces new legislation to combat misleading and aggressive advertising. Although the Unfair Commercial Practices Directive already regulates this area, the Juvin Report highlights the danger of the growth of new, more pervasive forms of advertising being used on the internet.

Though there is no explicit mention of Google Inc, it is obvious that the proposals target some of the services offered by the internet giant. With a clear reference to Google’s AdWords service, the Report calls on the Commission to condemn the practice of allowing companies to bid for keywords associated with brand names in search engines. When an internet user enters a purchased keyword into a search engine, that company’s advertisement is displayed alongside the ‘natural’ search results. Since 2000, when AdWords was first released, Google has faced countless lawsuits in the US and across the EU over its service. Despite claims that selling brand names as keywords encourages acts of parasitism and counterfeiting, the European Court of Justice has upheld the practice as lawful so long as the associated ads do not mislead the user as to the identity of the advertiser. The Report proposes that keywords associated with registered trademarks should only be available if the owner of the trademark authorises such use of the brand in question.

Targeted advertising is also flagged up as an unfair advertising practice. With significant implications for Google’s Gmail service, the Report recommends the complete prohibition of third parties reading private emails for advertising purposes. It is suggested that such practices are intrusive and constitute an attack on the privacy of individual consumers. Besides Google, websites such as Trip Advisor could also come under fire if the proposals are taken up. The Report warns of the danger of ‘hidden advertising’ which takes place in forums where consumers post comments to one another about various goods or services. It recommends the creation of forum moderators, and suggests running a campaign to alert consumers about this form of advertising.

The Report is scheduled for a full vote in December.

Further reading

Read the Juvin Report

Internal Market and Consumer Protection Committee press release

By Katey Dixon

Asda “living dangerously” with in-store optician ads

Using an advertising campaign that intentionally mimics a competitor, and invites customers to draw a comparison between the two services may approximate “living dangerously”, but does not in itself amount to trademark infringement. In what was a disappointing outcome for Specsavers, the High Court was only willing to accept one of the three claims against the supermarket chain, Asda.

As the logo for its in-store optician, Asda chose two oval shapes indicative of a pair of spectacles. The Specsavers’ logo uses the same idea. However, whereas the ovals are positioned side-by-side in Asda’s logo, in Specsavers’ the ovals overlap in the middle. Underlining the mimicry, Asda adopted the pale green hue favoured by Specsavers as the colour for its logo. Despite these similarities the court was unwilling to accept Specsavers’ argument that the logo amounted to an infringement causing confusion.

Factors persuading the court in Asda’s favour included the fact that, since Specsavers had not registered their mark in a specific colour, the colour of the mark in question was an irrelevant issue. It was also noted that although the ovals were similar and formed an important part of the logo, this was not the dominant aspect. The court held that the wording “ASDA optician”, written inside the ovals, formed the active part, and thereby introduced a significant difference from the claimant’s brand. This meant that a ‘reasonably circumspect consumer’ would not be confused by the two logos. The evidence that Asda was intentionally “living dangerously” did not alter this conclusion.

Where Specsavers did succeed was in its claim that the strapline - “be a real spec saver at Asda” - took unfair advantage of the distinctive nature of their trademark. The court held that, wishing to establish a reputation for value, Asda had used a strapline which clearly called to mind “Specsavers” in order to gain an unfair advantage. The court dismissed Specsavers’ third claim that Asda was guilty of passing off. Since none of the marks gave rise to confusion, the element of misrepresentation that lies at the very heart of any such claim was missing.

Further reading:
Specsavers International Healthcare Ltd v Asda Stores Ltd [2010] EWHC 2035 (Ch)
http://your.asda.com/2010/8/2/judge-rules-you-can-get-spec-savings-at-asda

Is it possible to trademark a smell?

Following the ECJ's ruling in the 2001 Ralf Sieckmann case, courts have continued to support the view that it is not possible to register smells or sounds as trademarks. A smell cannot be adequately graphically represented by a verbal description because it is too imprecise. Manufactured smells (which would include scents and perfumes) can give rise to intellectual property rights which will generally attach to the information describing the ingredients of / or formulae for the smells or to the processes of production (or both). This type of information has traditionally been protected by treating it as a trade secret.

By way of analogy, take for example the ingredients for Coca-Cola®. This information has always been guarded by the company as a trade secret and its disclosure to employees or third parties has always been under the form of non-disclosure agreements. Trade secrets are generally enforced by contract.

The advantage of holding a trade secret is that the intellectual property rights can exist indefinitely so long as you manage to keep it a secret. The trick is to make sure that you have sufficient contracts in place (whether with your employees or contract manufacturers or other third parties) to allow you to disclose freely the ingredients and means of production of your scents on a need to know basis. Any misuse or unauthorized disclosure of a trade secret by a contracted party would generally amount to a breach of contract and an actionable claim in the courts, giving the holder the right to an injunctive remedy (where available) and possible recovery of damages.


If you would like more information on this article or require assistance in the preparation of non-disclosure or employer/employee covenant terms to safe-guard this type of intellectual property, please contact Forde Campbell LLP.

Where does your Intellectual Property come from?

A crucial issue to consider before an organisation licenses its IP is the need to check the organisation’s actual right to license the IP. Does the organisation actually own the IP? If the organisation’s product uses IP provided by a third party, has the third party entered into a licence agreement with the organisation?

Of vital importance, does that licence agreement allow the organisation to bundle the third party’s IP into the organisation’s own product and on-licence it?
The importance of this can hardly be overstated, and this is an issue frequently overlooked in any licensing transaction. The reason for its importance is two-fold:

• if the organisation (party A) licenses to a licensee (party B) IP which A itself obtained from a third party (party X), A needs to be certain that it is permitted to on-license in this way. If such on-licensing is prohibited under the terms of A’s agreement with X, or imposes terms on how X’s IP must be sub-licensed, A will be in breach of the agreement with X to the extent that it on-licenses X’s IP or fails to fulfil the conditions imposed by X on the on-licensing. In such a situation, X will be able to sue A for damages caused by the breach of contract.

• secondly, party B may negotiate terms with A which require A to warrant that it has all necessary consents to allow B to use the licensed IP, including X’s IP. B may also require a specific indemnity from A so that A agrees to compensate B for any losses suffered as a result of a legal claim that A has no right to license the IP it is providing to B.

In this situation, party A is in serious trouble if it does not have the necessary permissions from X to provide X’s IP to B. It will be in breach of warranty to B, and liable to the indemnity being triggered if B suffers a loss as a result of A’s failure to obtain the necessary permissions from X.

In this example, party A needs to take extreme care to “back-to-back” its obligations to party B with the benefits it receives from party X. A can only allow B the scope of use of X’s IP which the agreement with X allows it to on-license. Equally importantly, the extent to which A agrees to be liable to B needs to back-to-back with the extent of liability offered by X to A. For example, if X agrees to be liable up to a financial cap of £1 million for failure of its technology to work, A would be extremely unwise to offer a £5 million cap to B in relation to X’s technology. If X’s technology failed and B claimed losses of £4 million from A, A would only recoup £1 million from X.

A typical area where IP licensors overlook the terms on which they themselves have licensed IP is in the software licensing world, in particular in relation to Open Source software. This is software the source code of which is made available to the end user for free: it is therefore attractive to many developers.

Users of Open Source software frequently overlook the fact that while it may be provided for free, this does not mean that the Open Source organisations do not impose restrictions on the use of the software. For example, Open Source licences frequently require that the Open Source organisation is given some form of credit in any on-licensing by an Open Source user; alternatively, the Open Source user may be required to document any changes made to the base Open Source product. Occasionally, the libertarian ethos underpinning Open Source has encouraged users to believe that there are no restrictions on use. The trend of recent court cases, however, is to protect the interests of the Open Source organisations: in Jacobsen v Katzer (August 13th 2008, US Court of Appeals) a court not only upheld the credit and change documentation restrictions as enforceable, but added that the user’s failure to comply with them was not simply a breach of contract, but also a breach of copyright. This allowed the supplier the extra remedy of suing for copyright infringement. Licensors who use Open Source code should therefore take care that they comply with any restrictions relating to how the code should be used and on-licensed to the licensor’s licensees.