Google wins trademarks battle with Louis Vuitton

Google won a significant victory in its seven-year battle with the owner of Louis Vuitton yesterday when Europe's highest court cleared the internet search giant of trademark violations in its advertising practices.

The row involving LVMH, which also owns the Moet champagne brand, focused on Google's controversial "AdWords" system, which allows online advertisers to buy key search words. Their ads then appear as sponsored links when a user's search terms, including registered trademarks, are typed into Google.

LVMH complained that the practice promoted sales of fake goods because it also directed Google users to unauthorised websites selling counterfeit Louis Vuitton products.

The European Court of Justice rejected LMVH's claim, saying Google had "not infringed trademark law by allowing advertisers to purchase key words corresponding to competitors' trademarks". However, the judges cautioned that advertisers could not use key words to mislead customers into believing they were buying genuine goods, and said both the advertisers and Google were liable.

The ruling outlined the principles behind the case, which will now return to the French supreme court.

Harjinder Obhi, Google's senior litigation counsel for Europe, said trademarks "are not absolute" and consumers benefited in "maximising the choice of keywords". He said the ruling protected internet hosting services as well as AdWords. "This is important because it is a fundamental principle behind the free flow of information over the internet," he added.

Google generated more than $23bn in revenues last year, with almost 97 per cent made through advertising. Much of that was through AdWords.

Pierre Godé, the senior executive vice-president of LVMH, said the result was not a surprise but it was "a fair, balanced decision for all the interests at stake". He did not rule out the two sides coming to an agreement before they return to court.