Under what circumstances can a competitor lawfully use a third party’s trademark online?
The brand has the power to unite a customer base. Impulsively, instinctively, thoughtlessly. Sometimes blindly. Has this attractiveness, which takes a company years, if not decades to build, lost its power of attraction on Internet ?
The question may arise when a competitor company uses a third party’s brand through a commercial link (called a “sponsored link”) to attract potential customers to its own website. Is it misleading advertising? Confusion deliberately induced in the mind of the consumer? This is no longer the issue, as this process is legal. Indeed, the jurisprudence is categorical and constant in this matter.
Absence of demonstration of an actual risk of confusion between the websites
Indeed, everything was called into question more than a year and a half later when the Cour de cassation overturned the Court of Appeal’s decision.
Regarding Google’s liability, it was already established that it should benefit from the limited liability regime instituted for the benefit of hosting companies by article 6-1-2 of the law of June 21, 2004 “Loi pour la confiance dans l’économie numérique”(LCEN).
In the judgement of January 29th, 2013 ruling, the “Cour de cassation’ held that the simple fact of using a trademark belonging to a competing company as a keyword in order to broadcast an advertisement is not considered to be characteristic of an unfair customer misappropriation.
In the absence of a demonstration of an actual risk of confusion between the websites of the two companies, the sollicitation of other people’s customers must be considered perfectly legal as long as it is not associated by an unfair act.
The display of the Solutions company’s “homecinesolutions.fr” website, after a Google search using the term “Cobrason”, also does not constitute misleading advertising either according to the judges. The same applies for using the phrase “Why pay more”.
In order for advertising to be considered misleading and likely to mislead, it must relate to one or more of the elements listed in Article L. 121-2 of the Consumer Code.
This decision is consistent with three rulings handed down by the European Justice Court on March 23, 2010 (CJEU, March 23, 2010, aff. C-236/08 to C-238/08, Google AdWords), which authorized the use of keywords corresponding to brands of a third party company, as part of an Internet referencing service.
This is consistent case law since the Court of Appeal, in a similar case, also recognized that the simple referencing under the “Delko” brand is not sufficient to characterize parasitic behavior by the defendant company and must be considered as lawful sollicitation of customers (CA, Aix-en-Provence, 2nd Ch., April 3, 2014, RG n°12/10894).
De facto, the deferencing of a competitor constitutes an act of unfair competition when the risk of confusion is not established.
The ‘Cour d’appel de Lyon’ thus considered, correctly according to the ‘Cour de cassation’, that by obtaining from the company Google that it removes the referencing of the advertiser on the Internet, the holder of the brand had unduly deprived the advertiser of a means of access to a clientele (CA, Lyon, January 19, 2012, 09/07831 – Ccass, com, May 14, 2013, 12-15.534).
The risk of confusion must be demonstrated, it cannot be deduced from the simple use, as a keyword, of a corporate name or a trademark of a competing company in the context of a referencing service (CA, Paris, Pôle 5 ch. 5, March 5, 2020 n°17/13954).
The ‘Cour d’appel de Montpellier’ ruled in this sense in a decision dated March 16, 2021 (CA Montpellier, Commercial Division, March 16, 2021, No. 18/03922).
The dispute was between the company Sodex-CPDEM, which sells household appliance spare parts in an establishment located in Montpellier, and the company Severo, a wholesaler of household appliance spare parts, which had used the name CPDEM in the advertisement of its commercial link.
According to the Court, the company SODEX did not demonstrate that it was sufficiently known, so that it could not establish that the click made on the disputed commercial link ‘cpdem montpellier servero.fr’ translated the wish of the Internet user to be on its site rather than on that of the company Servero.
Thus, as soon as the sollicitation of customers is accompanied by an unfair process, it becomes illegal.
For example, the use of the sign “PAP” by the company Entreparticuliers is, according to the judges, constitutive of infringement, since this sign constituted a sign of identification and information for the consumer linking it directly to the trademark of the company Les Editions.
Clicking on this sign directly directed the consumer to the website of the company Entreparticuliers, taking unfair advantage of the notoriety of the trademark “PAP” and creating a risk of confusion as to the origin of the products offered (CA Paris, Pôle 1, June 26, 2014, No. 2013/09891).
Countermeasures to be put in place
The use of a competitor’s trademark as a keyword is possible, provided that no unfair act is noted, the sole sollicitation of third party customers being legal.
The Courts will examine in particular whether the proposed site does not allow, or only with difficulty allows, the average Internet user to know whether products or services are from the holder of the brand or a company economically linked to it or, on the contrary, a third party (CA, Paris, Pôle 5, chamber 2, 21 June 2013 n°12/11394).
In view of the jurisprudence cited, it is strongly advised to put in place countermeasures and in particular to have a particularly identifiable Internet site, as well as catchphrases federating the clientele so that the latter is not diverted by a third party having acquired the brand of its competitor as a keyword.
Indeed, in order to characterize an act of unfair or parasitic competition, judges may have to verify whether the plaintiff company’s website has been the subject of investments to make itself known (CA, Rennes, 3rd Ch. Com, July 3, 2018, RG n°16/00156). The consumer, impulsively, instinctively and thoughtlessly, but never blindly, will always thank the brand for knowing how to defend its territory fiercely.
Thus, allowing a competitor to use a competitor’s trademark in a referral service significantly weakens trademark protection on the Internet in favor of freedom of trade and competition.
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