Shamelessly Stealing from Mathias Klang 2

More from the excellent Sound & Fury blog.

How Google Works

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Shamelessly Stealing from Mathias Klang 1

I always read Mathias Klang's blog Sound & Fury and so must you all. The following are to recent posts that everyone should read so I'm reposting here (without his permission). Mathias I'm sure you don't mind...

What Universities Should Know (But Don't).


Net Neutrality Talks Fail - Evidence of "Free Market" Dominance

On 7 September I'm off to a one day workshop on Net Neutrality in the UK. Well I say off but as it is being organised by the Department of Media and Communications at the LSE I'm not exactly going far. Net Neutrality is of course one of the current hot topics of Internet Governance apart from Chris Marsden's excellent book on the subject the debate has been raging across the blogosphere, in the media and in regulatory circles in recent months. 

The focus of much contemporary debate is of course surrounding the FCCs Net Neutrality programme in the United States. As I wrote on 1 October 2009 FCC Chair Julius Genachowski clearlx placed the Federal Government, through the guise of the FCC, on the side of mandated Net Neutrality in the US. Obviously such a position was never going to find favour with the right-wing, free-market position so favoured of the US free-marketeers. Thus almost exactly as Lawrence Lessig predicted in The Future of Ideas in 2001 (you can download the e-book version here under a CC Licence) a merging of carrier and content layer - the content providers and telcos - is starting to emerge and everyone is saying that the free market is the best way to regulate this.

The battle began in spring 2010 when a $1.4 million advertising campaign was launched by Americans for Prosperity (a Reaganite think tank and lobbying group); the National Taxpayers Union; the Free State Foundation and the Small Business and Entrepreneurship Council. This campaign claimed that "Washington wants to spend billions to take over the internet" and urged the public to help stop the "Washington takeover" - see BBC News. Of course as you may expect from this ragbag group of right wing radical thinkers the adverts were not neutral and were downright misleading claiming among other things that "The FCC wants to reduce the internet to an old-fashioned government-regulated utility."

Now I'm no strong supporter of mandated Net Neutrality and generally my approach has been to allow the market to develop before we start mandating controls. My main concern is that some previous US attempts to regulate such as the ill fated Dorgan-Snowe Bill would have made it all but impossible for telcos to deliver high quality high latency materials such as streaming video content such as IPTV or high quality voice content such as VOIP but equally I'm not someone who sees universal access at reasonable speed as some form of Internet Communism. 

As generally a supporter of allowing the market to develop I find what I'm about to say a change in view. The movement epitomised by Americans for Prosperity - a movement who celebrated when Comcast won their famous victory in April 2010 against the FCC when the Court of Appeals for the District of Columbia ruled that the FCC  lacked authority to censure Comcast  for interfering with subscribers’ Internet traffic.

Now it looks like the free marketeers are getting their way and Lawrence Lessig's 2001 dystopian vision of a two tier internet is perilously close to realisation. Closed door meetings between the FCC, Telcos and Content Providers in Washington, begun in the aftermath of the Comcast decision, are reported to have broken up with no agreement. Around the same time Verizon and Google have been dealing with reports that they are near to announcing a deal which would see content carried at a higher speed for a fee (exactly as Lessig predicted). If implemented such a plan would lead to a two tier internet with access to the higher tier being decided by ability to pay. Both firms deny this is the case. Google stated that they remain committed to Net Neutrality; while Verizon stated that the New York Times article behind all the rumours was wrong. 

Maybe it is all just hot air then.

But the very idea that major corporations such as these have the ability to strangle our internet access suggests a failure of regulation. This is where I change my position. The market only works if it is a regulated market - we've seen what happens when you allow markets to pursue profits at all costs - morals, judgement and society are lost in pursuit of the all powerful profit position. We need to move now to regulate the internet access and content supply markets. A failure to act now is something we may regret in years to come. Whereas 2001 (or even 2009) was too early to regulate this developing market it is now mature enough to withstand regulation and the time is now. Maybe internet access should be enshrined as a human right as is already the case in France and Finland and which around 80% of those polled suggested in March 2010 - see BBC. Maybe this right should be to a certain level of access and provision not just a generic access right. 

Today we live in the information society. Access to information is as important to us as access to education, employment and social support mechanisms. If we do not act now the future may look like this.

Google Europe to Sell Trade Marks in Third Party Ads

In a recent New York Times article it was reported that Google Europe will from 14 September 2010 allow advertisers to use trade marks they do not own in placing third party  adverts (or sponsored links in Googlespeak). This will extend to mainland Europe a policy that has been in place in the UK since 2008. 

This decision was taken after the decision of the ECJ in March in Google France  v. Louis Vuitton Malletier (see also the opinion of Advocate General Maduro). Google believe that following this decision the practice of offering trade marks to competitors or even unrelated third party advertisers as a keyword which will trigger the display of their advertisement (or sponsored link) is now legal provided that the advertisement does not confuse the customer into believing the goods or services offered are somehow linked to the trade mark owner (this is broadly what Google France v LVM said.) To protect against the placement of confusing (or even straight out counterfeit) advertisements Google will create an internal reviews process (as is already in place in the US and UK) which will allow trade mark holders to complain about what they believe to be an abusive use of their trade mark. Google will then review the placed advertisement and if they find it to be in breach of Google's Terms and Conditions they will remove the advertisement. Given that the Google France ruling left considerable scope for trade mark holders to litigate future claims it must be imagined that this formalisation of the Google practice into policy will undoubtedly lead to further litigation.

Maybe Google felt emboldened to develop their activities in this area following another, more recent ECJ decision. This is the July 2010 decision in  in  Portakabin Ltd and Portakabin BV v Primakabin BV, a reference for a preliminary ruling from the Hoge Raad der Nederlanden (Netherlands).
Portakabin Ltd, who make and sell mobile buildings, own the Benelux trade mark "Portakabin". An unrelated company, Primakabin, sold and let new and second-hand mobile buildings, both its own and those made by Portakabin.
Using Google's AdWords referencing service, Primakabin chose the keywords ‘portakabin’, ‘portacabin’, ‘portokabin’ and ‘portocabin’, representing Portakabin's name and three popular mis-spellings of it. Originally, the heading of Primakabin’s ad, which appeared once one of those words was entered into the search engine, was ‘new and used units’. Later Primakabin changed this to ‘used portakabins’.

Portakabin sued Primakabin for trade mark infringement, seeking injunctive relief, but failed. The trial judge took the view that Primakabin did not use the word ‘portakabin’ to distinguish goods and wasn't gaining unfair advantage through such use: it was merely using the word ‘portakabin’ to direct interested parties to its website, on which it offered ‘used portakabins’ for sale. Portakabin appealed to the Gerechtshof te Amsterdam, which prohibited Primakabin from using advertising which contained the words ‘used portakabins’ and, in the event that it used the keyword ‘portakabin’ and its variants, from providing a link leading directly to pages of its website other than those on which units manufactured by Portakabin were offered for sale. However, since that court held that use of the keyword ‘portakabin’ and its variants did not constitute use in relation to goods or services, Portakabin appealed further to the Hoge Raad der Nederlanden. The Hoge Raad decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:
‘1. (a) Where a trader in certain goods or services (“the advertiser”) avails himself of the possibility of submitting to the provider of an internet search engine [a keyword] … which is identical to a trade mark registered by another person (“the proprietor”) in respect of similar goods or services, and the [keyword] submitted – without this being visible to the search engine user – results in the internet user who enters that word finding a reference to the advertiser’s website in the search engine provider’s list of search results, is the advertiser “using” the registered trade mark within the meaning of Article 5(1)(a) of Directive 89/104 …?

(b) Does it make a difference in that regard whether the reference is displayed:

– in the ordinary list of webpages found; or
– in an advertising section identified as such?

(c) Does it make a difference in that regard

– whether, even within the reference notification on the search engine provider’s webpage, the advertiser is actually offering goods or services that are identical to the goods or services covered by the registered trade mark; or
– whether the advertiser is in fact offering goods or services which are identical to the goods or services covered by the registered trade mark on a webpage of his own, which internet users … can access via a hyperlink in the reference on the search engine provider’s webpage?

2. If and in so far as the answer to Question 1 is in the affirmative, can Article 6 of Directive 89/104, in particular Article 6(1)(b) and (c), result in the proprietor being precluded from prohibiting the use described in Question 1 and, if so, under what circumstances?

3. In so far as the answer to Question 1 is in the affirmative, is Article 7 of Directive 89/104 applicable where an offer by the advertiser, as indicated in Question 1(a), relates to goods which have been marketed in the European Community under the proprietor’s trade mark referred to in Question 1 or with his permission?

4. Do the answers to the foregoing questions apply also in the case of [keywords], as referred to in Question 1, submitted by the advertiser, in which the trade mark is deliberately reproduced with minor spelling mistakes, making searches by the internet-using public more effective, assuming that the trade mark is reproduced correctly on the advertiser’s website?

5. If and in so far as the answers to the foregoing questions mean that the trade mark is not being used within the meaning of Article 5(1) of Directive 89/104, are the Member States entitled, in relation to the use of [keywords] such as those at issue in this case, simply to grant protection – under Article 5(5) of that directive, in accordance with provisions in force in those States relating to the protection against the use of a sign other than for the purposes of distinguishing goods or services – against use of that sign which, in the opinion of the courts of those Member States, without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark, or do Community-law parameters associated with the answers to the foregoing questions apply to national courts?
In July the Court of Justice ruled as follows:
1. Article 5(1) of ... Council Directive 89/104 ... must be interpreted as meaning that a trade mark proprietor is entitled to prohibit an advertiser from advertising, on the basis of a keyword identical with, or similar to, that mark, which that advertiser has selected for an internet referencing service without the consent of the proprietor, in relation to goods or services identical to those in respect of which the mark is registered, where that advertising does not enable average internet users, or enables them only with difficulty, to ascertain whether the goods or services referred to by the ad originate from the proprietor of the trade mark or from an undertaking economically linked to it or, on the contrary, originate from a third party.

2. Article 6 of Directive 89/104 ... must be interpreted as meaning that, where use by advertisers of signs identical with, or similar to, trade marks as keywords for an internet referencing service is liable to be prohibited pursuant to Article 5 of that directive, those advertisers cannot, in general, rely on the exception provided for in Article 6(1) in order to avoid such a prohibition. It is, however, for the national court to determine, in the light of the particular circumstances of the case, whether or not there was, in fact, a use, within the terms of Article 6(1), which could be regarded as having been made in accordance with honest practices in industrial or commercial matters.

3. Article 7 of Directive 89/104 ... must be interpreted as meaning that a trade mark proprietor is not entitled to prohibit an advertiser from advertising – on the basis of a sign identical with, or similar to, that trade mark, which that advertiser chose as a keyword for an internet referencing service without the consent of that proprietor – the resale of goods manufactured and placed on the market in the European Economic Area by that proprietor or with his consent, unless there is a legitimate reason, within the meaning of Article 7(2), which justifies him opposing that advertising, such as use of that sign which gives the impression that the reseller and the trade mark proprietor are economically linked or use which is seriously detrimental to the reputation of the mark.
 The national court, which must assess whether or not there is such a legitimate reason in the case before it:

– cannot find that the ad gives the impression that the reseller and the trade mark proprietor are economically linked, or that the ad is seriously detrimental to the reputation of that mark, merely on the basis that an advertiser uses another person’s trade mark with additional wording indicating that the goods in question are being resold, such as ‘used’ or ‘second-hand’

– is obliged to find that there is such a legitimate reason where the reseller, without the consent of the proprietor of the trade mark which it uses in the context of advertising for its resale activities, has removed reference to that trade mark from the goods, manufactured and placed on the market by that proprietor, and replaced it with a label bearing the reseller’s name, thereby concealing the trade mark
; and

– is obliged to find that a specialist reseller of second-hand goods under another person’s trade mark cannot be prohibited from using that mark to advertise to the public its resale activities which include, in addition to the sale of second-hand goods under that mark, the sale of other second-hand goods, unless the sale of those other goods, in the light of their volume, their presentation or their poor quality, risks seriously damaging the image which the proprietor has succeeded in creating for its mark.
As has been widely reported a non-legalistic report of this case may be that the ECJ has ruled adwords do not infringe trade marks - see PC World or The Inquirer but this is not the case - as perhaps more accurately reported in The Register the true outcome of the Portacabin case is:
When choosing AdWords, unless the products and services of the trade mark owner and brand bidder can be clearly differentiated without the risk of internet users being misled then brand bidding will amount to trade mark infringement.  
Thus Google may remain at the centre of this particular storm for some time to come.