Trademarks (Internet)

Application 8774/06 Matim Li et al v. Crazy Line Ltd. et al (Tel Aviv District Court, July 31, 2006)

This decision is the first decision of an Israeli court regarding the issue of use of trademarks as keywords triggering sponsored link advertisements for the website of the competitor of the trademark owner. Matim Li, a large chain of outlets for big size clothes for women sued Crazy Line, its competitor, for using its trademarks "ml" and "matim li" (a phrase which means in Hebrew "fits me") as keywords triggering sponsored links advertisements for Crazy Line's website. The sponsored link advertisements themselves did not contain the Matim Li trademarks and the only use of the trademarks was done in the Google Adwords system "behind the scenes". Crazy Line also sued Google for letting this practice take place in the Google Adwords system.

The Tel Aviv District Court (Justice Magen Altuvia) rejected the claim in its entirety. Justice Altuvia's basic approach towards the matter is that a user of a search engine understands that the search engine is like a mall of information, where many of the "stores" (i.e. the search results) are not interesting. Also, Justice Altuvia believes that the user expects to receive all kinds of advertisements, including sponsored link advertisements, along with the algorithmic results provided by the search engine. Thus, for the sake of protecting the freedom of trade, it is perfectly legitimate to use keywords related to the field of interest of the user, regardless of the fact that those keywords may be trademarks of a third party competitor. Justice Altuvia is also of the opinion that since there was no use of the trademarks at stake in the advertisements themselves but rather "behind the scenes" only (as keywords triggering the ads), it seems that such use should not constitute trademark infringement. Moreover, although the mark "ml" may have been extensively used by Matim Li, it was not registered by Matim Li as a trademark while a third party did have a trademark registration in respect thereto. Thus, it could not be said that the mark was entirely associated with the plaintiff.

When confronting the precedent of the Supreme Court judgment in the matter of Aloniel, Justice Altuvia indicates that although it seems that according to the Aloniel judgment, any use of a third party trademark is prohibited, this is not exactly the case - even the Aloniel judgment should be interpreted so as to require that the use of the trademark is prohibited only as long as it creates some sort of unlawful advantage to the defendant. In this case, Justice Altuvia believes that there is nothing unlawful in the defendant's behaviour and prefers freedom of competition over the plaintiff's rights. Similarly, Justice Altuvia also denies the cause of action of passing off, since there was no likelihood of confusion that any user might mistakenly believe that the Crazy Line' website is related to Matim Li. Also, there is no merit to claim unjust enrichment.

Matim Li also contended that the defendants violated section 3 of the Commercial Wrongs Act (regarding burdening access to a business), based on the Magnetics v. Diskcopy District Court case, since once the defendant's divert the user to try another website (and create the "initial interest confusion"), the defendants make it harder on the user to access the plaintiff's website. In this regard, Justice Altuvia is of the opinion that there is no burdening on the user. As long as there is no use of the trademark in the sponsored link ad itself, nothing is unlawful. Justice Altuvia also believes that the "initial interest confusion" doctrine of the famous Brookfield case should not be applicable to this case.

Finally and most importantly, Justice Altuvia fully adopts the recent US court ruling in the matter of Merck v. Mediplan, which provides that "the sponsored link marketing strategy is the electronic equivalent of product placement in retail stores", and that the use of the mark as a keyword is not a use of the mark in the trademark sense. Thus, there is no infringement of the plaintiff's rights.

Interestingly, Justice Altuvia leaves the question of Google's liability open, as it is not necessary to decide upon it once it has been decided that the other defendants did not violate plaintiff's rights.