Naked Law

Finally some good news for Google?

In a ruling earlier today, the European Court of Justice found that Google’s AdWords service does not amount to trade mark infringement, but advertisers should be aware that trade mark owners will be able to prevent their trade marks being used in some circumstances.

The decision makes it clear that in offering its AdWords service Google does not infringe the rights of owners in their trade marks, regardless of whether the owners are famous or obscure. This means that Google’s integrity has been upheld even though there are now serious questions for advertisers.

Advertisers buying AdWords will only be able to avoid trade mark infringement if it is clear to consumers that the goods they are advertising are not associated with the trade mark owner and the advertisements do not undermine that owner’s advertising. Ironically this will be more difficult for owners of famous trade marks to prove, as Google will already be promoting their genuine sites in its statistical results.

However in a boost for Google and other internet service providers (ISPs), the ECJ has clearly stated that internet service providers can benefit from the "safe harbour" exemption from liability as long as they don't interfere, and act quickly to remove offending material. This conclusion is a welcome support to ISPs left disgruntled by the Italian court's decision to hold Google executives liable for a video posted on Google Video (see our previous post for more information). The exemption will still apply if they make money out of the service. This is a very sensible conclusion which ensures that the internet can continue to provide commercial services, as the ECJ has pointed out that making money is not the same as exercising control. Therefore, Google and others will not be liable just because they take money from advertising which they do not control, even if the advertising can be prohibited by the trade mark owner. 

Trade mark owners will therefore have to keep a close eye on competitors using AdWords - or live with it.

Gas case: more fuel for supplier fears?

We've all been concentrating on the Sky v EDS case (on which there was a useful seminar from SCL and Intellect this week), but there was another recent judgment on direct loss and exclusion of liability, in a dispute over the supply and maintenance of an IT system.

In GB Gas Holdings v Accenture, Accenture was contracted to design, supply, install and maintain a new IT system for Centrica, which included an automated billing system. The billing system was the third of five software releases required to deliver the system. There were substantial delays to its release and, after finally switching millions of customers over to the new billing system, Centrica experienced significant problems with functionality and performance.

The parties failed to resolve the various issues and Centrica issued proceedings against Accenture for breach of warranties. Accenture sought to rely on the limitation of liability clause in the contract which excluded liability for indirect or consequential loss and loss of profits, business or revenues.

The Court found that Centrica could claim the following as direct losses:

• around £18.7m paid by Centrica to gas distributors based on incorrect data of customers' gas consumption provided by the IT system;
• £8m for compensation paid to Centrica's customers for the poor service and billing problems;
• £2m for additional borrowing charges incurred to finance the business due to late billing or non-billing;
• around £400,000 for the cost of chasing customer debts which were not actually due; and
• additional stationery and correspondence costs of around £100,000 required to keep customers up to date on fixing the issues.

Although this ruling does not change our interpretation of existing laws, it is interesting because it demonstrates how widely the Courts are willing to interpret 'direct loss'. This will comfort the customer, but IT suppliers may want to consider strengthening their liability clauses.

Bad day for Google?

An Italian court's decision to convict three Google executives last week for allowing a video to be posted online is already attracting significant criticism.

The video, showing an autistic boy being bullied at a school in Turin, was posted on Google Video in 2006. It was removed as soon as it was brought to Google's attention. The person who uploaded the video was traced with Google's help and later convicted.

The Google employees were found guilty in a criminal prosecution of violating the victim's privacy by not seeking his consent before the video was posted. The decision has been called "ridiculous" by the UK's previous Information Commissioner and an "outraged" Google intends to appeal.

If the decision stands, there is concern (although I suspect this is a bit of a knee-jerk reaction) that social networks and the like will simply disappear from the internet because it is impossible for companies to vet every bit of content uploaded to their sites and they would not want to be held criminally liable for that content. It also seems to be at odds with the spirit of the European Commission's attempts to protect free movement of information services on the internet. In particular, E-Commerce Directive specifically protects ISPs from liability for certain offences where they simply provide caching or hosting services, or act as conduits for information, without actually monitoring or creating the content - this is the exemption that most ISPs and hosting providers currently rely on.

And the court decision is not the end of Google's problems. It was also reported last week that the European Commission has asked the company to comment on allegations that it is acting anti-competitively in the way that it filters and ranks web pages. Three separate companies have made complaints that Google ranks pages at the expense of competing search engines. Google has until next week to respond.

With the ongoing dispute about Chinese censorship and the future of Google Books hanging in the balance, Google seems to be having a really bad day (or month) at the office.....