Filching a Good Name for Internet Use?

Not only are the handbags fake, LVMH Moët Hennessy Louis Vuitton says, but when unauthorized parties buy its trademarks as keywords to generate search ads, its own cost of using those brand names on Google soars.

LVMH and a number of other companies want Google to stop the practice, and a European court ruling expected Tuesday is shaping up to be the biggest test of its legality. Analysts say millions of euros are at stake, in a case with significant implications for the use of the Internet as a marketing tool for brand owners and as a moneymaker for Google.

Google has faced similar lawsuits in the United States, but it has settled some of them, and no clear precedents have been established. So legal experts say the decision by the European Court of Justice in Luxembourg will be watched closely around the world.

“It’s going to be the first time we’re going to get a high court reviewing the legality of these kinds of business practices,” said David Bernstein, a trademark expert at the law firm of Debevoise & Plimpton in New York.

Google says AdWords, its search advertising system, complies with trademark law because it blocks advertisers in Europe from using others’ brand names in the actual texts of sponsored links. Google also removes links to counterfeiters’ sites, like the one advertising discounted handbags, when brand owners or consumers complain.

Google says it wants to be able to sell branded keywords to a variety of bidders because users of its search engine want to see ads for other sites, including those carrying product reviews and secondhand goods, and not just the brands’ official sites.

“We believe that consumer interest is best served by maximizing the choice of keywords, ensuring relevant and informative advertising for a wide variety of different contexts,” the company said in a statement.

But Google’s policy on sales of keywords to third parties varies by country. In France, court rulings have required Google to block the sale of such keywords at the request of the trademark owner. In other countries, including Britain and the United States, Google has moved to liberalize the practice. In the United States, Google even allows advertisers to use a rival’s brand name in the text of an ad in some cases.

“Under trademark law anywhere in the world, brand owners have the right to stop third parties from using their names,” said Pierre Godé, an LVMH board member and adviser to the chairman, Bernard Arnault. “Why make an exception for the digital world?”

After several French courts ruled in favor of LVMH in a battle that began in 2003, Google turned to the highest appeals court in France, which sent the case to the Luxembourg court for clarification of the main issues.

An adviser to the European court with the title of advocate general largely sided with Google in a nonbinding opinion published last year. The advocate general, Luís Miguel Poiares Pessoa Maduro, said it was very unlikely that consumers would be misled by the practice, a major test in many trademark cases.

The advocate general did say, however, that he thought Google could be held liable if it sold keywords to counterfeiters or other trademark violators.

Over all, the advocate general’s opinion was seen as a rare bit of good news for Google on the European legal front, where it has recently faced adverse rulings in a privacy case in Italy and a copyright lawsuit in France.

Neither Google nor LVMH has said how much money is at stake, but hints have emerged in a separate lawsuit that began in Britain and that has also been referred to the European court. In that case Interflora, the online florists’ network, sued the retailer Marks & Spencer, which had bought the Interflora keyword on Google as a way to promote the Marks & Spencer flower delivery service.