Russian Court Rules Keyword Ads Generated by a Web Service Do Not Violate Trademark Rights

Businesses often resort to placing keywords in the html code of a web page, meta tags, or in contextual advertising templates for promoting their products on the internet. And in many cases, rivals successfully recover compensation from competitors who use someone else’s trademark to promote their products. But the use of other people’s trademarks is not always intentional. Recently, a Russian entity proved that there was no infringement of intellectual property rights when a trademark that was similar to another mark had been included in an advertisement by a web service. In this landmark case, the courts of all instances, including the Supreme Court, reaffirmed that keywords that are automatically generated in search systems cannot infringe as defined by Russian intellectual property law.

The Arbitration Court of the Stavropol region found no violations because the search results were not dependent on the actions of the defendant, were technical, and were not aimed at signifying the goods on the internet.

Factual Allegations

The “Center for laser vision correction and cataract surgery Ophthalma” (Ophthalma), is the owner of exclusive rights for the trademark “Ophthalma” for advertising agency services. Ophthalma brought a lawsuit against the “High technologies of eye microsurgery” (HTEM, the defendant) to recover compensation for violation of its exclusive rights for the Ophthalma trademark in the amount of 1,000,000 rubles. Ophthalma also demanded that the defendant publish the court’s decision indicating the actual owner of the trademark “Ophthalma” in the official Bulletin of the Federal Agency for intellectual property.

The defendant commissioned an advertising agency and contracted it to set up and maintain contextual and targeted advertising campaigns in online services including Yandex.Direct, Google adwords, and myTarget. The purpose was to offer HTEM’s products or services to the persons most interested in purchasing them. These results were then placed in the most favorable positions in the Yandex search systems, as well as on Facebook, Instagram, Google, and the social networks Vkontakte and Odnoklassniki.

The advertising agency placed ads through the system Yandex.Direct with the text: “Ophthalmic!”, “Ophthalmic! Only 1 operation. Get 10% off now!”.

The agency placed ads on Yandex.Direct using templates that included a keyword in the text; in this case, the keyword was “Ophthalmo!” Thus, Yandex indexed the public words “ophthalmo”, “ophthalmology” and “ophthalmologist”, which were used in the advertising campaigns, together with publicly available information including the word “ophthalmia”.

This word also had been placed on the internet by the plaintiff for advertising its services. Opthalma thus argued that HTEM had posted the specified trademark in the text of its advertising messages on the internet sites yandex.ru, mail.ru, avito.ru through the search system, contextual advertising., etc. without the plaintiff’s consent, in violation of Opthalma’s trademark rights.

Legal Framework and Court’s Reasoning

Article 1229 of the Civil Code of the Russian Federation (Civil Code) stipulates that the use of a trademark is allowed only with the consent of the right holder. The absence of a prohibition on use is not considered consent. According to paragraph 1 of article 1484 of the Civil Code, the right holder has the exclusive right to use the trademark.

Subparagraph 5 of paragraph 2 of article 1484 of the Civil Code provides that the exclusive right to a trademark can be carried out for individualization of goods, works or services, in relation to which such trademark is registered, in particular by the placement of the trademark on the internet. Also, a trademark grants the owner ability to obtain the domain name and other methods of addressing consumers. Paragraph 3 of article 1484 of the Civil Code sets forth that no one has the right to use a trademark without the authorization of the right holder.

The Indexing Process

Yandex provides services on the internet at addresses in the domain yandex.ru offering advertisers placement via keywords chosen in common user search queries. This system, like other similar systems in Russia, is based on automatic indexing of public information, created and publicly available on the internet by third parties.

Indexing is a regular and continuous automated processing of website pages by a special computer system—namely, a search robot that regularly bypasses the internet on a certain route. Processing implies the analysis of pages by a search robot as a set of characters and the recording of certain parameters of the analyzed page to the database. Search advertising is the principle of displaying advertising in advertising spaces (places allocated in the design of the web page to place advertising ads). By means of this mechanism, the display of the advertisement is carried out under the condition of the presence of a word/phrase in the corresponding search query of the user, specified by the advertiser as a criterion (keyword / phrase) for display of this advertisement.

The indication of the word “Ophthalmo! in the search box “Yandex” led to the automated creation of similar names to the plaintiff and the defendant. Thus, the analysis of technical features of the rules of service display Yandex.Direct established that the keywords in the Service Yandex.Direct could not possess signifying ability in relation to any goods, services or persons.

The court concluded that use of a trademark as a keyword for technical purposes, without use for the individual goods and services established in article 1484 of the Civil Code, could not cause confusion between goods and services of their manufacturers. Moreover, such use could not be defined as the use of a trademark within the meaning of article 1484 of the Civil Code.

Verbal Use of the Trademark

The trademark that was the subject of the dispute had been registered for goods in class 44 of
the International Classification of Goods and Services. This includes veterinary services; services in the field of hygiene and cosmetics for people and animals; services in the field of agriculture, gardening and forestry. The combined designation of this trademark has no semantic and visual identity with the verbal designations ” Ophthalmo!”and designation of “Ophthalmic! Only 1 operation. Get 10% off now!”. The phonetic resemblance to the element “ophthalmic” was not at issue, since it was not a dominant factor in the compared designations.

The semantic feature in the verbal element “ophthalmia” is absent, since this word is fictitious. The plaintiff did not refute this fact.   The verbal elements ” ophthalm -” and ” ophthalmo – ” are prefixes denoting an eye or eyeball and there is nothing unique or special in them. The verbal element “ophthalmic” is descriptive and generally accepted in medical activity; the meaning of this designation is clear to the ordinary to the consumer without additional reasoning.

At the same time, the verbal element “ophthalmo” is widely used by many manufacturers and organizations in the domain name system of the internet dedicated to ophthalmology, both in Russia and abroad. The verbal elements “RU” and ” RF” in the designation are common top-level domains related to Russia and used by a significant number of users.. decided to deny the plaintiff’s claims.

Supreme Court Agrees

The case was subsequently appealed to the Supreme Court of the Russian Federation. The Supreme Court reaffirmed the statement that a technical action, independent of the will of the defendant, could not be recognized as the use of the plaintiff’s trademark within the meaning of article 1484 the Civil Code. The main function of the advertising was contextual and to provide the consumer with a link to a specific source of information about the services provided by the defendant as well as the plaintiff.

The Supreme Court reiterated that the purpose of advertising placement was primarily to provide the consumer information about the resources located at the address in a network on the internet. The Court noted that, if the search results are of interest to the user, this happens automatically, and does not depend on the actions of the advertiser. Therefore, the keywords in the service ” Yandex.Direct” could not possess any ability to signify any particular goods, services or persons.

Ultimately, the Supreme Court dismissed the applicant’s arguments on appeal and held that there were no significant violations of substantive and procedural law that warranted revising the first instance decision.

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