Adwords: using your competitor's trade mark in a comparative advertisement

On 10 October 2018, the District Court of Noord Nederland (Leeuwarden) rendered a decision in preliminary relief proceedings regarding the use of a trade mark via Adword advertisements on Google.

The parties in this case were Admicom Systems Beheer B.V. ("Admicom") on the one hand and Bouw7 B.V. ("Bouw7") on the other hand.

Admicom is a company specialised in the development, sale and implementing software of automation projects, mainly relating to the construction and installation industry. Bouw7 is a software developer also specialised in software for the construction industry. Admicom and Bouw7 are direct competitors.

Admicom is the owner of Benelux word marks VAKWARE (filed in 1999 for goods and services in classes 9 and 42) and ADMICOM (filed in 2017 for goods in classes 9, 35, 41 and 42).

Bouw7 bought advertisement space on Google by means of Adwords, using ADMICOM and VAKWARE as search terms. As a result, Google showed advertisements of Bouw7, if one of these search terms were used by Google-users.

The advertisement texts shown on Google contained inter alia the following sentences: ‘searching for an alternative? | Number 1 construction software: Bouw7’, ‘Admicom Alternative: Bouw7 – discover the multiple possibilities – bouw7.nl’ and ‘Bouw7: Construction management software | suitable for each construction business’.

The advertisements were linked to a webpage of Bouw7 and the URL in the advertisement contained “admicom”. On the webpage a text was written, starting with: ‘Searching for an alternative for Admicom?’

After a first cease and desist letter of Admicom, stating that the advertisements of Bouw7 were misleading, multiple letters were exchanged. The main subject of the correspondence was about the software packages and the question if these packages were comparable or not.

In preliminary injunction proceedings Admicom demanded amongst various other demands that Bouw7 stops the comparative advertising.

The parties did not argue about if this is a matter of comparative advertising under art. 6: 194a section 1 Dutch Civil Code. However, the parties' opinions differed on whether or not this comparison is permitted, based on one of the cumulative conditions of comparative advertising, namely if the advertisements compare goods or services meeting the same needs or are intended for the same purpose (art. 6: 194a section 2. b Dutch Civil Code). Admicom claimed in addition that, as a result, Bouw7 infringed its trade mark rights in VAKWARE and ADMICOM.

Admicom believed that Bouw7’s software is not a full alternative for Admicom’s software, based on the following:-

• The software of Bouw7 does not contain all the product features of Admicom's software.
• The software of Admicom contains features for the three main processes in the construction industry, namely: acquisition and calculation, construction and project management and finance. Admicom believed that Bouw7’s software only contains features for the construction and project management.
• As an additional argument, Admicom filed as evidence a report of Mr ing N.M. Keijser, who examined the software applications and the information on the websites. This expert concluded that the software packages of the parties were not comparable either.

The question is if Bouw7 compares goods and services meeting the same needs. In respect of this question, case law has held that the terms ‘same needs’ and ‘same purpose’ should not only relate to identical goods but also in relation to goods and services that are interchangeable to a sufficient extent. If these conditions are met, comparisons in advertisements should in principal be permitted.

The presiding judge considered that Bouw7’s software does not need to have exactly the same product features as Admicom’s software to be considered as an alternative. It is relevant if the (reasonably well-informed, observant and circumspect) entrepreneur to whom the advertisement is aimed sees the software of Bouw7 as an alternative for the software of Admicom. Therefore, it is relevant if the goods and services are competitive. The presiding judge believed that this is the case.

Furthermore, the presiding judge was of the opinion that the advertisements of Bouw7 are not misleading by using the Admicom trade marks, because Bouw7 distinguishes itself explicitly by presenting the software as an alternative for Admicom’s software.

Taking this into consideration, the presiding judge came to the conclusion that the advertisements of Bouw7 in which its software is presented as an alternative for the software of Admicom is not misleading and can therefore not result in trade mark infringement (referring to the O2 decision of the CJEU). Therefore the demands of Admicom were rejected.

The lesson learned from this decision is that comparative advertising is not only applicable for identical goods and/or services. As long as the goods and services are interchangeable to a sufficient extent so that the relevant public considers the goods and/or services as alternatives and the goods and services are considered to be competitive, comparative advertising is not misleading as long as the other cumulative conditions in relation to comparative advertising are met as well.