See Pacific Boating Group Pty Ltd v Freedom Boating Club Pty Ltd  FCA 72 (8 February 2012)
Extract from legal newsletter, IBLS:
The latest advocate general opinion on keywords advertising could, if followed by the European court, have a significant impact on Google’s advertising model. The advocate general’s opinion in Interflora v M&S advises that a trademark owner can take action against an advertiser who attempts to benefit from the attractive force of the proprietor’s mark. This is the first time that such a high court has opined on a dispute between a trademark owner and advertiser, rather than examining Google’s role – but it could deter advertisers from bidding on others’ trademarks.
The advocate general states that trademark use as a keyword can be forbidden under Article 5(2) of the European Trademarks Directive if “the advertiser attempts thereby to benefit from its power of attraction, its reputation or its prestige, and to exploit the marketing effort expended by the proprietor of that mark in order to create and maintain the image of that mark”.
Yesterday evening a crowd gathered at University College London for a seminar on the future of advertising function of the trademark. Although the speakers were in the dark about the advocate general’s opinion in Interflora, they nevertheless provided insight that takes on a new light today. For instance, this latest opinion continues the court’s flirtation with the advertising function, which could disappoint Annette Kur, one of last night’s speakers and co-author of the recent study into the European trademark system. “Including the advertising function into reasoning under Article 5(2) TMD is unnecessary and dangerous,” she said, advising brand owners to forget about trying to use the advertising function to gain protection beyond the established function of the trademark. “Stick to what you know,” she said.
Trademark owners will have to wait some time for the court’s judgment in Interflora.
See also FT
Given the nature of the alleged infringement here, the most relevant factors to the analysis of the likelihood of con- fusion are: (1) the strength of the mark; (2) the evidence of actual confusion; (3) the type of goods and degree of care likely to be exercised by the purchaser; and (4) the labeling and appearance of the advertisements and the surrounding context on the screen displaying the results page.
The district court did not weigh the Sleekcraft factors flexibly to match the specific facts of this case. It relied on the Internet “troika,” which is highly illuminating in the context of domain names, but which fails to discern whether there is a likelihood of confusion in a keywords case. Because the linchpin of trademark infringement is consumer confusion, the district court abused its discretion in issuing the injunction. "
"There is no stopping Google selling trademark terms as keywords. That is the message from the US courts this week. A judge from the US District Court for the Eastern District of Virginia has dismissed Rosetta Stone's case against the search giant, effectively killing off once and for all the conventional method of attacking the AdWords programme.
Rescuecom had already dropped its case against Google (in order to fight a suit on exactly the same issue but where it is the defendant). But the fact that a court has now dismissed this type of case is very surprising, as it shows that they cannot even get to court anymore. The message is that mark owners will be wasting their time suing Google for trademark infringement. The Court of Justice of the European Union recently said the same thing, although it left the door open for mark owners to sue those third-party advertisers that purchase competitors' trademark terms as keywords.
While the Best Buy v Rescuecom case will be tried from this particular angle, it appears that Google is off the hook. Users of the AdWords programme may sue each other, but the view of one US court at least is that there's no point suing Google. If trademark counsel want to stop the sale of their trademark terms to their competitors, they need to switch tactics. Fast."
Source: World Trademark Review
In a long-awaited opinion, the 2nd U.S. Circuit Court of Appeals ruled that Google must face a trademark infringement lawsuit for selling keywords that trigger ads.
The three-judge panel reversed a lower court's dismissal of Rescuecom v. Google, 06-4881, in which computer-repair company Rescuecom had claimed that users could be confused by links to competitors' ads that appear alongside Google search results for the company's trademarked name.
Rescuecom Corp. v. Google Inc., 2009 WL 875447 (2d Cir. April 3, 2009)
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This website has some useful links and references: http://www.epiphanysolutions.co.uk/article-index/rights-and-laws-of-the-internet/