IP Cases & Articles

BEST: New Methods Tagged Onto Definition of Advertising

Following a reference from the Belgian Cour de Cassation, in Belgian Electronic Sorting Technology NV v Bert Peelaers and anor. C-657/11, the Court of Justice of the European Union (CJ) has ruled on the definition of ‘advertising’, within the meaning of the Comparative Advertising Directive 2006/114/EC (CAD). In particular, the CJ has confirmed that ‘advertising’ can be interpreted as including use of metatags and the use of a domain name (as opposed to the mere registration of a domain name).

Metatags are invisible words hidden within a website (in its metadata or programing code, for example) so that when the relevant word is searched for (eg, via Google) the website has the potential to appear nearer the top of the list of search results.

The defendant had registered and used ‘bestlasersorter.com’ (‘BEST’ was an acronym of the claimant’s company name) and the defendant also used the claimant’s name and products as metatags within their website. Both parties were producers of sorting machines and sorting systems incorporating laser technology.

‘Advertising’ is defined in the CAD as:

the making of a representation in any form in connection with a trade, business, craft or profession in order to promote the supply of goods or services, including immovable property, rights and obligations.

The CAD provides that in order to be non-abusive advertising, a number of conditions must be fulfilled. Examples of these requirements include:

  • not being ‘misleading’ (ie, the advert deceives or is likely to deceive, resulting in a change of economic behaviour of a consumer or injury to a competitor)
  • comparing goods/services meeting the same needs or intended for the same purpose
  • not taking unfair advantage of the reputation of a trade mark, trade name or other distinguishing marks of a competitor.

If an act which is deemed to fall within the definition of ‘advertising’ fails to meet these criteria, then such act would be deemed to be unlawful. By way of background, under the provisions of the CAD, individual member states may allow brand owners to launch proceedings direct or to designate an administrative body to deal with breaches of the CAD. (In the UK, the government has appointed Trading Standards authorities to initiate proceedings on behalf of traders and consumers.)

In relation to domain name issues, the CJ clarified that the mere registration of a domain name, being a purely formal act, did not fall within the definition of advertising.

The CJ stated that registration of a domain name did

not necessarily imply that potential customers can become aware of the domain name.

On the other hand, the use of a domain name was held to amount to ‘advertising’ within the meaning of the CAD.

The CJ also held that the use of metatags would fall under the CAD. The CJ said that it was not important that metatags are invisible to the user of a website, highlighting that the CAD covered both direct and indirect advertising. As metatags have the potential to elevate a website within a consumer’s search engine results, a consumer may have thought that the defendant’s website was linked to the claimant. Therefore, this demonstrated that the use of metatags is capable of affecting the economic behaviour of a consumer.

Commentators have observed that it will be difficult for metatag use to ever comply with the CAD criteria, such as to objectively compare “one or more material, relevant, verifiable and representative features of a product”. Further, it appears that if a company wants to cite a competitor brand in a domain name (which it will then actively use), such domain name may itself need to fulfil the requirements of the CAD. These issues will be important for all individuals and companies considering using the name of a competitor or their products within their own brand advertising strategy.

This is an interesting decision that shows the continued struggle to interpret legislation in light of evolving technology. Being a CJ decision, we will follow with interest how this judgment is applied by national courts and also how regulators such as the Advertising Standards Authority in the UK deal with these issues going forward.