PARIS—The European Union’s highest court ruled Tuesday that Google Inc. has the right to sell ads linked to the Louis Vuitton name and other famous brands, a landmark judgment that clears search engines of trademark liability in Europe and protects a crucial revenue stream.
The European Court of Justice in Luxembourg ruled that Google is not liable for trademark infringement when it sells ads linked to keyword searches for a brand to one of the brand’s competitors.
The court argued that the search giant is merely a host for ads, and turned down a lawsuit brought by luxury-goods group LVMH Moët Hennessy Louis Vuitton SA. The court concluded that it is an advertiser’s responsibility to make clear if the product it is selling is different from the brand keyword typed in by the consumer.
The ruling is a victory for Google and protects its main source of revenue, says Nicola Dagg, an Intellectual Property lawyer at the London-based law firm Allen & Overy. “It gives Google legal certainty over what is a very big cash cow,” Ms. Dagg said.