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European ruling makes it tougher on Google advertisers

All eyes are on China this week as Google watchers assess its potential risk in that fast-growing market. But across the globe in Europe, the world’s most-used search engine is grappling also with the possible  fallout  from a spat over its advertising model.
The company scored a victory in Europe’s top court on Tuesday over the legitimacy of its Adwords system, with a ruling that found Google does not infringe trademark law by selling to advertisers keywords that trigger paid ads.
The case, in which one plaintiff was luxury brand LVMH, was seen as a major challenge to Google’s business model. LVMH — the purveyors of all things Louis Vuitton –  argued it sought to protect brand holders’ trademarks in the digital age. 
Yet despite the victory, as Reuters pointed out last week, the world’s largest search engine is still not out of the woods. Some warn that Google could see its ad revenue slide if advertisers pull out of Adwords, concerned they could be found liable in future for trademark violations. 
That’s because brand owners can now take up claims against advertisers who use their trademarks to confuse consumers, according to the court, which said Google  too may be liable if the company actively manipulates keywords or fails to act on legitimate complaints.

“Google’s legal victory may prove to be a little hollow,” wrote Eric Goldman, an associate professor of law at Santa Clara University School of Law in a blog this week. “It could still see revenue contraction if advertisers are dissuaded by their legal exposure.”
Will advertisers, who depend on the exposure from Google’s powerful search engine, balk? Goldman points out that trademark owners still have an arsenal of legal options to throw at advertisers, from legislative changes to going after advertisers one by one. 

LVMH, in a statement, acknowledged that the court’s ruling did not test Google’s business model. But it said the decision would make it easier for brand owners to combat illicit use of registered trademarks.