The ECJ decided that this practice is fine so long as advertisers’ identities are clear.  Also, the organization indicated that trademark holders should direct complaints about such things at advertisers, not Google.  All of which helps establish AdWords as an acceptable business model in the European Union’s 27 member states.

Dr. Harjinder S. Obhi, Google’s Senior Litigation Counsel in EMEA region, wrote in response on the Official Google Blog, "We believe that user interest is best served by maximizing the choice of keywords, ensuring relevant and informative advertising for a wide variety of different contexts."

Obhi then continued, "For instance, if a user is searching for information about a particular car, he or she will want more than just that car’s website.  They might be looking for different dealers that sell that car, second hand cars, reviews about the car or looking for information about other cars in the same category."

Unfortunately for Google, its stock is down a bit this morning in the wake of the ruling, but that’s more likely due to the mess in China.

The Paris court has ordered eBay to stop using keywords which harm the reputation of the Louis Vuitton brand to promote its sites and will impose penalties of  $1,372 (1,000 euros) for future violations.

"Louis Vuitton welcomes this decision, which confirms established case law that aims to protect the consumer from the illicit use of company trademarks," said Nathalie Moull-Berteaux, Global Intellectual Property Director of Louis Vuitton.

The court also ordered eBay to pay $274,407 (200,000 euros) in damages to Louis Vuitton. eBay has also been ordered to pay $41,161 (30,000 euros) to reimburse the legal costs of Luis Vuitton.

"This case is about the use of Adwords to direct buyers’ listings for authentic goods from eBay sellers," said Yohan Ruso, director general of eBay France.

"This issue is being used by certain Rights Owners as an excuse to retain total control of what people can buy, where they can buy it from, and how much they have to pay. This is why 750,000 Europeans signed a petition to the European Parliament last year, protesting barriers to Internet trade."

Items like coveted Louis Vuitton bags show up in counterfeit versions around the world. The fight by luxury brand manufacturers like LVMH to stop them brought the company in conflict with eBay.

Although eBay regularly takes down counterfeit items and works with many big brand companies, the Tribunal de Commerce in Paris decided the company didn’t do enough. E-Commerce Times said the French court ordered a $63 million judgment against eBay for not doing enough to keep LVMH brand products out of its listings.

A furious eBay vowed to fight the decision:

“We believe that this ruling represents a loss not only for us but for consumers and small businesses selling online, therefore we will appeal. It is clear that eBay has become a focal point for certain brand owners’ desire to exact ever greater control over e-commerce. We view these decisions as a step backwards for the consumers and businesses whom we empower everyday.

“We believe that the overreach manifests itself through an attempt to impose, in France, a business model that restricts consumer choice through an anti-competitive business practice.

“The ruling also seeks to impact the sale of second-hand goods as well as new genuine products, effectively reaching into homes and rolling back the clock on the Internet and liberty it has created.

France has proven a pain to eBay, with the company losing a suit to Hermes recently, as well as an action by a group of auction houses that consider eBay a vehicle for stolen goods, the report said.

A word of advice to Googleplex denizens: you may wish to keep your Taiga bags at home after today, considering the broadside fired by Louis Vuitton after an appeals court in Paris upheld a District Court’s February 2005 verdict against Google for trademark counterfeiting, unfair competition and advertising, Reuters reported.

Vuitton was furious that Google’s search ads displayed links to sellers of counterfeit Vuitton merchandise alongside legitimate resellers. Google will sell trademarks as keywords to competitors, and allow their use the trademarked term in an AdWords advertisement’s text.

Google’s Trademark Policy places the burden of settling trademark disputes on the advertiser. If Google receives a complaint, it will only investigate whether an ad in question uses the trademark in the ad text.

Vuitton said in a statement the Appeals Court had awarded it 300,000 Euros in damages, an increase from the earlier ruling. The court further granted Vuitton 60,000 Euros in legal expenses in its decision. Lastly, Google has to publish details of the sentence in four magazines at its expense, the report said.

Selling these keywords has been a sore point for other businesses besides Louis Vuitton. Geico and Google settled a case with direct insurance seller Geico in September 2005, while a similar suit filed by Check N Go in February 2006 is still ongoing.

A Google spokesperson quoted in the Reuters report said Google had implemented a policy that bars advertisers from buying “search listings under trademarks held by others.” But the AdWords policy cited earlier appears to contradict that statement, unless “listings” does not mean paid search advertisements for some reason.

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David Utter is a staff writer for WebProNews covering technology and business.