What Trademark Owners Should Know About Google’s AdWords

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Google, the world’s largest Internet search engine, has become wildly popular among Internet users, winning polls and awards year after year for its innovative approaches to organizing the vast amounts of information on the Web. Google’s free search engine is funded in large part by its online advertising program, AdWords. While AdWords is a lucrative program for both Google and advertisers, it raises issues not only for businesses’ intellectual property attorneys but for brand managers as well. AdWords effectively fosters trademark infringement, in turn potentially diminishing brand value. As courts grapple to resolve these issues, the resulting decisions can and will affect the day-to-day business of companies around the world.
What is AdWords? 

The AdWords program uses keyword-based advertising in the form of “sponsored links” that appear on the right side of the browser window when a search term is entered. The model enables advertisers to write their own ad text, select the keywords that will trigger their ads, and pay only when users actually click on the ads. Google’s standard agreement with advertisers requires that the chosen keywords and ad copy be relevant to the advertiser’s Web site, products or services and holds the advertisers responsible for the content they choose. The agreement also prohibits trademark infringement, and the company has implemented a Trademark Complaint Procedure allowing trademark owners to submit complaints about the alleged misuse of their trademarks in the AdWords program.

As trademark owners are finding out, however, these parameters fall short of preventing competitors from piggybacking on established trademarks and brands. If a company’s competitors can choose a keyword that matches that company’s existing trademark, then consumers can be lured to the competitor’s product instead of the initial product they desired. For example, a user who searches for “Tiffany & Co” will receive a list of search results with relevant Web sites, including Tiffany’s authentic site, as well as “sponsored links” to businesses that sell various brands of jewelry. These paid advertisements may be helpful to users searching for general information about jewelry. However, a user searching specifically for Tiffany & Co. jewelry may initially be misled by these “sponsored links.”

Some argue further that Google’s resulting profit is unjust and that the AdWords program leads to the misappropriation of the trademarks’ goodwill because Google allows companies to purchase their competitors’ trademarks as keywords.
 

What’s the big deal?

When a competitor purchases your trademark as a keyword through AdWords, Internet users will see your competitor’s ad on the right side of the page when they search for your trademark. This is disconcerting to trademark owners worldwide. Why should competitors be able to hijack your trademarks and brand to attract consumers looking for your product?

Trademark infringement occurs when a trademark connected to a particular product is used by another company in a way that confuses consumers about the source, affiliation or sponsorship of that product. In the case of AdWords, consumers searching for a specific brand may have used the trademark as a search keyword, but instead be directed to a competitor that has purchased the trademark as a keyword to prompt an advertisement for its product. Once on the unintended competitor’s Web site, the consumer will likely realize the mistake, but may be content to stay and purchase the competitor’s product.

The value of a brand heavily influences a consumer’s loyalty because a strong brand – clearly exemplified by a thoughtful trademark – differentiates a company from others in the marketplace. If one business is able to profit from the value of another business’s brand, then the consumer’s loyalty can potentially shift, thus diminishing the brand’s value.

Since the inception of AdWords several years ago, a handful of trademark owners around the world have sued Google to stop the sale of their trademarks as keywords. In August 2005, GEICO sued Google to stop the sale of its trademarks as keywords and to prevent the display of third-party ads in search results where users searched for its trademarks. The parties settled the case on undisclosed terms. Currently, two other U.S. cases are dealing with the matter. In February 2006, parent company of payday loan provider “Check ‘n Go” sued Google for selling its trademark “Check ‘n go” as a keyword to its competitors; the case is pending. In May 2007, American Blind & Wallpaper Factory Inc.’s case against Google was ordered to a jury trial set for November to determine whether AdWords violates U.S. trademark law.

Internationally, a landmark decision created a decisive roadblock for Google’s profits from selling trademarks as keywords. In June 2006, Louis Vuitton won in the French Court of Appeals against Google for the sale of Louis Vuitton trademarks as AdWords. Google was ordered to pay more than $350,000 in damages and prohibited from using Vuitton trademarks in its AdWords program.
 

What does this mean for trademark owners?

Currently, it is more productive to address the problem of your competitors purchasing your trademarks as keywords with the competitors themselves, rather than Google. While U.S. courts currently have not determined whether Google is liable for trademark infringement in the sale of trademarks as keywords, and many have found no liability for Google, it is much easier for a court to come to the conclusion that a competitor trading on the goodwill of another business is liable for trademark infringement in this circumstance. Perhaps the outcome of the pending American Blind & Wallpaper suit will help clarify Google’s level of responsibility with respect to trademarks.

In the meantime, it is wise to carefully select keywords and copy for ads, and avoid the legal risk of using competitors’ trademarks as keywords and in ads.

As long as courts continue to struggle with the trademark law issues raised by Google’s AdWords program, the intersection of the law and the Internet with respect to online keyword advertising will remain a gray area worthy of close monitoring for businesses and Google alike. 

Julie C. Jennings is an associate at Senniger Powers LLP, a national intellectual property law firm based in St. Louis, Mo. Ms. Jennings’ practice is concentrated in all aspects of domestic and international trademark law, including infringement matters and domain name disputes.

Compliments of UnBoundedition.com

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