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Will Google Ban Trade in Trademarks?

By - November 13, 2004

amblinds.jpgI’m noticing enough buzz on the topic to merit bringing it up here – folks on the boards are talking about whether Google might ban the practice of bidding on trademarked terms. The original rumour came from a Google UK source, reported on Corante, first mentioned on Webmasterworld, the grandaddy of the SEM/SEO discussion boards.

From that thread:

A friend of mine attended a Google University seminar at Earls Court (London, UK) on Thursday last week. Apparently one of the guys from Google said that they were planning to phase out affiliate bidding on AdWords ‘very soon’. The reason – showing several ads for the same merchant reflects badly on the user’s experience.

I’m a full-time affiliate who primarily uses AdWords to send customers to the exact product page on a merchant’s website. If this is true quite frankly I’m in trouble. I called my account rep immediately in horror and he said he’d heard nothing of the sort. I would certainly hope Google would give plenty of warning if they were planning such a huge change.

The implications are significant here – the affiliate industry, which makes a lot f money arbitraging trademarked keywords, would be dramatically impacted. And Google stands to lose what may well be a significant revenue stream. But I sense there may be more at work here than merely “improving users’ experience.”

The UK information may be unfounded rumor, but the fact is, Google (and Overture) face a very serious threat from lawsuits over trademarked terms. In short, Geico (yup, owned by Google hero Warren Buffet) and American Blinds both have very serious complaints pending against Google, and both litigants are not going to go away. The cases are winding their way toward what could be a very public and very unpleasant discovery period.

Their beef? Competitors are buying their trademarked terms as AdWords and profiting from the confusion (ie other insurance companies were scooping up “Geico” as an AdWord, and driving customers to competing sites.) Interestingly, perhaps due to the fracas, there are no potentially infringing AdWords anymore on the term Geico, though a search for American Blinds still shows competitors attempting to make hay on that company’s name.

Google’s initial defense to these suits has been to claim that A/Google only uses trademarks in “internal computer algorithms to determine which ads to show,” and B/ that the “process is not visible to users and therefore can’t cause them to be confused as to the origin of goods or services displayed in the ads.” (More in this Cnet story, which I am quoting.)

This argument has been viewed with skepticism by the courts, which have ruled that Geico can go ahead and sue. As it girds for the fight, Google, which previously had been limiting the purchase of some trademarks on a sort of hand-rolled basis, altered their AdWords policy to let anyone bid on a trademarked term. While the official reason given for the change was “better results”, most legal observers I’ve spoken with say the real reason was legal consistency: you can’t be fighting the Gecio and American Blind lawsuits, claiming that you’re simply an intermediary, while at the same time protecting some trademarks.

What is not clear to me is whether the original source was claiming that Google was going to ban affiliate ads altogether – which would be a very large hit to revenues – or just the practice of affiliates using trademarked terms. In either case, Google could narrow or extend the policy with regard to competitors who buy their rivals’ keywords. It remains to be seen.

If Google does shift strategy and ban the use of trademarks in AdWords, the suits will clearly be moot, and the company will have avoided what could have been a damaging blow to their corporate image. After all, having the courts rule definitively that you’re profiting through an illegal practice is not exactly good business. Just ask Microsoft.

Tip of the Hat: Majestic Research.

Update: Good reading in response to this post and the original rumors: SEWblog.

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7 thoughts on “Will Google Ban Trade in Trademarks?

  1. Vangorilla says:

    Trademark suits represent a serious challenge for all search engines going forward. A trademark owner should not have his TM used for the selling of competing products. And any revenue a SE generates from using the TM as a keyword seems quite unfair.
    The most recent and blatant example of this is Merck’s Vioxx. Lawyers using Vioxx as a keyword in order to solicit class action suits on the web.
    Kind of seems unfair that your bad press is the reason for increase in the keyword usage stats.

    This all changes when the TM owner is able to take back and “turn on” their TM. The recent Word Registry created by SAIC/NeoMedia Technologies will now give a TM an electronic id. The word Vioxx (if registered), will have a specific URl associated with it.

    This Word Registry, is the disruptive event that will change the way SE can sell keywords.

  2. MikeM says:

    Interesting from Neomedia;

    http://freshnews.com/news/other-tech-areas/article_20093.html

    “Just imagine entering a word or short phase, such as a product name or description, and immediately going to the appropriate Web site on your mobile device,” said Charles T. Jensen, president, CEO and COO of NeoMedia. “Soon, users of the PaperClick Go-Window will be able to enter a registered word to quickly and easily get the information they need to make a purchase decision, receive a promotion, and more . . . All automatically.”

    Also interesting, none of their websites come up. Not really holding my breath on this one but worth following.

  3. Joe Agliozzo says:

    A trademark on a word doesn’t mean you “own” the word in all instances and can prohibit everyone else from using the word in any way, shape or form. Think about “Coke”. Certainly coke is a trademarked term for colas, but probably not for the substance used in making steel. So a steel producer will not be infringing on the “coke” trademark, if they buy the keyword, coke, right?. Now it is true that the resulting ad is not relevant for one or the other viewer group, so there is no problem here. Now take the closer case of “American Blinds”. Clearly a trademarked term, and if a competitor buys the keyword “American Blinds” they are trying to steal a customer from America Blinds – but “WHAT’S WRONG WITH THAT!” – it’s the American way, isn’t it? What you can’t do is pose AS American Blinds to steal their customer – but there is nothing wrong with putting your ad up there along with American Blinds’ ad so that the consumer can compare your offering with theirs. It is probably also safe to assume that a consumer who searches on American Blinds may want to see not only American Blind’s offerings, but also see other competing offerings – isn’t the ability to easily compare products one of the great things the internet has brought to consumers? So the issue is really whether by buying the keyword, you are creating confusion about who the resulting ad belongs to. The solution is therefore in regulating the ad copy, and not the purchase of the keyword. John, I believe you have written about this before (and quoted some authorities, also).

  4. David Lewis says:

    It sounds as if Google is looking at banning search arbitrage and not trademark bidding.

    Search arbitrage is the practice of an advertiser using another site’s URL as the display URL. These advertisers are usually affiliates who use an affiliate link as the destination URL. Overture has never allowed search arbitrage.

    Trademark bidding is where an advertiser, whether an arbitrager or not, bids on a company’s trademark. Try a search on Google for the Sony trademark “vaio”. What is the difference if it is PriceGrabber (which gets paid per click to merchants who sell Vaios), BestBuy (which sells Vaios) or an affiliate (which gets a commission from Sony)? Is Google qualified to make that distinction? Is Google qualified to make the distinction of who owns the trademark for a given industry? No. That’s why Google stopped the ban on trademark bidding.

    It is a good idea for merchants to pick a select few value-added resellers (often top affiliates online) to help protect their trademarks. They can have a limited license agreement granting certain rights (e.g. trademark bidding) to a select number of affiliates. This is how it is done in the brick-and-mortar world. Why should it be any different online.

    For the example of Vioxx, the #3 result on Google for the term Vioxx is a class action attorney. Should Google have to weed these out from natural results as well?

    Even in paid search, there is Broad / Advanced Match. Should Google not allow a broad matched result for “blind” when a user searches for “amercian blind”? Again, how can Google verify all of these? VARs can be used to force all of these unwanted results out.

  5. On trademark: what Joe said.

    On affiliates & search arbitrage: what David said.

    Google alone should not regulate the entire economy. Interested parties will also have to work these issues out on their own.

  6. There’s something missing in the comments here. That is, the fact that intent matters when it comes to trademark law. I’m speaking mostly of a company’s intent to confuse customers… or infringe on an advertiser’s good will to crate benefit for themself. This is what bothers advertisers. It also bothers them to feel out of control – hence the “turn it over to the affiliates and let them flood the page with us-us-us” when one of our marks is submitted. “Since we can’t control Google, we’ll just flood it using… using… who were those people again?”

    To David’s point, who is more inclined to want to confuse? A competitor or an affiliate of a competitor? A marketer or one of their run-of-the-mill affiliates?

    Part of the problem here is marketers having suddenly decided to use hired guns to engage in online marketing and asked, quite literally, nothing of them (short of “don’t put my banner/link next to naked people”) in return. Heck, they even run circus style “contests” to encourage affiliates to sell-sell-sell. So do affiliate networks who get a cut of the action and, as we’ve seen, will hand out cash bonuses to affiliates who break their own rules… over, and over and yes over again! How long before merchants look in the mirror and wonder who they really are (or were back in 1999 when they started all of this)?

    Does Sony goose their distributors to encourage them? Sure they do… but in a more professional tone and with a hand-selected, qualified sales/marketing force. There are more rules involved than “you can’t sell us up against smut.” In fact… think about that for a moment. Think about the fact that most major retailers have that requirement in their T&C’s. Hey… if you want to earn respect from people the first thing to do is not insult them (right)?

    The fact that affiliates have to be told things such as what Shawn Collins points out today here http://www.imediaconnection.com/content/4604.asp is fairly frightening… to me at least.

    If these “partners” are not told to NOT do the dirtiest of things, they’ll do it. Why? Because they’ve been allowed to for years!

    Whoops… I’m off track.

    What we’re seeing now is a move toward rules. Rules that should have been set YEARS ago. Google is stuck in the middle – having to watch Overture make all the right moves and suffering through consequences of their making the wrong ones in regard to how affiliates can and cannot use the system. Google blew it and now must change.

  7. Nazz says:

    If Google goes ahead with this or loses this battle, then Google is finished as they make much of there revenue from Adwords.

    Short Google now.

    -Nazz