You may not have heard but Google is facing a legal battle over its use and alleged abuse of business trademarks.
A May Google change in policy means it now allows third parties to use a brand owner’s trademark as a keyword to throw up sponsored links to the third party site.
Normally when you type in a word into a search engine the engine displays websites that contain the words-hence the importance of keywords and potential abuse by some sites which search engines have sought to control.
Also displayed will be sponsored links in a greyed or blued out box-you can see examples of this at Google mail when keywords in emails through up sponsored links at the side by advertisers pertinent to the content of the email concerned.
The sponsors pay for privilege of course by way of revenue for the search engine each time a user clicks through to the advertiser’s website via the hyperlink-pay per click (PPC).
Popular keywords can demand high PPC rates-£10 or more-and this explains partly why Google in recent years have been raking in the money-Adwords for instance made £1.73bn in the last quarter and contributed 60% approx of total Google revenue.
With trademarks the position is the same-with Morrison’s entered you might find a price comparison website as a sponsored link which raises the question whether there has been trademark infringement.
In Reed Executive plc v Reed Business Information at the Court of Appeal Lord Justice Jacob had suggested in 2004 it might not be an infringement but reserved his opinion overall. This confusion caused uncertainty and led to Google preventing advertisers using third party trade marks to produce sponsored links.
In this case a banner advert for TotalJobs.com appeared when the reed part of the trademark was entered. Here the court held the view that members of the public knew search results threw out “rubbish” and that users would not make a connection between the Totaljobs banner and the employment agency.
This earlier confused position is now clarified with Victor Andrew Wilson v Yahoo! in which Wilson traded as a mobile caterer at London festivals under the trade name of Mr Spicy-a name he registered as a Community Trademark for food, sauces, spices and providing food and drink.
He complained that when typing Mr Spicy into Yahoo! search engine he received sponsored links to Sainbury’s and a price comparison website. He claimed infringement by Yahoo! and Overture the sister Yahoo! business.
The court decision went against him predictably but usefully provided clarity on the online trademark abuse claim elements required.
The court followed Arsenal Football Club v Reed of 2003 in which the Gunners sued street vendor Mark Reed over sale of unofficial merchandise. This case ended up in the European Court of Justice (ECJ) where it was held the legitimate trademark owner could not prohibit the use of an identical sign for similar goods if that use cannot affect his own interests as owner of the trademark with respect to the function of the mark which was to guarantee the identity of origin of the marked goods.
Applying to Spicy the court found no one would think the sponsored site Sainsbury’s had any connection with Wilson and the use of the trademark as a key word would not have affected Wilson’s interest in the mark or caused it to fail as an origin guarantee. The text of the adverts also did not refer to Wilson.
As a result of the UK case Google now changed their UK and Ireland policy-without formal consultation of advertisers and brand owners-altering the previous position that trademark owners could complain and have let advertisers bid on keywords on the back of trademark owner’s brands to trigger their own advert thereby pushing up the price. Critics argue that this amounts to putting brands up for auction so leaving them vulnerable to advertisers who could abuse them to bring traffic to their own sites.
On the continent it is a different story of course as local laws there apply and Adwords has been in the dock before when in 2007 in the Paris Court of First Instance it suffered defeat against a bedding manufacturer-Belle Literie-on the trademark infringement issue. Google suffered damages of £54,000- a drop in the Google ocean perhaps but will set a precedent for larger claims pending by ABTA, Thomas Cook, Lastminute.com, Arcadia and many others.
Currently with three Google cases parked at the ECJ it remains to be seen whether Google are home and dry on this important principle or whether they shall have to revert to their previous policy which was favoured by trademark owners.
Ironically Google’s philosophy of “Don’t be evil” appears to be going in the same direction as Microsoft.
For more Google litigation please look out for future alerts.
