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Google's trade mark policy change, the cost to brand owners and the law

OUT-LAW News, 07/04/2008

Companies could find themselves with significantly increased advertising costs after a policy change from Google on the use of trade marked terms to trigger search engine adverts. But experts say that brand holders might try to fight the policy in court.

Google has announced the lifting of a ban on one company buying the right to use another's trade mark to trigger its own advert. The move brings the policy for trade marks held in the UK and Ireland in line with that for trade mark rights held in the US and Canada.

Brand owners will now have to outbid other firms if they want their ad to appear beside the 'natural' search results when a user types their trade mark into the Google search engine.

The cost to brand owners

Up until now the trade mark owner could enjoy a monopoly on that ad space in Europe by asking Google not to let any other party sponsor its trade marks as keywords. That policy continues for trade mark rights held in all countries other than the US, Canada, the UK and Ireland.

That bidding process will increase the costs of advertising a trade marked brand through Google's AdWords programme, experts say, with the extra revenue going to Google.

"For some brands this is going to be expensively annoying, very expensive. These brands will be typically large brands with a pure play model, for example an airline or a bank," said Andrew Girdwood, head of search at digital marketing agency Bigmouthmedia.

"However big brands like the comparison sites Expedia, Lastminute, MoneySupermarket, MoneyNet – they may benefit because previously when I typed in Barclays only their ads would show, whereas MoneySupermarket's didn’t," said Girdwood. "Now these big aggregators that compare brands have the chance to bid on brands once again and drive traffic from Google to their comparison sites."

Google's policy change and the legal challenge

One trade mark expert has warned that Google's new policy will be open to legal challenge, and that the law in the UK is still unclear on whether buying a keyword that matches another firm's trade mark is lawful.

"The change of policy seems to be the inevitable consequence of a series of court decisions in the UK, the latest being the Mr Spicy decision, which seem to suggest that the use of a registered trade mark as an AdWords trigger would not constitute trade mark infringement, unless the registered trade mark concerned appeared in the visible text of the sponsored link or on the website linked to the advert and directly lead to confusion in the marketplace," said Lee Curtis, a trade mark attorney at Pinsent Masons, the law firm behind OUT-LAW.COM.

"However, Google needs to be careful in this new policy in that even in the UK and US, it would appear that if the use of a registered trade mark in an AdWords advert causes confusion in the marketplace in the words of the UK courts as to 'trade origin' then it is still possible that a court could come to an decision against the defendant," he said. "The jury, as they say, is still out on that matter."

Earlier this year the High Court delivered a ruling that cleared Yahoo! of trade mark infringement. The owner of a trade mark for the term 'Mr Spicy' in relation to food had taken the case. But the High Court said that Yahoo! had not used his trade mark when it displayed ads beside the search results when 'Mr Spicy' was entered as a search query. The advertisers in that case had sponsored the dictionary word 'spicy', not the trade marked-term 'Mr Spicy'.

"Google has possibly taken the Mr Spicy decision as a green light to relax their policy in line with the US," said Curtis. "However, the UK case law is probably not as liberal as Google might desire, as the case law clearly states that if such use causes confusion as to 'trade origin' then infringement will be found. It is not as simple as saying the use of registered trade marks in all AdWords in all circumstances is now allowed by case law."

Google told users of its AdWords system late last week that the rules governing its use would be changing. "From May 5, 2008, our trademark complaint investigations will no longer result in Google monitoring or restricting keywords for ads served to users in the UK and Ireland," it said. "This will bring our procedure in line with the approach taken in the US and Canada."

It will still be the case that advertisers are not allowed to use a trade marked term in the actual advert itself under the new rules. Advertisers will be able to buy the right to display their ad when a trade marked term is used by the searcher, but will not be able to use that term in the advert.

Google's policy change only applies to the UK and Ireland operations, said Curtis. "This new policy does not appear to apply to continental Europe and in particular France, where the courts have taken a much less liberal approach to the use of registered trade marks in AdWords," he said.

Intellectual property law expert Iain Connor said that European court rulings could end up impacting the situation in the UK.

"If Google is successfully sued over an AdWords dispute in a European territory outside the UK and Ireland, then given our harmonised trade mark law it is likely that a UK or Ireland based claimant will seek to rely on the case as binding authority," said Connor. "If the UK or Ireland court refused to follow Europe, the only way to resolve the issue is to go to the European Court of Justice."

"The ECJ is likely to say that if the bidding on a keyword affects the essential function of the trade mark as an indication of origin, it is an infringement. As to whether the ECJ will say that is a very difficult question," he said.

Connor said that brand holders might even argue that Google is taking unfair advantage of their marks. A provision of the UK's Trade Marks Act states that a person infringes a registered trade mark if he uses it in a way that "takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark."

Learn more: The legal issues of Google's new AdWords policy will be discussed at OUT-LAW's free Breakfast Seminar, Marketing on the web: top legal tips.

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