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Brands' frosty reception for keyword search policy change

12 June 2008

Search engine Google has made a significant policy change to its online advertising facility - AdWords - in the UK and Ireland, allowing open bidding on all keyword search terms, including those protected by trademarks.

The change brings the UK and Ireland into line with the US and Canada, where there has been an open bidding policy since 2004.

Keyword advertising allows advertisers to buy the right to be associated with a particular keyword term. When a keyword is typed into the search engine, advertisements belonging to those people who have paid to be affiliated with such term will appear in the ‘sponsored links’ section of the search results page.

As a result of the policy change, advertisers will not only be able to sponsor generic keywords – ‘food’, ‘jobs’, ‘cars’ – but also specific brands or company names, regardless of any official connection with the brand or brand owner.

Unsurprisingly, this change has not been received warmly by everyone in the UK business community.

Some - Google included - will argue that allowing more than one entity to be associated with a Trademark term will increase competition and enhance the overall search experience by increasing the number of relevant hits.

However, for others this as seen as an opportunity for competitors and ‘free-riders’ to profit unfairly by driving internet traffic to their own websites by associating themselves with well-know brands owned by third parties.

But is Google’s open bidding policy lawful?

The current UK approach

Although the UK Courts have yet to decide directly on the legality of Google’s latest change to its AdWord system, they recently considered the issue in the context of an equivalent online advertising facility using sponsored keywords owned by Yahoo!.

In Wilson v Yahoo! UK Ltd & Others [2008] Mr. Wilson alleged that Yahoo! and its sister company, Overture Services Ltd, (together ‘Yahoo!’) had infringed his registered Trademark for Mr Spicy. Mr. Wilson claimed that when the term “Mr Spicy” was typed into Yahoo!’s search engine, it produced sponsored links to unrelated websites, including Sainsbury and Pricegrabber.The Court ruled in favour of Yahoo!, finding no infringement of the Mr Spicy Trademark.

This was for two main reasons:

The Court went further, stating that even if Yahoo! had sold the term ‘Mr Spicy’, this, by itself, would still not amount to an infringement. The Court indicated that provided the text of the advertisement displayed in response to the keyword search made no infringing reference to the Trademark, Mr Wilson’s rights in his ‘Mr Spicy’ Trademark would not be infringed.

So for the time being it is unlikely search engines in the UK will be prevented from selling another’s Trademark as keyword search terms to third parties.

The Trademark owner must look at the sponsored advertisement in each case to see if there is an infringing use of its Trademark, although in such circumstance the claim is likely to be against the owner of the sponsored advertisement, and not Yahoo!.

The approach of the rest of the world

United States: Google’s home nation view is that a Trademark is not infringed by selling it as a keyword phrase to third parties, although the US Courts are far from adopting a consistent approach.

In several early cases, US Courts sided with the brand owners and consumers, declaring that selling another’s Trademark as a keyword did amount to Trademark infringement.

However, the most recent view is that such activities do not equate to a Trademark infringement on the basis that selling keywords or phrases containing Trademarks does not amount to ‘use’ of that Trademark.

It is unclear which decision the US Courts will follow in future, as neither approach is set in stone. With a disputes between Google and high profile brand names still going on (most notably American Airlines), it will also be interesting to see how determined Google will be to settle those disputes before they get to trial in order to preserve the current judgement.

Germany: Germany has followed a similar line to the US and UK. The German Courts have twice ruled that Google’s sale of keywords consisting of another’s Trademark did not amount to an infringement . The German Court felt that to find otherwise would impose a burdensome obligation on Google to check that every keyword sold does not infringe a third party’s Trademark.

France: One country that has found Google liable for its actions, and with minimal fuss, is France. In a large number of cases the French Court has condemned Google’s actions and found in favour of the brand owners. Most notably, in 2005 it found that Google had infringed the Louis Vuitton and LV Trademark by selling them as keywords to third parties who then used them to display unrelated advertisements, including, counterfeit sites . Google was barred from using or selling ‘Louis Vuitton’ and ‘LV’ in any unrelated advertising on all of its websites accessible from France, and ordered to pay €400,000 damages.

Conclusion

The recent decision of the UK Court highlights that Trademark owners do not have absolute control over their Trademarks when it comes to online advertising. In particular, it would appear that a Trademark owner cannot prevent third parties from sponsoring, or, indeed, search engines from selling, keywords search terms consisting of their Trademarks for the purpose of online advertising, unless some further infringing reference is made to the Trademark in the body of the advertisement.

This decision is of concern to the brand owners because there are situations where a Trademark owner would legitimately expect to restrict others from using his mark as a keyword search term, even if no reference is made to the Trademark in the actual advertisement.

For instance, assume a consumer wishes to buy a particular branded product from a supermarket. The branded product is only sold in selected supermarkets. The consumer is not aware which supermarkets these are, so types the branded product name into a search engine. Under Google’s and many other search engines’ current policy, any supermarket could sponsor a keyword term consisting of the branded product, regardless of whether or not they sell it in their stores.

As a consequence, there is every likelihood that the consumer could click on the sponsored link of a supermarket that does not sell the branded product. The consumer may then spend time on that supermarket’s website searching for the product and, for the sake of convenience, may end up making other unrelated purchases through this website which they would otherwise have otherwise from the supermarket which did stock the branded product.

This is just one scenario where the use of a Trademark as keywords would seem to allow a third party a free ride on the reputation of a Trademark, and there are many other conceivable examples. For instance, if the Yahoo! decision is followed by the UK Courts in future, it would seem that Trademark owners will be in a much weaker position in seeking to prevent unsavoury websites from buying keyword associations with their brands.

Practical steps for brand owners

Although at present it appears that brand owners cannot use the Court to prevent Google selling their Trademarks as keywords search terms, there are a number of practical steps that can be taken to minimise the impact of this policy:

Are any of the issues in this article giving you a headache? If so, we want to know

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Joseph Stephenson

Solicitor
T: 08700 86 8876
I: +44 (0)118 965 8876
E: joe.stephenson@shoosmiths.co.uk