Google Faces Trademark Lawsuit Over Selling Keywords
By Anna Johnson on April 6th, 2009In a decision that should interest ANYONE involved in pay-per-click advertising on the search engines, the 2nd U.S. Circuit Court of Appeals ruled last Friday that Google must face a trademark infringement lawsuit for selling keywords that trigger ads.
The appeals court reversed a lower court’s dismissal of Rescuecom v. Google, which was brought against Google by computer-repair company Rescuecom.
In that case, Rescuecom sued Google over allowing competitors to bid on terms that were trademarked by Rescuecom. Rescuecom argued that consumers could be confused by seeing links to competitors’ ads that appeared when searching on those trademarked terms.
The lower court dismissed the case, agreeing with Google that its use of Rescuecom’s trademark was ‘internal use’ and not a ‘use in commerce’ that could amount to trademark infringement.
The 2nd U.S. Circuit Court of Appeals, however, ruled that selling the trademarked terms to advertising customers was not ‘internal use’, especially as Google suggested those terms via its ‘Keyword Suggestion Tool.’ As such, the court allowed the trade mark infringement case to go ahead.
Where does this leave Google… and the other search engines… and the Internet marketers who advertise on the search engines?
Firstly, the upshot of the appeals court decision is NOT that Google did infringe Rescuecom’s trademarks by selling them in the form of keywords to Rescuecom’s competitors.
The court has merely rejected Google’s argument that selling the trademarked terms was ‘internal use’ and said, effectively, that the question over Google infringing Rescuecom’s trade marks is still an appropriate question for a court to consider.
We still don’t know, definitively, whether selling or bidding on competitors’ trademarked keyword terms is illegal. Or, should I say, where it’s illegal, given the various jurisdictions involved.
The search engines seem to be taking a cautious approach in that they disallow advertisers to bid on obvious big-brand trade marks, but are still are allowing bidding on other terms.
This may not, however, just be due to the low likelihood of a given trademark owner taking action over their marks being sold as keywords.
It may simply be due to the search engines not knowing about the millions of trademarks that exist!
And let’s face it, if Google is found to have infringed Rescuecom’s trademark for selling its marks, then you can bet that pay-per-click advertising will suddenly become more expensive AND onerous for EVERYONE involved in keyword based advertising.
It will become more expensive for advertisers, because the search engines will no doubt pass on the costs of keeping track of all the various trademark databases.
And this won’t simply be a matter of adding all those words to the search engines’ list of ‘disallowed’ words.
Trade marks attach to words when they are used in a specific context i.e. in relation to specific categories of goods or services. That’s why you can have the same words being trademarked by different companies for different products and services.
Consequently, the search engines will need to make sure that when they allow or disallow the use of certain words, they will do so in the right context.
Given the potential for error, it’s highly possible that a lot of words may be erroneously disallowed, forcing advertisers to jump through hoops to be able to advertise on those terms.
If all this is giving you a headache… yep, me too.
All this said, we don’t know for sure what decision will be made when Rescuecom v. Google goes to court.
On the bright side, the precedent so far is the 2nd Circuit Court’s decision in 1-800 Contacts v. WhenU.com, where the court found that 1-800-Contacts did NOT have its trademark infringed by keyword advertising sales.
However, in last week’s decision the 2nd Circuit distinguished between the two cases. Whereas in 1-800 Contacts v. WhenU.com, WhenU.com made no use whatsoever of 1-800 Contacts’ trademark… in the Rescuecom decision, Google actually recommended (via its Keyword Suggestion Tool) and sold the relevant trademarked terms to its customers.
Hmmm… so is it okay to passively allow trademarked keywords to be bought or used (e.g. via organic search engine optimization), as long as you don’t actively sell them (e.g. via a keyword suggestion tool or similar)? I guess we will wait and see what the court decides in Rescuecom v. Google.
Unless, of course, the parties settle out of court… which, for better or worse, will leave the question open…
