While investors salivate at its IPO prospects, advertisers and consumers take issue with Google's business practices.
French-owned AXA wants Google to axe its practice of letting competitors advertise to users who search on its name.
AXA, an international insurance and asset management company, is suing Google for trademark infringement in a French court. The suit arises from the search provider's AdWords pay-per-click advertising service that lets marketers pay to have their ads show up when someone searches for a specific term.
A Google spokesman confirmed that AXA's suit is for trademark infringement, but said company policy precludes any further comment.
AdWords by its very design encourages competitive advertising. An online shoe retailer might pay, for example, to have its ad appear when someone came to the Google site and typed "shoes" into the search box. However, when advertisers are able to buy advertising against a competitor's brand name, those competitors get mad.
The search leader has been embroiled in similar trademark infringement suits in Europe and the U.S. It lost a trademark infringement case brought by two French travel company; it's appealing that ruling. Luggage manufacturer Louis Vuitton also is suing Google in France.
"When you do business in a search engine context, you'll come up against claims that rise or fall in a particular jurisdiction," said Jay Johnston, a trademark and intellectual property specialist with the law firm of Dechert LLP. "As the folks at Google found last year, ... France may be a fairly sympathetic jurisdiction for this type of litigation."
In December, Google asked the U.S. District Court of Northern California to rule on whether some of the keywords it sells infringe the trademark of American Blind and Wallpaper Factory. American Blind wanted Google to stop letting competitors buy more than 30 keywords ranging from "americanblindandwallpaper.com" to more generic terms such as "American wallpaper discount."
According to court documents, Google's lawyers told American Blinds' lawyers that it wouldn't allow others to buy the trademarked terms, but that generic terms within trademarks, such as "wallpaper" and "blinds," were fair game. When American Blind sued, Google asked for a summary judgment. The court has not yet delivered a ruling.
Google's policy for its AdWords service, which lets marketers buy ads to appear when someone searches for a key word, was not to sell trademarks as key words. Then, earlier this month, Google did an about-face on its policy for the U.S. and Canada, announcing that it would allow advertisers to include trademarked terms in their keyword ad buys. However, it will not allow others' trademarks to be used in the ads themselves. In other words, a running shoe discounter could pay to have its ads appear when someone searched for Nike, but the ad that was delivered couldn't say, for example, "discounts on Nike shoes."
The new policy, to be implemented in the coming weeks, is only for North America, according to the Google spokesman. On international sites, the old policy will remain in place: advertisers cannot buy trademarks as key words, nor can competitors' trademarks appear in their ads.
Trademark as it relates to search engines and search engine marketing is a fast-changing area of law, Johnston said. "Trademarks in particular are a special kind of intellectual property asset," he said. "They are a use-it-or-lose-it proposition, and they also come with the fundamental obligation to police the use of the marks by other folks. Where you have the engine of Internet growth and development barreling down the highway, you're going to have issues."
Johnston said those issues have evolved quite a bit in the past four or five years, for both search engines and other types of contextual online advertising. "Google is trying to maneuver through a landscape that's not fully defined and trying to come up with strategies for providing itself with an engine of economic benefit."
The Mountain View, Calif.-based company must believe the adage that there's no such thing as bad publicity. Because along with that policy shift it launched the beta release of Gmail, a free consumer email service that applies AdWords to users' personal email. The outcry from privacy advocates was fast and furious, with California State Senator Liz Figueroa introducing legislation to ban even computerized scanning of email.
The same policy and technology that lets an advertiser place its ads when someone searches for a competitor's name will deliver competitors' ads into opt-in promotional emails and company newsletters, according to ClickZ, a Jupitermedia site covering online advertising. In a ClickZ test, an email from department store Neiman Marcus included ads from online retailers selling the same goods, while a Travelocity mailing included ads from competitors Hotwire, Cheapfares.com and TravelFleaMarket.com.
Gmail is still in limited use, but in the contentious search engine marketing industry, vociferous complaint seems inevitable.
"Google is exploiting all the flaws that exist in today's systems," said Jupiter Research analyst Michael Gartenberg. "As it prepares for what appears to be a potential IPO, it has to take all of these [criticisms] extremely seriously. We'll see Google attempt to defend its business model and to lay claim to the things it does well."
However, Gartenberg said, the company has some growing up to do. It has been less than forthcoming in response to critics. In a prepared statement, the company stated that it does not believe Gmail interferes with users' privacy. It has not commented at all on its theories of trademark.
"One of its core tenets is do no evil," Gartenberg said. "The controversies don't amount to a whole lot of anything, but it's interesting that Google's response have been vague and uncertain." He said Google's communication style -- or lack of communication -- is similar to that of Microsoft's However, Gartenberg and Johnston agreed, the company has little choice but to let the courts sort out these trademark issues. "It seems to me that Google has said, 'We think this is defensible, and we'll wait and see who takes issue with it and in what context,'" Johnston said. "It's an area where the law is far from settled." This article was originally published in internetnews.com.
when it was at the height of its power, as Google is now. "There's a certain arrogance that success breeds, not so much the arrogance that comes with being haughty but with being young."
However, Gartenberg and Johnston agreed, the company has little choice but to let the courts sort out these trademark issues.
"It seems to me that Google has said, 'We think this is defensible, and we'll wait and see who takes issue with it and in what context,'" Johnston said. "It's an area where the law is far from settled."
This article was originally published in internetnews.com.
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Susan Kuchinskas has covered interactive advertising since its invention. The former staff writer for Adweek, Business 2.0, and M-Business covers technology, business and culture from Berkeley, CA.
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