Google Shifts Trademark Policy

Google has changed the trademark-related guidelines for its AdWords program; it will now allow U.S. and Canadian advertisers to use others’ trademarks as keywords.

According to Google’s trademark-complaint policy, updated late last week, the company will still block the use of trademarked terms in ad text when trademarks owners complain. Outside the U.S. and Canada, Google will ensure neither keywords nor ad text use trademarked terms.

“As a provider of space for advertisements, please note that Google is not in a position to arbitrate trademark disputes between the advertisers and trademark owners,” reads the company’s policy. “As a courtesy to trademark owners, however, we are willing to perform a limited investigation of reasonable complaints.”

Google says it has evaluated case law surrounding the issues, and is acting to provide users with more choice.

“It’s important for us to give the user choices and if the trademark owner is able to make sure that no other ads appear, then that removes user choice,” said Rose Hagan, Google’s senior trademark counsel. “The users will determine if those ads are relevant or not.” In Google’s AdWords system, an ad’s ranking is determined by how much advertisers pay, along with how many clicks the ad gets.

The move will also serve to wring as much money as possible from the popular advertising program, given the murky legal status of trademarks in search engine advertising.

“If Google is foregoing substantial revenues, it’s probably a smart decision provided it does so with the knowledge that it might have problems in the future,” said Douglas Wood, an expert on advertising law and a partner with Reed Smith Hall Dickler. Wood says Google’s disavowal of responsibility for policing trademarks is consistent with case law applying to offline media.

“For example, if the Wall Street Journal accepts an ad for a company that infringes the trademarks of a competitor, the Journal is not liable unless one can show the publication actively engaged in creating the infringing materials in the first place, something that is very rare,” said Wood. “Without such a showing, the issue remains a concern between the competing companies, not the media.”

Google believes the key issue in the U.S. is whether or not a consumer would be confused by the use of the trademark. Since consumers never see what exact keywords an advertiser bought, the company maintains there shouldn’t be confusion.

“We don’t think that merely seeing ads on a page is going to be confusing to users,” said Hagan. “If they’re confused it’s because of something in the ad text.”

Outside the U.S. and Canada, confusion isn’t the defining issue, Hagan believes. Hence the decision to let the previous policy stand elsewhere in the world.

Google is currently involved in legal wrangling with American Blind and Wallpaper Factory over the keyword issue. The home decorating firm filed a trademark infringement lawsuit against the search giant, saying it shouldn’t be allowed to sell keywords such as “American blind” and “American blinds.” Google had conceded to American Blind’s demands that it forbid the sale of exact phrases to which it had the trademark, such as “American Blind Factory” and “Decorate Today.” With this change in policy, it appears Google will no longer be making such concessions.

The issues are similar to those raised in a suit filed by Playboy Enterprises against Netscape, now owned by America Online. In that case, banner advertisements for adult-oriented products and services appeared when searchers typed in terms such as “playboy” and “playmate.” Though the parties settled the suit, at least one judge felt Playboy had a case.

Google’s main competitor, Yahoo-owned Overture, has taken a more conservative approach. It allows advertisers to bid on a trademarked term only when the Web site the ad links to refers to the trademark or its owner in an appropriate manner. Examples include comparative advertising, sale of a product bearing the trademark, and commentary about the trademark owner or its product. The site could also use the term in “a generic or merely descriptive manner,” Overture’s policies state.

“The law is confused and vague,” said Wood, citing the difficulty of applying offline rules in the online market. “It will be years before sufficient case law is established to clearly set forth the rights of online marketers.”

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