Trademark Policies: Google and Beyond

Here’s my prediction: trademark holders will increasingly mandate search engine bidding rules within their distribution contracts in response to trademark policy changes being made by the search engines. And Google’s recent change is just the beginning.

I’m not a lawyer. But business exposes executives to legal principles in a variety of ways. So nothing I say here is legal advice (regardless that I took one class at Yale Law School during grad school, combined with the unfortunate circumstance of having been on both sides of litigation, both for my company and for client companies over the years). This column is written from the advertiser/marketer perspective, with an attempt to also see the consumer, legal, and regulatory perspective, as well as the search engine (publisher) perspective.

Advertisers and marketers talk a lot about trademarks and trademark infringement. Within the search community, any changes in the search engines’ trademark policies become catalysts for discussion, evaluation, and often for litigation.

In reading legal documents, it becomes clear that trademark law was drafted and designed primarily to protect the consumer — and not serve as a lever that corporations can bend at will if they feel a current or prospective customer may select the goods or services of a competitor. One must keep this intent in mind when evaluating Google’s changes to its trademark advertising and bidding policies.

Google has always managed to find ways to be (or appear to be) consumer-centric, while extracting ever greater ad revenue from its search marketplace. Its consumer-centric focus serves Google well as it ventures into untested territory within the realm of trademark policies; Google can always fall back on the foundational tests of trademark infringement or dilution.

The terms most often used in the legal blogs and articles I’ve been able to find are “confusingly similar” or “likelihood of confusion.” If we think about the SERP (define) and consumers seeing the links and listings in a SERP, how confused can they get if they see an ad that includes the searched trademark term but the landing page/site associated with such a listing selling that brand (new or used)? Or could they really think that if they do a search on one brand and see an ad for an alternative that the two are the same?

Let’s take the discussion out of the SERP and think of other offline or online purchase or pre-purchase behaviors that trigger ads or messaging. Suppose I take a left down the health and beauty aisle at the supermarket (which is a bit like typing in a query). I then slow down in the toothpaste and tooth care section and engage in a search for my brand.

Right near my brand is the store brand and the package is a similar color. Am I confused? No.

A coupon dispenser next to the Colgate area has coupons from Crest. Do those coupons confuse me? No.

Let’s say I decide to buy Crest, and the coupon machine at the checkout counter automatically prints me a coupon for a Tom’s of Maine because I also buy a lot of organic products with my frequent shopper card. Am I confused? No.

Why should search engine results be held to a higher standard than the supermarket?

Google has updated its domestic and international trademark policies. The changes differ based on which country you’re in and whether you, as an advertiser, have a trademark of your own or plan on bidding on trademarks of products you sell/carry.

Most of the people reading this column are in the United States, as are most of my clients. So let’s think about the issue from the perspective of the marketer/advertiser in the U.S.

The biggest change is that Google’s policy allows for those who sell a trademarked product or service to bid on that trademark and include the trademark in the ad. Taking the consumer perspective, this is a valid change because consumers will find the trademark on the landing page and be able to consummate a transaction or otherwise learn more.

At the same time, Google can expect overall CTRs (define) to improve as consumers’ eye-scanning picks up on more “relevant” ads including their searches. Higher overall CTRs and improved Quality Scores (define) may balance themselves out (higher CTRs improve the Quality Score and lower the bid requirement), but the net benefit to Google is beyond searcher satisfaction. Google will make more revenue too because the increased clicks will more than offset any Quality Score effect.

However the OEMs (define) and trademark holders may not always want their distributor or retail channels to bid and include the trademark in the ad. Marriott, for example, is clearly concerned that online travel agencies will capture a Marriott search and end up booking a competing hotel. There is also the fact that the commission would be due on a Marriott booking.

So if online travel agencies want to have the right to carry Marriott inventory, they could easily be contractually constrained in their overall contracts with Marriott. Google’s policy therefore becomes moot.

Also, a consumer’s intent isn’t always clear. A search for “Delta” may be for the airline, Delta College, Delta Dental, Delta Faucet, or thousands of others.

My recommendation: If you’re a trademark holder and want to restrict the bidding behavior of your retailers, distributors, and affiliates, make sure you include that restriction in your umbrella contract. Don’t involve Google or the other search engines. There are pros and cons to any policy you put in place, so play out the scenarios before you make a decision.

Join us for Search Engine Strategies San Jose, August 10-14, 2009, at the McEnery Convention Center. Spend Day 1 learning about social media and video strategies with ClickZ.