An interesting legal battle is emerging between Google and, well, everyone. Or at least everyone who has a trademarked good or service and has a web presence. And, as usual, the courts are a decade or so behind the technology curve and are still struggling to find a workable remedy.
The controversy was born out of the way Google sells ads. Google uses a feature called "AdSense" to generate revenue. AdSense ads are those simple, text ad links that appear off to the side or along the top of some web pages. A number of companies, including one from Michigan, are lining up to try to force Google to stop engaging in trademark infringement in its Adsense program. Here is how it works.
Google sells advertisers certain search terms. Let's say you have a store that sells cheese. If you purchase the term "cheese" from Google, then every time someone enters a search request containing the word "cheese", websites with that phrase will be returned in response to the search request. If the web page participates in AdSense, it has some invisible code embedded into the page which causes Google ads to appear. Those ads are calculated to pertain to your search terms. In the cheese example, you might get AdSense ads that offer cheesecake, brie, or cheese knives for sale. For embedding the AdSense code, the owner of the web page gets a few cents (or more) if people click on the ads. The advertisers, in turn, pay Google, usually on a pay- per-click basis, when people click on the AdSense add. Per click fees range from a few cents to $10 or more for some search terms. It works well. Last year Google reported in excess of $10 billion in revenues from Adsene. No problem, right?
Well, not exactly. You see, the problem is that Google will sell any term as an AdSense search term. This is even true of search terms that are part of the registered service mark or trademark of another company who is a competitor of the company that bought the word from Google.
A Michigan company called American Blind & Wallpaper Factory, Inc. recently sued Google in a California Federal District Court alleging that Google had sold trademarked material to a competitor of American Blind in violation of the Lanham Act (15 U.S.C. 1051) which protects trademarks.
Google had sold to American Blind's competitors search terms like "American Blind", "American Blinds Wallpaper" and even "americanblinds.com". This meant that if a Google searcher, who maybe half remembered driving by the American Blind and Wallpaper store, typed in the term "American Blind", he or she would get back a bunch of web pages to look at, many of which would have Google Adsense adds down the side of the page with links like Americanblinds.com. Trouble is, that link would not take you to the real American Blind and Wallpaper Factory website. Instead, it would take you right to the a competitor's website. Even though the American Blind Company objected, Google kept selling the ads.
American Blind settled the case a few weeks before trial, apparently because it ran out of money. There should be little doubt that Google can outspend just about any opponent in court these days. Other companies are also lining up to sue Google. American Airlines is the next big player to take Google on over this issue. It filed suit in the U.S. District Court for the Northern District of Texas in August of this year. Happily, American has more resources to throw at the problem than American Blind did. But bravo for American Blind for taking on the Googlemonster.
Unfortunately, the courts are a little behind the curve on this. There is a split among the federal circuits as to whether this really is a violation of U.S. Trademark Law or not. In one of the more relevant cases, the 2nd Circuit got it wrong. In 1-800 Contacts, Inc. v. WhenU.com, Inc., decided in 2005, the 2nd Circuit Court of Appeals held that "pop-up" ads that did not use or display the actual service mark of the competitor brand did not violate federal law.
However, there are brights spots. In 2006 the U.S. District Court for Minnesota decided the case of Edina Realty, Inc. v. TheMLSonline.com. The Edina Court held that the defendant's purchase of a trademark as a search term violated the trademark where there were other ways for the defendant to describe its product or service.
The underlying facts in Edina expose the big problem with this type of case. In that case, Edina Realty sued its competitor, another realtor, to force it to stop violating its trademark. Edina did not sue the search engine that was selling the ads. It's a little like treating the symptom rather than the disease. You have to keep lancing those pesky boils. The Edina Court did not address the contrary result reached by the the 2nd Circuit in the 1-800-Contacts, Inc. case. At this writing it does not appear that Michigan U.S. District Courts or the 6th Circuit have addressed the issue.
Bottom line here is just because you have gone to the trouble and expense of protecting your trademark, servicemark or domain name, don't feel too secure in the knowledge that you are fully protected against all comers. Your competitors make be stealing your good name and business aided and abetted by Google. Rather than take on Google (or some other search engine behemoth), it may be easier (and cheaper) in the short run to take on your competitors, one by one--at least until the courts get it right.
Hopefully American Airlines will have better luck on the Google front. It would be unfortunate if Google were allowed to write its own rules that adversely affect so many thousands of companies just because no one can afford to take it on.
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