Google Adwords: Marketing Genius or Trademark Infringement?
February, 2006
by Joshua A. Aldort and Colleen A. Brown
Introduction
Google was founded by Larry Page and Sergey Brinn. In January 1996, Larry and Sergey began a search engine called BackRub, named for its unique ability to analyze the “back links” pointing to a given website. By September 1998, Google was answering 10,000 search queries each day. In 1999, AOL/Netscape selected Google as its web search service and helped push traffic levels past 3 million searches per day. In June 2000, Google officially became the world’s largest search engine with its introduction of a billion page index – the first time so much of the web’s content had been made available in a searchable format.
Today, Google’s search engine answers hundreds of millions of user searches and covers billions of web pages daily. Users can search on general terms such as “rental trucks,” or more specific keywords, such as “UHaul.” Google checks the keywords against its databases and produces a search result page, which lists the websites, in order of decreasing relevance with the most relevant websites listed first, that match the customer’s keyword search. The results of these searches are called “organic listings.”
The Adwords Program
Google also offers a number of products and services to consumers. One of its more lucrative and controversial services is a keyword-triggered advertising program entitled “Adwords.” Google’s Adwords program enables advertisers to purchase or bid on keywords that generate an advertising link known as a “Sponsored Link” to the purchaser’s website. Google posts the sponsored links on the top of and at the margins of its organic listings.
Some of the attractive features of the Adwords program include: 1) An Adwords customer only pays Google based on the number of users who click on their sponsored link; 2) an Adwords program “discounter” feature that automatically lowers a customer’s cost per click price to one cent above its nearest competitor to allow it to maintain its ad’s position on the results page; 3) A Google ad can be created in only five minutes (Google’s main competitor, Yahoo!’s Overture’s ad can take as long as five days before an ad goes live); and 4) Google allows a customer to choose who will see its ad from among 250+ countries and in 14 languages.
In April 2004, Google’s Adwords underwent a policy change. Until then Google had respected trademark owner’s requests to not offer their marks up for sponsorship. Since the policy change, Google has seen its revenues continue to grow at a healthy rate.
Trademark Infringement Claims
However, not everyone is reveling in Google’s ingenuity. Rather, Google’s new Adwords policy has spawned a number of lawsuits by trademark owners who object to Google selling advertisement space based on their trademark.1 In two such lawsuits, Geico and American Blinds alleged Google was infringing their trademarks and violating unfair competition laws by allowing a competitor to sponsor an ad based off of their protected trademarks. Geico and American Blinds alleged that the intended result of the Adwords program was to divert consumers who wish to find one company’s products and services to that company’s competitor’s Sponsored Link without the consumers realizing that they are being directed to the competitor’s website.
Likelihood of confusion is the core element of trademark infringement. These cases raise a particular type of confusion, “initial interest” confusion, which occurs when a competitor trades on a famous mark to attract a consumer’s initial interest but not to make an actual sale. For example, a “KFD” sign might lead consumers to a fast food restaurant, but once there, the consumers realize it is not “Kentucky Fried Chicken” yet still purchase food because they took the time to drive there. Although dispelled before an actual sale occurs, initial-interest confusion unlawfully capitalizes on a famous mark’s goodwill.
So far, courts applying the initial-interest confusion doctrine to the online world have found initial-interest confusion in cases in which a famous trademark is: 1) used in a competitor’s “meta-tags” (keywords specified by a website owner that signal to search engines how the site should be indexed); and 2) unlawfully used in a competitor’s domain name. To date, the Geico court has come the closest to finding initial interest confusion for “keywording” by ruling that sponsored links that include Geico’s name in the heading or text of the ad cause initial interest confusion.
However, the Geico court granted summary judgment to Google on the case’s primary issue, finding as a matter of law that it is not trademark infringement to use trademarks as keywords to trigger advertising. The Geico court also ruled that Geico had failed to establish a likelihood of confusion stemming from Adwords Sponsored Links that do not include Geico’s name in their heading or text. Google and Geico settled soon thereafter. Finally, in March 2005, the American Blinds court denied Google’s motion to dismiss the complaint. The parties are currently conducting discovery, with a 2007 trial date.
Learning Point:
While the law is still very much in flux, the preliminary Geico court ruling suggest that Google’s Adwords program does not per se constitute trademark infringement. However, to minimize liability, a business should avoid including a competitor’s trademark in a Sponsored Link’s heading or related text. •
(Footnotes)
1 Google, Inc. v. American Blind & Wallpaper Factory, 2005 WL 832398 (N.D. Cal.) and Government Employees Ins. Co. v. Google, Inc., 2005 WL 1903128 (E.D. Va.)
Back to CM Report of Recent Decisions (2006v1) 2006 Volume 1 Table of Contents
