In a recent post on Google’s use of trademark words as advertising search terms, one of the questions I raised was whether Google was really any different than a newspaper that might run an ad that was infringing on a third party’s trademark. Rescuecom, Corp. v. Google, Inc. may help to provide some insight into this question.
In Rescuecom, the Court of Appeals for the Second Circuit was asked to determine if the plaintiff had alleged a cause of action for trademark infringement against Google. Rescuecom alleged that some of its competitors were purchasing its trademark as a keyword that would trigger the competitor’s ad when a google user searched with Rescuecom’s trademark. For fun, I searched with this trademark but got no advertisements on google or yahoo. I guess that the competitors got shut down by all of the litigation that was ongoing in this matter.
In any event, the Court goes on to discuss whether google’s practice of offering trademarks for auction to competitors could be infringement by google. The Court noodle’s through the complaint in this manner: (a) most of google’s revenue comes from advertising, (b) google has a financial stake in the effectiveness of the advertisements it runs for advertisers, (c) trademarks of well known companies have value as keywords for advertisers, therefore, google can be liable for trademark infringement if the trademark is “used in commerce” as that is defined in section 1127 of the Lanham Act, and the use is likely to cause confusion on the part of users of google’s search engine when those users are presented with advertisements from competitors to the trademark holder.
The Court does not fully explain the logic in (b) above. For those that use google’s AdWords, an advertiser can create an ad and determine when that ad will display on google’s web site based on keywords that are used by google users to search for web content. For example, if you were looking for Starbucks and used that trademark as a search term in google, google will return web pages it thinks are relevant to that result, along with advertisements that are tied to that search term. Advertisers can place a bid on the maximum amount they will pay for a click on their ad. So, if there were multiple advertisers with “Starbucks” as their keyword, the one with the highest bid would display at the top of the list of advertisements (usually in the right hand column, but google also has ads at the top of the search results listing on the left periodically). Clicking on an advertisement will take the user to the advertiser’s web page, which will not necessarily be Starbucks’ home page.
Google also benefits from a competitor outbidding the trademark holder per click through the AdWords system. So if Starbucks and I both decided to run an ad in AdWords based on the trademark “Starbucks,” I could force Starbucks to increase the amount it would pay per click by automatically increasing my bid for the same keyword. Google, in fact, has a tool to allow bids to automatically change based on the market for a keyword.
Consumers, I suppose, could be confused by this. Rescuecom alleged that consumers were likely to be confused (and they were losing business to their competitors as a result) by the ads because they display in a “manner which would [not] clearly identify them as purchased ads…” Rescuecom, at *6. And the competitors that were using Rescuecom’s mark were in the same business as Rescuecom, and I seriously doubt they would put a link at the top of their page that would say “Looking for Rescuecom Corp? Here is a link to their page.” I suppose if I wished to sell my “Karbucks” brand coffee, the easiest way to advertise it would be to buy the trademark “Starbucks” on AdWords, and just have a very large marketing budget to bid on that keyword. Maybe that is the reason that Starbucks coffee is around $12-$15 per pound – the AdWords bids keep going up because of competing trademark infringers!
I suppose that google could use the existing trademark database, TESS, which is maintained by the US Patent and Trademark Office, and simply prevent anyone (or anyone other than the current trademark holder) from bidding on a particular registered and active trademark. Factually, there is also a question of whether much of google’s advertising money comes from the mis-use of trademarks. For example, I do have the word Starbucks in an ad that I have run, but the link in my ad takes you to an article on my blog about another trademark infringement case against a Starbucks competitor. I’m not selling coffee on my blog (at least not yet), so no danger of infringement. When I originally created the ad, there was a lag before approval of it, where I presume that google at least had the opportunity to check to see if I was trying to infringe Starbucks’ mark. Stay tuned!