• by Ross Fadner , April 13, 2004

While Google's policy shift on the sale of trademarks through its sponsored listings may attract a flurry of lawsuits from disgruntled trademark holders, some industry analysts and legal insiders don't think the shift will carry serious repercussions for the Mountain View, Calif.-based search giant.

Google no longer protects companies' trademarks from being bid upon by advertisers. However, advertisers may not mention another company's trademark in the actual text ads. The move doesn't extend to customers outside the United States and Canada.

Douglas J. Wood, partner at Reed Smith Hall Dickler LLP, maintains that it's "not entirely unfounded to take issue with whether use constitutes trademark infringement," but the real issue, he says, is "whether media should be responsible for marketing and trademark content. In the offline world, you wouldn't hold media liable" for this type of discrepancy, he says.

Wood says the incongruity between keyword buys and trademark infringement boils down to a similar problem that software-based adware companies face. The adware philosophy essentially claims that when users type keywords into their browser, they may not necessarily be looking to interact directly with a specific brand name. As Wood notes, Americans--exposed as they are to numerous brand messages every day--have a tendency to equate brand names with actual product categories.

For example, a consumer visiting a fast-food chain may ask for a Coke, but the order taker responds: "Is Pepsi okay?" or vice versa. Asking for a Coke in this instance may not mean that the consumer wants a Coke specifically; it could also mean that he or she wants a cola to go with the meal.

By accepting outside bids for trademarked terms, Wood believes that Google is simply acknowledging this discrepancy. However, he does note that particularly in the online space, "there is a very fine line between fair and unfair competition." He says that the number of lawsuits brought against Google is likely to increase a result of its decision to place trademarks up for bid by advertisers.

For its part, Google says: "Our revised trademark policy significantly enhances the Google search experience and ensures that users are exposed to a wide variety of relevant, commercial information sources."

Google, ever the champion of the user experience, also notes what it believes is the advertiser's right: "This change in Google's trademark policy removes an obstacle that had prevented certain advertisers from targeting their ads in the manner they believed most useful."

Nate Elliot, principal analyst, Jupiter Research, notes a likely revenue windfall as a result of the policy change, as trademark holders and their rivals compete in open season bidding wars: "[Google] points to accuracy, but there's also significant money involved," he says.

Elliot notes that Google has fought legal battles over the sale of trademarks before. "[Google] is already dealing with the ramifications of selling other people's trademarks," he says. "If Google's already fighting these battles, why shouldn't they continue to [sell trademarks]-- especially if it turns out to be legal." Previously, Google conceded to demands by American Blind and Wallpaper that it stop selling keywords related to its trademark. The new move represents an about-face.

Google has sold brand names before, but in the past, many--including eBay--were granted bidding-immunity for their respective trademarks by the paid search giant. The policy change overrules such previous agreements.