Google faces trade mark class action over AdWords
Firepond looks for help melting Chocolate Factory
Posted in Management, 13th May 2009 09:04 GMT
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Google is facing an attempt to file a class action lawsuit over its US policy of allowing companies to use trade marks they don't own to trigger their internet adverts. If it gathers enough participants, the suit could be costly for the search giant.
Class action law suits are US legal cases in which many companies or people in a similar position band together to collectively sue a company. A company called Firepond has sued Google and wants other companies who believe their trade marks have been violated to join it in one big case.
Firepond, a small sales process software company, has sued Google, claiming that its AdWords system infringes its trade marks. AdWords allows companies to pay for certain keywords to trigger their own adverts, which are displayed alongside in Google's search engine results.
It is also seeking to turn its case into a class action suit, whereby a court lumps together many very similar cases against the same defendant for efficiency's sake. Payouts are then usually split between the lawyers running the case and the many defendants.
Firepond has sued not just Google but also its online video subsidiary YouTube, AOL, MySpace, Turner Broadcasting and Interactive Corporation because these companies use Google's search engine and AdWords system on their own sites.
Trade mark rights in keyword advertising systems have been controversial for some time around the world. Google used to only allow other companies to bid to have their ads displayed beside trade marked keywords in the US and Canada.
It expanded that policy to cover the UK and Ireland last year, and then extended it further earlier this month. The policy now covers 194 countries. The UK and Ireland are the only European Union countries in which any trade mark can be bought as a keyword by any company.
"Google has improperly infringed [Firepond's] 'Firepond' Marks by selling, for example, [its] trademark 'Firepond' to [its] competitors as a keyword so that when an Internet User searches for 'Firepond' on...Google's Internet search engine, the competitor's advertisement hyperlink will appear at the very top and/or on the right side of the first page of search results…thereby confusing Internet Users and diverting a percentage of such Users from [Firepond] and enjoying and benefitting from all the goodwill and 'buyer's momentum' associated with [its] valuable trademark," said Firepond's suit.
"[Google] profit[s] financially from infringing upon…protected trademarks and assisting and encouraging third parties to do so as well," said the suit, which was filed this week in the US District Court for the Eastern District of Texas.
The suit said that "the so-called 'Sponsored Links' do not always clearly identify themselves as advertisements", and that users are "duped into clicking through to a competitor's Sponsored Link".
Trade mark law expert John Mackenzie of Pinsent Masons, the law firm behind OUT-LAW.COM, said that Firepond may have difficulty in establishing the basis of a class action suit, which depends on all the suing parties facing the same problem.
"Each individual trade mark infringement will be different and it will be difficult to make a case," he said. "A brand such as Kodak is famously distinctive, whereas brands made up of common words will be in a different situation. Kipling will be different again because it is a personal name, a brand and it has products which will be sold by other people, who will have a legitimate reason to use it as a keyword," he said.
Mackenzie did say that, despite the difficulties, the most effective way for brand owners to tackle the keyword issue is in a class action law suit. "The courts in the US are split on the issue, some think buying a keyword is trade mark use, some think it isn't. There hasn't been a fully fought trial on this, and it is about time there was," he said.
French courts have previously backed trade mark holders' claims, and ruled as recently as February of this year in favour of two travel companies who claimed that Google's sale of their names as keywords was trade mark infringement.
The European Court of Justice has been asked by the German Federal Supreme Court whether the purchase of keywords in advertising systems counts as a use of a trade mark that could lead to infringement proceedings.
Details of the suit are here.
Copyright © 2009, OUT-LAW.com
OUT-LAW.COM is part of international law firm Pinsent Masons.
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COMMENTS
Strike one for the...
lawyers. Those buggers will be the catalyst for Ragnarok I have no doubt
Clear breach of trademark
The precedent was set in English law by an action between pharmaceutical firms when a brandname was used by a competitor in an ad that read like "X replaces Carter's Little Liver Pills and costs less". The trademark owner sued successfully on grounds that their name was being used commercially without permission. For decades afterwards UK advertisers avoided comparison ads that named competitors.
Comparison ads began to reappear in the 1970s but I suspect that the advertisers ensured that the use of a brand was relevant to a substantiable comparison -- not just a blatant use of one brand to promote another.
If Google are using brand name searches to divert potential customers to a competitor who has paid Google they may may not escape the legal precedent set in Edwardian times.
May no be illegal, but its certainly evil...
There's a kind of blackmail there - its spend money with us to protect your trademark or else someone else will be using it to benefit their business...
The domainance of the advertising model on income from the net seems to me to be getting very unhealthy... It means that income tends to go not to the creators but to those who prey off them...
All power to them !
Great stuff - it'll keep the layers amused for a long time as well.
It's going to come down to "internationality" isn't it. Even in the UK we can have several companies with very similar or the same "key" name. So who's going to be the one that can use the name in Google Adwords?
Firepond are now called FPX (?!) and they seem to have some problems of their own:
" A former executive of Firepond Inc., a company formerly headquartered in Waltham, was arrested Tuesday as he attempted to enter the United States at the Lewiston Bridge in Niagara Falls, N.Y.
James E. Reid allegedly faked $4.8 million in deals, forged customer signatures and was paid $156,000 in commissions for one of the deals, according to a federal indictment. "
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