Legal Issues

by Mike Masnick


Filed Under:
adwords, liability, trademark

Companies:
google, rescuecom



Dangerous Appeals Court Ruling Opens Up Google To Trademark Liability In AdWords

from the common-sense-is-missing dept

One of our big complaints with the various lawsuits filed over companies buying ads in search engines based on trademarks of their competitors was the idea that somehow the search engines themselves were liable as infringers. That made little sense. The purpose of trademark law is to avoid consumer confusion, not give the mark holder total control over the mark. If the ad itself is confusing, then you could see a reason to sue the company that created the ad -- but it's ridiculous to blame Google or Yahoo, who had no part in actually creating the ad. A variety of lawsuits had agreed -- and, in fact, most of the recent lawsuits on this topic that we'd seen involved companies suing whoever took out the actual ad.

Unfortunately, it looks like that's about to change.

Eric Goldman has an analysis of a new Second Circuit ruling that found that Google is potentially liable for ads bought on trademarked terms, overturning a lower court ruling that made sense. Goldman points to some factual errors made by the court in making this decision, but the oddest bit of reasoning is that the court actually took on a point that we often raise here in discussing these types of cases: no one thinks there's any trademark infringement because a supermarket places multiple brands of soda in the same spot. The supermarket knows that people may be looking for Coca-Cola, but may be tempted to buy the off-brand cola that's on sale. That's not trademark infringement against Coca-Cola and certainly not the store's liability.... or is it. In this ruling, the court noted:
It is not by reason of absence of a use of a mark in commerce that benign product placement escapes liability; it escapes liability because it is a benign practice which does not cause a likelihood of consumer confusion. In contrast, if a retail seller were to be paid by an off-brand purveyor to arrange product display and delivery in such a way that customers seeking to purchase a famous brand would receive the off-brand, believing they had gotten the brand they were seeking, we see no reason to believe the practice would escape liability merely because it could claim the mantle of "product placement."
That implies that Google's placement of search ads somehow tricks users into believing when they click on, say, an ad for Avis, they're actually going to the Hertz website. Yet, there doesn't seem to be any evidence presented that users are regularly fooled by such ads. Most users recognize that ads are ads.

The ruling pins liability on Google because Google "suggests" terms that may be relevant, and since it suggests trademarked terms at times, that dumps the liability onto Google. But, again, that makes little sense. Nothing that Google does is specifically causing confusion. Simply suggesting a trademark isn't confusing anyone. Unfortunately, though, as the EFF points out in its analysis of the ruling, this is likely to lead to a lot of new bogus lawsuits against Google, and (most likely) Google scaling back some of its AdWords tools and programs, giving consumers less ability to find out about competitive offers when we search.

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  1. icon
    Matt (profile), 6 Apr 2009 @ 3:27pm

    Let's hope Google Fights this

    With this lawsuit going to the core of Google's business, let's hope Google fights this to the end. This is one case where it does not seem to be easier/cheaper to pay off the plaintiff.

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