2d Circuit: Rescuecom Defeats Google's Motion to Dismiss (4/3/09)

When I first started watching these paid search lawsuits, I personally thought that they were non-issues.  In several cases of companies suing the search engines for running competitor’s adds on the search engine results pages for a trademarked term, the search engines had won.   A precedent had already been set from these cases, right?  At least I thought so.

Now, that leads to this article that was published on Friday: Google Loses Round in AdWords Lawsuit.

To boil down the article to the sticky residue that remains, the 2nd Circuit federal appellate court overturned Google’s motion to dismiss the case for allowing the trademark “rescuecom” to trigger paid ads.

While this doesn’t mean that Google will lose the case, it is an interesting reversal since the case was originally dismissed by the district court on the grounds that allowing the keyword “rescuecom” to trigger paid advertisements did not violate trademark law because it wasn’t a use in commerce.

The term “Use In Commerce” is very important here, and is the primary indicator of whether or not your trademark is being violated.  A good example of “use in commerce” is if you owned a company that sold a product to computer geeks under the name “Microsoft”, disregarding the fact that there is another company that uses the name “Microsoft” and sells products within the same market.

The other key determinate is whether confusion is likely to exist.  In my example above, for a person shopping for computer equipment, there absolutely will be confusion over the products (the real Microsoft vs. the other Microsoft).

In the case of search keywords, it is a bit more touchy.  It is common to position yourself against your competitors by using their company name or product, and then writing an ad that says, essentially, “Their product sucks.  Our product is awesome.  Buy our stuff instead.”  (Whether that is really a viable method that works well, I don’t have the data to back it up.  That’s an entire other topic that I might get to some other time.)

Now, it gets sticky if the advertiser is either trying to game the system, or doesn’t think out his tactic.  Here are examples:

1. Gaming the system: Bidding on search ads for competitors trademarks, using the trademark in the title and making the ad appear to be the authentic company.
2. Not thinking out their tactics: Putting a trademark in their list of keywords for the ad, and putting a dynamic title in the ad that causes the trademark to automatically be inserted into the advertisement.  Especially, if you don’t differentiate your company from their in the ad copy, you may be opening your door to a lawsuit.

For the advertiser, Google has already put some safeguards in place.  For example, if your ad copy uses a term that is in their list of trademarked terms, your ad will be disapproved.  If this happens to you, don’t take it personally.  Take it from those of us that have managed lots of campaigns in some really crowded markets: it’s likely to happen to you at some point.

The way around this is to either:

1. Be permitted by the manfuacturer or distributor of your product to use the trademark, and forward that information to Google, or
2. Use a different term in the ad copy to differentiate your product or service from the trademarked product or service.

I will be keeping an eye closely on this lawsuit, as it has the possibility of changing the landscape of paid search.  If Google looses, it also may pave the way for more restricitve rules on paid search ads.

What are your thoughts or questions?  Post a comment!

-Kris

Technorati Tags: google, lawsuit, paid search, rescuecom, use in commerce