Google Liberalizes US Trademark Policy: “What, Me Worry?” Part 2

By Eric Goldman

In my Deregulating Relevancy article from a few years ago, I explained how trademark law was having pernicious consequences for online conversations. Among other unwanted effects, trademark law hinders online discussions about trademarks even when both conversationalists found the discussion relevant.

I don’t think things have gotten better since I wrote the article in 2005. Perhaps we have a better understanding of trademark law’s capacity for harm, but we continue to see misguided lawsuits from trademark owners and mixed results from judges.

While the courts do not automatically support online trademark-mediated discourse, the bigger practical threat to online trademark law comes from extrajudicial privately enforced trademark policies, such as the search engines’ “voluntarily” adopted trademark policies. These policies minimize search engines’ exposure to trademark liability for their ad sales, but they effectively resolve a huge percentage of trademark owners’ “problems,” almost always in the trademark owner’s favor, without any judicial oversight at all.

Thus, I was delighted to see Google’s announcement that it was liberalizing its trademark policy to allow a group of “special” advertisers to reference third party trademarks in the advertisers’ ad copy, even if the trademark owner objects. See Google’s official announcement. The “special advertisers” includes resellers, review sites, and sellers of compatible/complementary/replacement products.

In practice, this means that these advertisers and consumers can now use the same trademark to speak with each other. In contrast, today, the advertiser can purchase the trademark as the triggering keyword but can’t use the trademark to explain why the consumer was seeing the ad. Personally, I had always thought the “blind” nature of the ad copy had the potential to confuse consumers, and Google has taken a big step forward in solving that apparent problem.

Having said that, I wish Google had gone further. There are two obvious groups of advertisers who should be able to reference the trademark in the ad copy but still will not be able to do so: (1) competitors making comparative claims, and (2) gripers who wish to complain about a trademark owner’s practices. These two advertiser groups can still buy third party trademarks, but they will still be forced to speak in code in the ad copy to explain why they did so. Nevertheless, we shouldn’t let these omissions detract from what is otherwise very good news from Google.

While I think the policy change is good news, I don’t expect trademark owners will agree. Trademark owners already are wary of Google due to the widespread perception that Google’s trademark policy is less trademark owner friendly than Microsoft or Yahoo. (Google will not disable a trademark as a keyword at the trademark owner’s request; while Yahoo and Microsoft will do so in many circumstances). Google’s move could antagonize trademark owners further.

Should the battle move into the courtroom, I think Google’s move is legally defensible on two fronts: (1) The group of special advertisers generally should be protected by the nominative use doctrine, and (2) to the extent the ads are no longer “blind,” there may be less consumer confusion about the ads than there has been in the past.

Even so, I expect trademark owners to be even more aggressive about suing Google. First, some trademark owners will bring trademark lawsuits to control their online channels (see, e.g., the Mary Kay case and the many cases I cite therein), so special advertisers like resellers are an irresistible target for trademark owners trying to reduce competition among their retailers. Second, the Rescuecom decision eliminated Google’s ace-in-the-hole to eliminate trademark lawsuits early, so trademark owners may feel like their odds of success have gone up.

Indeed, in what I think is a completely unrelated move, this week a group of plaintiffs’ lawyers initiated two class action trademark lawsuits against Google (1, 2). I would not be surprised to see other trademark owners decide they’ve had it with Google. I could also see trademark owners deciding to push legislative solutions, especially in Google-hating Utah. (Although, some of the special advertiser groups in Google’s new policy would not have been able to take advantage of Utah HB 450, Utah’s most recent foray in disrupting the online advertising business). It could take years for all of the legal shenanigans to shake out.

I think the biggest question is why Google is making this change now. After all, Google has not had any good news recently on the trademark front. If anything, the Rescuecom decision might have counseled Google to become more restrictive. not less. Further, it’s clear from the Firepond lawsuits that trademark owners aren’t afraid to sue Google over Google’s multi-billion-dollar cash cow. And, although Google is now in line with Microsoft and Yahoo’s policies with respect to their trademark policies as applied to the special advertiser groups, none of those voluntary trademark policies are successfully battle tested in court; Google has no precedent to confirm that it will win in court if challenged. Collectively, it’s not like a cloud of doubt about the trademark law implications of Google’s policy changes has magically lifted.

Indeed, the timing is interesting given last week’s announcement that Google was liberalizing its trademark policies for 190 countries. On the surface, it looks like the two liberalized policy announcements may be connected because both could have the same effect of increasing Google’s ad revenues. In other words, perhaps Google is feeling the effects of the market downturn and looking for easy sources of new revenues, and what is easier than taking cash from customers who are already asking to buy ads but Google is voluntarily refusing?

Personally, I don’t think this is a cash grab by Google. If nothing else, if the policy change also leads to an increase in expensive lawsuits, the change may not be cash-flow positive for Google any time soon. (Though it should be immediately cash-flow positive for Google’s outside trademark counsel!) Instead, I’m willing to accept Google’s argument that the policy change is actually about allowing advertisers and consumers to speak the same language, which simultaneously improves the consumer experience and should lead to better ad performance for advertisers. And, in my opinion, that’s exactly what trademark law should be about.

Other comments on this policy change:

* Danny Sullivan at Search Engine Land

* (1, 2)

* Wendy Davis

* Miguel Helft at NYT

* Reuters

* Sherwin Siy