Google's trade mark tweak could cost businesses dear
OUT-LAW Radio, 10/04/2008
We investigate the change Google has made to trade mark rules in
its AdWords system, and find it could increase ad costs by a factor
of six.
A text transcription follows.
This transcript is for anyone with a hearing impairment or who
for any other reason cannot listen to the MP3 audio file.
The following is the text spoken by OUT-LAW journalist Matthew
Magee.
Hello and welcome to OUT-LAW Radio, the weekly podcast that
keeps you up to date on all the twists and turns in the world of
technology law.
Every week we bring you the latest news and in depth features
that help you to make sense of the ever changing laws that govern
technology today.
My name is Matthew Magee, and this week we investigate a change
in Google's UK Adwords policy that could make advertising through
it six times more expensive.
But first, the news:
Music industry hits out at 'unreasonable' Carphone Warehouse
And
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irresponsible and unreasonable over its refusal to ban customers
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injunction against the company to enforce claimed legal rights.
Carphone Warehouse's Talk Talk became the first ISP to reject
the three strikes and you're banned plan when Chief Executive
Charles Dunstone said that the scheme was an intrusion into users'
privacy.
The British Phonographic Industry, which wants to run the
scheme, has hit back at Dunstone, saying that any responsible
company would sign up. "We want to work with Carphone Warehouse" it
said, "but given its persistent and unreasonable refusal to take
any action to address illegal activity on its network we have
written to Mr Dunstone, explaining our position and also reminding
him of the legal rights that we have."
The UK Government has said that it might pass a law enforcing
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That was this week's OUT-LAW News.
Imagine you're the chief executive of a multinational company,
pushing your Blackberry around the table of your Lear jet,
wondering is it just you, or are limos getting smaller these
days?
The chances are you've spent billions of pounds over the years
building, promoting and protecting your brand, that thing that
makes your bar of chocolate or running shoe stand out from the
rest.
Now imagine how you would feel if people were putting your brand
into Google's search engine only to be faced, on the next page,
with ads for your competitors' products.
You would probably be extremely annoyed, given that you employ
legions of lawyers, specialists and advisors to make sure your
trade marked brand is protected to the hilt.
Though this has been the case in the US for some time, UK execs
have escaped that particular cause for concern. Until now. Google
has just announced a policy change, and it could have serious
implications for the worlds of brand names and trade marks in
Britain.
From May 5th other people will be able to pay so that someone
plugging your brand into Google will see their ads alongside the
normal search results. Trade Mark law expert Lee Curtis of Pinsent
Masons, the law firm behind OUT-LAW, says this is a significant
change.
Curtis: The previous European
policy was if a registered trade mark owner made a complaint
regarding the use of their registered trade mark in an Adword then,
providing they provided sufficient proof, Google would deactivate
the use of that Adword. Now what's happened is the policy has
changed and they've said: we will not do that in future unless the
complained of registered trade mark actually visibly appears in the
advert associated with the Adword.
Google's keyword advertising service is called Adwords, and the
change is significant because it's a titan in the search
advertising business. Google's search engine has a 90% market share
in the UK. In the US Yahoo has a vibrant search keyword business,
but has just announced a trial in which it will switch over to
Google's system.
Any change Google makes, then, will affect almost anybody
advertising through search keywords.
These systems operate through a combination of quality ratings and
bidding. First, Google will assess how relevant your site and ad is
to the keyword that you buy to avoid a shoe shop, for example,
using the keywords 'Oscar nominations' to drive traffic to an
irrelevant site.
Then it allows businesses to bid on the right to have their ad
displayed when someone searches for that keyword. It is an open
auction with the highest bidders' ads displayed in the order of
their bids.
The score rating on relevance comes into play if there's not much
competition for a word: the system sets a minimum bid price which
will be lower for more relevant ads.
Big brand operators in the UK have had a monopoly on their own
brand as a keyword till now. Once the change is made, though,
they'll be hit where it hurts – in the pocket. So says Andrew
Girdwood, head of search at digital marketing agency
Bigmouthmedia.
Girdwood: If you're the only person in
the auction because you've got your brand protection in place, the
only person you need to beat so to speak is the auctioneer which is
Google. And they'll sell that advert to you cheaply. But now of
course you've got other people in the auction. So the days of you
being able to bid near that quality score are gone.
It won't just be pricier, said Girdwood: companies will be
advertising in a more crowded, more confused market, one with more
ads that are less relevant.
Girdwood: If you're the only ad shown by
Google then everybody who's going to click on an ad is going to
click on you. But now if there's two, three, four or up to 11 ads,
you're going to have to share those clicks with all those other
competitors. This is an auction where you don't just have a first
place, now you have a second place and a third place and a fourth
place and so on. So brands will have to pay more for their clicks
simply because there's more people in the auction and will need to
change their strategies to encourage people to click on their ads
because of a competition for clicks.
This one alteration – ending the Adword monopoly owners have
over their trade marks – will change the whole way that brands are
advertised online. And online is increasingly where advertising
happens as money flows there from more expensive newspapers and
television.
But though powerful, Google isn't the law, and trade marks still
have legal protections. Curtis said that the law on whether others
should be allowed to bid on your trade mark is still undecided.
Curtis: The basic law is, if you
just look at the offline world, if you're using a similar trade
mark or using a similar sign to a registered trade mark, then you
have to prove that confusion is occurring in the marketplace.
Whereas if you're using an identical sign to the registered trade
mark you don't have to prove confusion, but there's nothing laid
down in the law saying Google's policy is against the law. It's
just built up over case history and everything is moving towards
Google's position but it's not as clear cut as Google make out.
There may well be a further case in the future which sort of
clarify more and maybe go against Google's position.
UK courts have never issued a definitive judgment, said Curtis,
though he said that there does seem to be a trend towards allowing
trade marks to be bought as keywords by third parties.
Curtis: There's been no definitive
case on the use of an identical registered trade mark in an Adword
as opposed to a similar mark and I’d quote the latest case which
has kicked all this off is Mr Spicy where someone was alleging that
they did infringe the Mr Spicy registered trade mark via the use of
the Spicy adword. There again there's never been a case in the UK
on identical usage and there's always a possibility in the future
that a court action would be brought out which would contravene
Google's position.
The situation contrasts starkly with that in the rest of the EU,
and especially France, where courts have been much more rigid about
protecting trade marks, even though all EU trade mark law should be
the same.
That anomaly can only be sorted out by the European Court of
Justice, said Curtis.
Curtis: Ultimately the only party
or legislative body which can sort out the contradictions between
the various practices across Europe is the European Court of
Justice. Trade mark law is harmonised and we should technically all
follow the same procedure but until there's a case from the
European Court of Justice there's not going to be a common practice
on this.
Curtis believes that a challenge will come soon in the UK courts
as brand holders try to assert their rights over the use of their
trade marks, but Bigmouthmedia's Girdwood said that not everybody
will be displeased by the change.
Girdwood: It depends on the brand. Some
brands - this is going to be expensively annoying, very expensive
too. And these brands will be typically large brands with a pure
play model. So for example an airline or a bank. However big brands
like the comparison sites Expedia and Last Minute or in finance,
people like Money Supermarket and Moneynet, they may benefit. There
are now these big aggregators who like compare brands, they now
have a chance to bid on brands once again and drive traffic from
Google off to their comparison sites.
The stakes are certainly high, with the cost of competing for
keywords set to raise ad spends significantly. How much, nobody
knows, but Girdwood said it could increase budgets by a
multiple.
Girdwood: Well in the ideal scenario with
the search agencies doing their job a brand click where you have a
trade mark in place could be from 1p if you're very lucky, maybe up
to about 5p. I would forecast now that the same clicks might be in
the region of 25, 30p. So that's a multiple of five or six plus
it's not going to as effective as it was before. So it's a dramatic
increase.
Curtis: It's quite a major change. I
think it's going to affect the online advertising market quite
considerably. I very much suspect that it's going to start
fireworks quite quickly.
That's all we have time for this week, thanks for listening.
Why not get in touch with OUT-LAW Radio? Do you know of a
technology law story? We'd love to hear from you on Radio@out-law.com. Make sure you
tune in next week; for now, goodbye.
OUT-LAW Radio was produced and presented by Matthew Magee for
international law firm Pinsent Masons.
