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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

OUT-LAW nominated for a Webby

Music industry body the BPI has labelled Carphone Warehouse irresponsible and unreasonable over its refusal to ban customers who illegally file share amid reports that it will seek an 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 the system if the music and ISP industries cannot agree.

OUT-LAW has become the first web site from a non US firm ever to be nominated at the Webby Awards, an international award hailed as the 'Oscars of the internet' by The New York Times.

Keen OUT-LAW Radio listeners can show their support by voting in the People's Voice Award. The Webby Awards is the leading international award honouring excellence on the internet. OUT-LAW.com is the only non US website to make the shortlist in the law category. It's the first time in the 12 years of the Webby Awards that a law firm or legal information website based outside the US has been shortlisted.

The other nominees for best law website 2008 are Shearman & Sterling for its Recruiting Campaign; ABA Journal; University of Pittsburgh School of Law for JURIST, and Pro Bono net for Law Help.

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.

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