Is It Time To Rethink Bidding On Trademarks?

Trademarks are in the news again.

Last week, Microsoft announced an update to its trademark policy. Now, you can poach off your competitors’ trademarks by bidding on them as keywords on Yahoo and Bing, just like you’ve always been allowed to on Google.

Okay, so now you can bid on someone else’s trademarks in both AdWords and adCenter. Does that mean you should? A recent court decision may lead you to rethink your strategy.

In late January, a California district court announced a decision which could have enormous implications for paid search advertisers, but has not yet been picked up by any industry news sites.

In the case of  Harry J. Binder, et al. v. Disability Group Inc., et al. Case No. CV 07-2760-GHK (SSx ) the court threw the book at an overly aggressive PPC marketer, the Disability Group, to the tune of $292K, plus legal fees. The judge’s ruling was based in large part on the fact that Disability Group was buying their competitor’s trademarked keywords in Google AdWords!

In this month’s column, we’ll take a look at these two trademark developments and discuss their implications for all search marketers. First, we’ll take a look at the new Microsoft trademark policy and compare it with Google’s. Then we’ll discuss in a general way, whether or not any of us should continue advertising on competitors’ trademarks on any ad network.

Microsoft’s New Trademark Policy

Corporate trademark policy update announcements are rarely very sexy. Marketing departments usually dread the task of putting a positive spin on a story they have to translate from legalese and the language of lousy limitations, to happy, smiley marketing-speak.

Last week, however, Microsoft’s legal team threw their marketing folks a bone and gave them something they’ve probably been begging for since the Bing rollout:  allowing advertisers to bid on competitors’ trademarks.

So, what’s the big deal?

For Microsoft, the big deal is very likely higher revenue as they open up a popular new category of keywords on adCenter and bidding heats up on thousands of hotly-contested trademarked brand terms.

For advertisers who like to bid on competitors’ trademarks as keywords, the big deal is that they can pretty much cut and paste their AdWords brand term ad groups into adCenter and get an instant boost in traffic and conversions.

Comparing Google & Microsoft Trademark Policies

In its press announcements, Microsoft suggested that this change brings their trademark policies more in line with industry standards, i.e., with Google. This is true, though there are still differences in how the two companies functionally deal with trademark complaints.

In keeping with the cross-network compatibility theme of this column over the past few months, here’s a brief rundown of the functional differences and similarities between adCenter and AdWords trademark implementations.

Use of Trademarks in Ads

You are prohibited from using trademarks in ad text on either network except for limited fair use conditions, which Google and Microsoft spell out on their websites.

Ad Display URLS

Google does not take the display URL into consideration for trademark complaints, but Microsoft does, and Microsoft will investigate trademark complaints for trademarks that appear in ad display URLs. That means if you simply import your existing AdWords trademark ad groups into adCenter, they will be subject to trademark scrutiny. Your ads will run, but only until a competitor files a complaint.

Dynamic Keyword Insertion (DKI ) Ads

There was a time on AdWords when black-hatters would use DKI to get around Google’s terms of service by dynamically inserting trademark terms in ads. Those days are gone. Now, if a dynamic insertion would cause a trademark to appear in the ad, Google will simply use the default ad text instead. Microsoft, on the other hand, will take the keyword offline when a dynamic insertion causes a trademark complaint.

Specific vs. General Complaints

Google allows trademark owners to file general trademark complaints that apply to all relevant ads. They also allow trademark owners to identify authorized trademark users who will be permitted to use the trademarks in ads.

Microsoft, on the other hand, requires trademark owners to file specific complaints when they encounter ads that infringe on their trademarks. What this means is that you, as the advertiser, have to continually police the paid search listings to keep competitors off your trademarks. For efficiency’s sake, I would hope that at some point soon, Microsoft takes one more cue from Google and enables trademark owners to file generalized complaints. However, Microsoft stresses, as does Google, that they are “not a mediator” and it is ultimately the trademark owner’s responsibility to affirmatively defend their trademarks.

Agencies Acting for Trademark Owners

Both Google and Microsoft allow ad agencies to act on a trademark owner’s behalf and file trademark complaints. Google’s process for obtaining permission is well documented at their website. I could not find the equivalent information on the adCenter website, though a Microsoft spokesperson assured me that they have a one-time agency authorization form that advertisers and trademark owners can fill out, so contact your Microsoft rep for more information on that.

Search vs. Content Networks

Both Google and Microsoft will investigate trademark complaints in both their search and content networks.

Whether or not you are currently advertising on the content networks, you should still monitor those networks for infringing ads. Monitoring content network ads is not easy since your ads can appear on thousands of websites across the web. There are some services (Keyword Spy, SpyFu, and Compete to name a few) that can help you spot trademark infringements. There is only one tool I am aware of, Adgooroo, that reports on both search and display ads.

Non-Advertisers

Both AdWords and adCenter accept trademark violations from non-advertisers, and my Microsoft spokesperson tells me, “We actually get these fairly regularly.”

The Risk Of Advertising On Trademarks

Should you or should you not advertise on your competitors keywords? This debate has been ongoing for years in our industry, because the law is still unsettled.

My own personal opinion is that if we all followed the golden rule about this issue, life would be so much simpler. If you don’t want anyone poaching on your trademarks, then don’t poach on theirs. Now, I don’t want to come off as a Boy Scout on this issue, because I have to admit I have advertised on competitors’ trademarks. In light of recent court cases, though I am seriously rethinking this strategy.

Some people argue that this is a case of simply assessing the business risks of a trademark lawsuit (fines, bad publicity, legal fees) against the potential gains (money, money, money). Not the highest ethical basis for doing business, but okay, it is a valid argument.

However, in Binder v Disability Group, the courts ruled that there was both personal and corporate liability involved. This is no longer just about business risk; this is about your own personal liability. You can download the court’s findings here:  Binder_v_Disability_Group (PDF).

You can’t expect to rely on a “Google and Microsoft say it’s okay” defense. If you read through the Binder v Disability Group decision, you’ll see that argument is never raised, and the courts were well aware of Google’s policy. But Binder wasn’t suing Google, they were suing their competitor.

You also can’t rely on the “everyone else is doing it” defense. I used to try that when I was growing up and my mother would always come right back at me with, ”If everyone was jumping off the Brooklyn Bridge does that mean you should, too?”

I am not a lawyer, and don’t want to get bogged down in this column on the specifics of this particular case, but it is quite an eye-opening decision and it could encourage the filing of similar suits. Read it for yourself. Have your clients read it. Have your lawyers read it.  Because, in the immortal words of some unknown Roman lawmaker, ” Ignorantia legis non excusat.”

Opinions expressed in the article are those of the guest author and not necessarily Search Engine Land.

Related Topics: Channel: SEM | Paid Search Column

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About The Author: is President and founder of Find Me Faster a search engine marketing firm based in Nashua, NH. He is a member of SEMNE (Search Engine Marketing New England), and SEMPO, the Search Engine Marketing Professionals Organization as a member and contributing courseware developer for the SEMPO Institute. Matt writes occasionally on internet, search engines and technology topics for IMedia, The NH Business Review and other publications.

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  • http://www.intellectual-property.it Gareth Dickson

    There’s a useful summary of the Binder & Binder decision here: http://bit.ly/fCiYBV Surprisingly blunt assessment of the Defendant’s actions, but there may be a rehearing / appeal based on a more recent appellate decision in the 9th Circuit (it’s name has escaped me!).

  • http://www.roirevolution.com Chris Crompton

    There are three levels at play when bidding on a trademarked keyword:
    1. Showing up for the keyword search without using the trademarked term in your ad.
    2. Using the trademark term in your ad without trying to impersonate the trademark owner (i.e. “Alternative to XYZ Brand”)
    3. Trying to impersonate the trademark owner with your ad to mislead their customers.

    Level 3 is obviously wrong and unethical and will get you into legal trouble. I can’t think of anything unethical about Levels 1 & 2.

  • http://www.litigationandtrial.com/2008/12/promo/max-kennerlys-twitter-landing-page/index.html Maxwell S. Kennerly

    Courts in the United States have consistently allowed businesses to use their competitors’ names as triggers for adWords, and that wasn’t really a problem here.

    The problem here was that the business in question then set up an ad which claimed an affiliation with Binder & Binder and then led users to a website which claimed to be affiliated with Binder & Binder. Both of those are big no-nos, since they create a likelihood of confusion that the website in question is in fact affiliated with Binder & Binder.

    In short: you can use coke or and-aid or xerox as the search term trigger for your ad, but if your ad or website creates the appearance of being one of those company’s websites, you can expect to get yourself sued.

 

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