Should Google Pay Off Brand Owners With Cut Of Keyword Sales?

I saw Should Google Give Brand Owners A Cut? from InsideGoogle earlier, about the idea of Google paying brand owners a share of revenues of those advertising on their names. Then a reader just emailed me asking what I think about the idea. OK, I’ll bite. In short — probably not. More on that below, along with a review of Google’s existing policies and how they came to be. Plus, give me your thoughts by commenting!

The InsideGoogle post comes off this post at Googlejet originating the idea:

Instead of refusing advertisers to advertise on brand terms, Google should offer the brand owners a chance to make money when people bid on their brand names.

This is how it would work:
- An advertiser bids on the term NOKIA.
- An automatic e-mail is sent to NOKIA requesting permission to advertise.
- Click revenues generated by bidding on brand names should go to the brand owner
- Google should be paid a transaction fee for enabling the brand name rent

If this implemented the brand owner will always be able to spend more on protecting their brand in Google. The brand owner could pay more to affiliates and afford a higher cost per click. Google would avoid expensive lawsuits while enabling brand owners to spend more on keyword advertising.

Where to begin with the issues? First and foremost, Google’s policies have emerged in response to lawsuits. Bidding on terms that in other cases are also trademarks is still a relatively new area. Lawsuits are the way we’re figuring out what the rules are.

Notice that awkward phrase:

terms that in other cases are also trademarks

I’m not a trademark lawyer, but I’ve been involved in some trademark lawsuits and written enough about other cases to feel comfortable stressing that words are only trademarks when used in certain circumstances.

Take apple. If I write apple, I might be referring to many things like the fruit, so apple isn’t a trademark in that instance. Say I do write about something that Apple the electronics company is doing, such as "Apple is releasing a new phone." I still haven’t used the word "apple" as a trademark. That’s because I’m not trying to convey that I’m selling any particular product related to Apple products.

Now say I do repairs of Apple computers. I decide that I want to run a Yellow Pages ad saying that I do among other things, "Apple Computer Repairs." My understanding is that I won’t be restricted from this, not in the United States. I’m describing what I do — repair Apples. I’m not saying I sell them. I’m not saying even that I might be an official Apple repair place. But neither am I likely causing consumer confusion, a key test of when terms are used in a trademark sense.

Now I decide to sell a computer. I decide to call my computers Ap-ples. Aren’t I clever? A court will likely rule that I’m trying to confuse consumers into believing I’m selling real Apple computers. And Apple has trademark protections on the use of that word with computers precisely to prevent this.

Now back to bidding on terms. In the United States, we’ve had several lawsuits about bidding on terms — just another one was resolved recently. Google’s trademark policy for the US came out of an earlier court battle. If I recall correctly, Google made a policy change it thought would help based on some early court arguments in the Geico case (and see here) that were upheld when it won that in 2004).

In particular, the court seemed sensitive that using a word that is also a trademark in the ad copy might cause confusion . But just bidding on the word wasn’t deemed a problem. As a result, Google allows anyone to bid on words that are also trademarks in the US (and Canada), as explained more here.

The rules are different for other countries. In the European Union, as a result of the Louis Vuitton case (again, if I recall correctly — and also see here), Google found it could neither take ads that use a word that might be a trademark to trigger those ads (specifically — broad match is still OK) or use those words in the text.

So just pay off the brand owners? In some countries, there’s no legal reason Google has to at all. Moreover, which brand owner? Some words are used by multiple companies. And don’t forget, trademarks don’t have to be registered to still receive trademark protections. How do you determine all the possible brand owners that are "entitled" to a pay off.

No big brand holder likes to see others riding off the back of something they may have done. That’s one reason why Yahoo bans certain types of competitive ads. But having a trademark shouldn’t give you the ability to restrain trade unfairly, either.

For me, the answer really comes down first to what the law requires — since you have to follow the law — and next to what’s best in the user interest. If I search for a well known brand, I expect to see that brand at the top of the main free listings on any good search engine. If I don’t, they have a relevancy problem. And if I do, the brand complaints they might be "missed" are largely resolved, in my mind. You’re there — and you’re not having to pay for it.

Aside from that, I think many brands have their own economies that spring up around them. Pick any hotel, and there are consolidators that want to sell rooms for those hotels through official partnerships or non-official but still legal ones. I think that’s just life for the brand holder. But the big caveat is that the search engine needs to ensure that the ads themselves are not confusing. If I search for marriott, ads that come up (I get them in the UK; the US doesn’t have them) shouldn’t try to make me think I’m getting to the official Marriott site. Aside from that, I see no reason why they shouldn’t be allowed, assuming they are relevant — that I really can book some type of Marriott property through them.

Related Topics: Channel: SEM | Google: AdWords | Legal: Trademarks

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About The Author: is a Founding Editor of Search Engine Land. He’s a widely cited authority on search engines and search marketing issues who has covered the space since 1996. Danny also serves as Chief Content Officer for Third Door Media, which publishes Search Engine Land and produces the SMX: Search Marketing Expo conference series. He has a personal blog called Daggle (and keeps his disclosures page there). He can be found on Facebook, Google + and microblogs on Twitter as @dannysullivan.

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  • http://www.efrontier.com Jonathan Beeston

    Isn’t this just a good way of Google monetising trademark searches more? Brand searches are huge – it must be frustrating for the Googlers to see all that empty inventory.

    So this kills two birds with one stone:

    1, Outsource all those pesky trademark problems to the trademark owners instead and let them do as they please. As well as helping with the lawsuits, you don’t need as many people at Google to do this. I understand that the backlog to process trademark issues is now a few months.

    2, Start making money again. Okay, so a ‘transaction fee’ isn’t as nice as keeping all the revenue, but it’s better than nothing, which is what Google are getting on a lot of trademark searches. A small transaction fee on millions of trademark clicks a day is still a lot of money.

  • AdamM

    Yahoo’s guidelines for trademark are certainly easier to understand and work with as an advertiser.

    To use your example- I should be able to buy the keyword Marriott and display the word Marriott if my landing page has something to do with Marriott. Trademark owners and users should benefit from that simple model.

    One of the trickier things about Trademark law is that, without clear guidance on what is infringement and what is not, Trademark owners are compelled to protect their Trademarks or risk losing them to public domain. We’re all in desperate need of legal clarification.

    Clarity would also limit the practice of trademark owners forcing other advertisers out of the marketplace simply to lower their per click costs.

  • MarkF

    This all just doesn’t make sense from a retailer’s point of view. Google has just disallowed our use of the term ‘Levis’ in our online ads. We are a retailer that has been selling Levis (along with many other clothing brands) for over 40 years, and for the last six years on the internet. We have a contract with Levis to promote and sell their product. We pay Levis for their product with the express purpose of selling it at the retail level. This is all very simple and very common.

    Buying an ad on Google to promote the brand name products we sell is no different from buying an ad in a newspaper. How are we to do business if Google (or the newspaper) prevents us from lawfully advertising our products?

    And why should Google pay a fee to the brand holder? Is that asked of any other advertising media? No. In fact, it’s usually the opposite — the brand owner pays us, in co-op advertising, to promote their product that we sell.

    Maybe I’m missing something here, but it all seems a bit of an over reaction by Google. Everyone benefits from legitimate advertising of brand named goods – including the trademark owner. It’s always been done this way.

    We are in no way being deceptive – we are simply promoting a product that we are licensed to sell by the manufacturer.

    Is seems that Google is throwing the baby out with the bathwater!

  • http://www.piedmontdesign.com/blog Greg Stierle

    Another problem would be if I saw this new program and decided to register popular search queries as trademarks. Would Google then have to start paying me royalties? How would we decide?

  • http://www.emersondirect.net emerson

    I couldn’t agree more. In fact I’ll give you a case in point. About 4 years ago we were spending thousands of dollars on media in the form of radio, television and ppc. Because of the exposure we couldn’t bid on our own brand as a keyword because it was so expensive. Although we were ranked organically #1 we still wanted to profit from the ppc. WE did but the cost per aquisition was very high. As well a number of sites used our keyword in their URL even though they had nothing to do with in any form or fashion. WE had to hire a law firm to shut them down but it still did not prevent people going onto Ebay and creating auction sites for our product. If we were to have received a cut from Google for everytime someone clicked on our keyword and it didnt go to our pages, we would have made an additional 7 figures.

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