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.