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.