Don’t Get Your Hopes Up Over Fighting Google AdWords Ads

A recent decision by the U.S. Fourth Circuit Court of Appeals (which covers Virginia and four other states) might have given trademark owners hope that they can stop a certain kind of advertising on Google by their competitors.

I write to crush that hope. You have almost no chance of stopping Google here. In this situation trademark owners should focus on competing instead of litigating.

Some background is necessary. Google sells advertisements that appear in its search results. It calls this program “AdWords.”

Here’s how it works: Google allows you to buy advertisements that are triggered by search terms. It puts these ads above or to the right to the main search results. It labels them as “ads.”

So, for example, a search for “swim fins” might cause ads from merchants of swim fins to appear in the “ads” section.

Sometimes a merchant will pay to have its ad triggered by searching for a trademark. For example, it might have its ad pop up when someone searches for “Speedo.”

This fosters competition. TYR, another swim-products manufacturer, might want its ad for TYR fins to pop up when you search for “Speedo.” A seller of used Speedo fins might want its ad displayed. A counterfeiter could advertise.

Many trademark owners would like to use the law to stop such online competition.

About two years ago, Google won a big victory in a Virginia federal trial court. That court effectively shut down trademark challenges to Google’s AdWords program. The appeals court just reversed this decision, thereby allowing the challenges to continue.

Most importantly, the appeals court overturned the trial court’s attempt to end universally all of the legal challenges to AdWords.

The way in which the district court tried to end the issue is too deep in the legal weeds for explanation here, but it was an unprecedented and odd view of the law, which the appellate court rejected soundly.

The appeals court also held that the trial court didn’t give enough weight to the evidence against Google. It sent the case back to the trial court for more development.

Don’t get excited, trademark owners. You should not see the appeals-court ruling as an good opening for attacking AdWords competition.

Here’s why: Google has run its AdWords program since 2004. It’s permitted the use of trademarks of others (in some cases) in the body of such ads since 2009. Google hasn’t lost an AdWords case yet.

Google came close to losing a case several years ago but settled before the case completed. Some think that if you are a huge company and fight hard enough, Google will eventually settle on terms that make you happy. Few challengers fit that profile.

Also, Google can always change its program to undermine your claim by making it more obvious that its ads are just ads and not part of the organic search results.

The key legal issue here is whether Google’s AdWords ads are likely to cause confusion as to whether the ads come from the trademark owners when they don’t. For example, would an AdWords ad by TYR confuse folks searching by brand name for Speedo fins?

Google made such a change in late 2010. It previously labeled these ads as “sponsored links.” It now calls them “ads,” which is clearer. Google didn’t admit that this change was caused by concern over possibly losing AdWords trademark cases, but it looks that way to my trademark-lawyer eyes.

In addition, you won’t ever stop AdWords advertising entirely. As long as Google displays AdWords ads in a way that doesn’t confuse consumers, it’s legal. How ads are displayed and labeled might change, but you’ll never get rid of them entirely through legal action.

Of course, if you are faced with counterfeit goods on Google or with an AdWords ad that is deceptively worded, file a complaint with Google. It has programs to deal with those situations.

Otherwise, I recommend adapting to competition via AdWords and focusing your time and money on competing better.

by John B. Farmer
Published in the Richmond Times-Dispatch
© 2012 Leading-Edge Law Group, PLC. All rights reserved.