With the demise of Zango, many in the online adult community thought that the Internet might become a place where consumer confusion over brand identity no longer existed; and competitively inspired search-term targeting might be limited to helping its author's marketing — rather than extended to harming another's.
According to some companies, however, this dream is not yet realized — and the culprit this time is none other than search giant Google, which is embroiled in a lawsuit over its allowance of advertising triggered by search terms containing a competitor's trademark.
Earlier this week in Texas, software company FPX, which does business as FirePond, a trademarked name, filed a federal class-action lawsuit against Google, claiming that it had violated the FirePond trademark and further contesting Google's advertising and trademark policy on behalf of all Texas trademark owners — reportedly the first class-action suit to address this issue.
The case stems from a surfing session in which FPX CEO Audrey Spangenberg reportedly typed her company's name into Google and saw paid advertisements for her competitors listed above her company, triggered by the search on her trademarked name.
"It is inappropriate for Google to sell my trademark for a profit," Spangenberg said. "It really misleads our customers and our potential customers."
"I believe Google is basing this decision on some court cases of a spyware/adware program like Gator, where if a surfer was on XXX website, they could popup YYY website (a competitor) based on the keywords in the domain," Brandon "Fight the Patent" Shalton told XBIZ. "Google did say that they would not allow the trademark keywords to be used in the actual AdWords text copy as it would seem this would allow competitors to jump in on a brand name."
According to the NY Times, however, although Google previously settled similar suits with American Airlines and Geico, it recently expanded the ad policy to more than 190 new countries and will now "allow limited use of trademarks in the text of some search ads, even if the trademark owner objects."
"I think that there will be trademark owners that do not like this policy," Google's Senior Trademark Counsel Terri Chen said. "But trademark law allows for that. It is a pretty well-established principle in the offline world and in the online world."
Some legal experts question the FPX challenge and its application to class-action status, but see other vulnerabilities in Google's approach. "I think that's going to be an issue in deciding whether to certify the class," University of Iowa College of Law Professor Mark Janis said.
Gibson Dunn Partner Terrence Ross, whose firm represented American Airlines in its Google suit, sees a darker side to the practice. "I know of several companies spending millions of dollars a year in payments to Google to make sure that their company is the very first sponsored link," he said. "It certainly smacks of a protection racket."
Some observers see an upside for consumers in all of this however, as they are exposed to alternative offers, products and services that may better target their needs and budget.
"The argument by Google is that if a surfer was looking for the brand name, that's the one they would be clicking on," Shalton said. "But on the flipside, the surfer is now exposed to alternatives, which have products similar to their intended search, so the consumer would be exposed to additional opportunities."
"The winners in this are Google who gets higher bids placed on brand keywords; competitors who can now ride the tailcoats of a brand name; and surfers who get exposed to more alternatives," Shalton concluded. "The loser is the brand name owner who now needs to bid for their own keywords where before, they would have been ranked at the top anyways."