This is an interesting issue beyond the law. To what extent does owning a phrase or word, even a word you made up, give one rights to how it is used?

On one hand, it would appear that the search engine and those who buy the brand name would be trading on the reputation and work of the owner of the name. It's a basic trademark violation, they say.

On the other hand, attempting to limit how what the user of a search engine sees when they search on the brand would be restricting speech and free trade.

The search engines have point to the fact that it is an auction system which determine who get the exposure from purchasing the keyword, saying that this means that to prohibit use of brand names would be restraining trade.

The issue should decided on what best serves the public good, which is why LVMH points to fakes being sold on the search ads.

The reply on this is that selling fakes is fraud and outside the issue at hand.

I've looked at this for a long time and come to conclusion is that restricting the use of brand names is not appropriate. Of course, there are bad actors that make one reconsider this at times. But, using brand names can be ethical and it should be legal.

Makes no sense to me. If you ask the store owner for a Pepsi, why can't coke pay him to say, if you want a coke, it's right there.

IMHO the engines ought to give the TM holder the top spot for whatever the minimum bid is ($0.05) and then let everyone else duke it out for positions 2 to infinity. The real headache is sometimes not so much that people show up in the sponsored listings for your TM but that they bid up the price so much it costs a fortune to get traffic for your own name.

give the TM holder the top spot

Why? I fail to see any good or doubleplusungood reason for this. I have a warehouse full of fake coach handbags at wholesale prices...

Seriously, this would be an issue for the courts. Google (et al) are not the trademark police.

If they do that (give the TM owner the top ad spot for the min bid price) it comes as close as possible to keeping an open marketplace while protecting the trademark owner and not costing the TM owner a fortune to be represented at the top where one might expect them to be. If you have a warehouse full of fakes you could bid for second on down if Google didn't ban the account for advertising counterfeit goods.

Not permitting the use of the TM term in the ad text (by anyone other than the Tm owner or those authorized by the TM owner) came close to achieving the same thing when that was in play.

Maybe gave you the wrong example (because it made it very easy for you to skirt the real issue), but forcing the TM owner to #1 would be a huge cop out IMO.

It's a slippery slide once you make a commercial entity responsible for enforcing the rules. What's next, requiring a proof of tax-id or business license for adsense operators in far-away-istan? Scope creep, me thinks. Let the courts sort out the fights, each in their own jusrisdiction... That is the closest you get to an open marketplace.

I don't get it. Google stopped my competitors bidding on my trademark the minute I complained. Nor am I allowed to bid on their trademarks.

What am I missing?

So Target opens up a store accross the road from a Walmart. Is the landlord who sold/leases the property violating Walmarts TM?

If a newspaper can sell Walmart an ad next to a Target ad, are they not violating Target's TM?

I think what the problem is buying keywords that are Trademarks and using them like this:

"Shop MyLesserWidget, which is the same quality and materials as BigNameWidget."

"MyLesserWidget has more bang for the buck than BigNameWidget!"

This creates real confusion IMO.

How does it create confusion? If you driving looking for a McDonalds and pass by a Buger King, you know its not McDonalds!

"Shop MyLesserWidget, which is the same quality and materials as BigNameWidget."

"MyLesserWidget has more bang for the buck than BigNameWidget!"

They are settled in court between the parties. Coke can say that Pepsi tastes better, if that's true based on surveys or whatever the standard is. If they lie, Pepsi will of course go after them. So comparison is 100% legal

Edited by me. Misread.

If a person is actively searching for a brand, and is served with another product...then I can see the case for confusion.

The analogy of driving to a Mcdonalds and seeing a Burger King is not a good one at all...this would be more like entering a building that looked like a Mcdonalds only to find out it was a Burger King.

Realize that laws are many times applied using the least sophisticated consumer interpretation.

"this would be more like entering a building that looked like a Mcdonalds only to find out it was a Burger King. "

No, it's like you wanting to go to McDonalds but after being showed Burger King decide to go there. The ads are marked as ads, at least technically.

Merely pointing out that what some (here) might see as "comparison" is coat-tail riding (and PAYING FOR THE PRIVILEGE) inside a monster algorithmically advertising venue where only the HOUSE (ie. Google) wins.

I have no dog in this fight... what few Trademarks I have few desire and I have Zero desire to tie mine to any other Trademark. :)

Merely a comment I can see both sides from where I sit on the fence.

No, it's like you wanting to go to McDonalds but after being showed Burger King decide to go there. The ads are marked as ads, at least technically.

Again, we're talking least sophisticated consumer here.

If someone searches for Mcdonalds and gets an ad at the top of the page that shows something like "Looking for Great Hamburgers?" but directs somewhere else then I can see clear confusion.

But these are bad examples because both Mcdonalds and Burger King have such brand recognition.

Years ago when I worked in a retail store (before moving to my online businesses full-time) we had a couple of instances of customers bringing in products that were not made by the company store I was working in, and then claiming they had to be because "they ordered them from the first listing online!". Because I was web-savvy these incidents really stuck out in my mind.

I think with smaller companies there is real risk of confusion for Joe middle-America consumer who has no idea or care how these ads work.

There is really no good physical world analogy for PPC ads like this- it's new territory. The closest might be something like searching for "Honda" in the Yellow Pages and there is a phone number for a Nissan dealer under their heading. Even that example doesn't really compare though.

And then there is the issue of dynamic keyword insertion which could actually cause many more issues.

Google and the non-trademark holding keyword bidder are literally trading on the reputation of another's trademark, leveraging the recognition that the trademark owner's work has earned. Of that there can be no question. For that reason there must be some recourse for the trademark owner.

Should Google be prohibited from allowing non-owners to bid on a trademark? I don't think that is reasonable either.

For any remedy, Google will need to provide trademark holders a method to identify themselves to Google such that Google can verify their trademark right. I don't think it would be reasonable for Google to be expected to automatically identity all trademark keywords.

Once that is done it might be as simple as placing a link above any ads that says "WonderWidget is a trademark of Some Crazy Company" followed on the second line with a link "Go to the Some Crazy Company website."

I had thought of a few other possibilities, but the more I think on this one the more it seems the most appropriate.

All of this of course doesn't begin to get into the issue of the breadth of a trademark right. That is, a trademark normally does not mean that nobody else can use that name on any other product or service. It only applies to similar products/services. Trademarks also usually provide protection within the geographical area that the owner does business. So how Google would manage this aspect of it is a good puzzle.

[edit]Of course I am using the trademark keyword "Google" (for which I did not bid) here to refer to any ppc or keyword advertising system[/edit]

To build on luke175's point with an example:

For an affiliate campaign where we have been given authorisation to bid on brand terms, it's astonishing how many searchers genuinely believe that we are the real company because they don't actually read things like the URL or the page title. We're not even trying to mislead - they just search for branded keywords and then assume that the results they get are "accurate".

Fundamentally searchers in general are not very sophisticated, so regulating to the lowest common denominator is probably a good idea.

The current state of the law, at least in the Ninth Circuit (Federal appeals court for places like California and Arizona), is as follows (non-lawyer, layman's summary): In this case on keyword advertising just decided: [docs.justia.com...]

The Ninth Circuit held that the pillar of trademark infringement is consumer confusion and that the relevant factors for deciding the confusion issues in a keyword ad case are: likelihood of consumer confusion, the strength of the trademark; any evidence of actual confusion; the types of goods and the
degree of care likely to be exercised by the purchaser (more expensive usually means greater care and less chance confusion); the labeling and appearance of the advertisements and the surrounding context on the results page (if an ad area clearly says ADVERTISEMENT, if the ads are away from the search results, and for example but not always needed depending on all the factors as a whole, the ad says that the advertiser is someone other than the trademark holder, these can be factors in favor of NO confusion, but if the ads are mixed in with search results and not clearly labeled, then it might be a factor toward more confusion).

If you read the decision in the case, which is Network Automation, Inc. v. Advanced Systems Concepts, Inc. No: 10-55840 (March 8, 2011), it gives a pretty plain english explanation of how it works.

> pillar of trademark infringement is consumer confusion

Thats right, and the only case for infringment is if the person bought the product thinking it was the brand when it was not.

> Thats right, and the only case for infringment is if the person bought the product thinking it was the brand when it was not.

Establishing the likelyhood of confusion and/or infringement does not necessarily require evidence of actual confusion. Actual confusion is a factor to be considered, but cases are made without actual confusion evidence depending on the strength or weakness of the other factors.

What I'm saying is that the factors are to be considered and weighed. As a court noted: "We do not count beans." (and I would add, "we look at them, we smell them, we taste them, we compare them to different kinds of beans, we cook them, we discuss them, we weigh them, and we weigh them against each other)

The recent case I cited above takes a while to read, but it does survey the current state of judicial thinking in the Ninth Circuit both for the typical factors to be analyzed when considering possible infringement, and the ones employed in the keyword ad context in the case.

And of course, being the internet, this whole thing is a bit of a moving target. The court emphasized that things are not set in stone and have to be adjusted as the technologies and society change. For example, in the internet context, when most people were new to the web, confusion was more likely, all other things being equal. As web consumers become more sophisticated and experienced, confusion is less likely, all other things being equal.

So Target opens up a store accross the road from a Walmart. Is the landlord who sold/leases the property violating Walmarts TM?

If the store does not have a sign that says WalMart, then there would be no confusion, now would there?

If a newspaper can sell Walmart an ad next to a Target ad, are they not violating Target's TM?

No, because they are separate products and hence no confusion to the consumer.