JURISPRUDENCE
Can Normative Goals of trademark laws resolve the Google AdWords impasse?
Lalu John Philip
IntroductionAdvancements in internet technology has brought into fore new forms of trademark infringements. Sometimes, in case of new practices in the internet like pop-up advertisements, meta-tagging, keyword advertising, etc. courts find it difficult to conclude whether such practices constitute trademark infringements.
In this project, the researcher looks at one new practice-Google’s ‘Adwords’ keyword advertising programme- and enquires whether the inconclusiveness of the courts with regard to this programme, can be resolved by looking at the normative goals of trademark laws.
Towards this end, the researcher has formulated the following research questions.
Research Questions
1) What are the functions of trademark laws? What are the reasons for trademark protection?
2) What has been the judicial approach towards deciding the question of whether the new practices in the cyberspace, particularly the keyword based advertising’, is trademark infringement or not?
3) Can the question of whether ‘keyword based advertising practise’ on the net is trademark infringement or not be satisfactorily answered by looking at the foundations of trademark laws?
Functions of Trademarks
Trademark is a designation used to identify and distinguish the goods of a person[1]. Trademarks emerged originally to indicate the origin of goods[2]. Through this, trademarks also perform a number of equally important functions[3]. McCarthy identifies four functions that trademark performs that are deserving of protection in the courts-to identify one seller’s goods and distinguish them from goods sold by others; to signify that all goods bearing the trademark come from a single, albeit anonymous, source; to signify that all goods bearing the trademark are of an equal level of quality and finally, it functions as a prime instrument in advertising and selling the goods[4].
Reasons for trademark protections
Private law has a normative character and sets its own definite requirements of fairness and reasonableness[5]. In the realm of business and trade, law enforces high standards of fairness or commercial morality through the unfair competition law[6]. This legal standard of fairness is higher now than in the past.[7] Trademark infringement is but a branch of unfair competition. In giving protection to trademarks, law and society are superimposing ethical and moral norms on the competitive process.[8] Fifth Circuit emphasised the connection between commercial morality and law of unfair competition by stating that ‘we are not reluctant to conclude that what is morally reprehensible is also legally impermissible.’[9] Thus commercial morality is a touchstone for unfair competition law[10]. In short, law prevents trademark infringement because it is ‘unfair’ and is against ‘commercial morality’.
There is also an economic rationale for giving trademark protection.[11]McCarthy points out that trademark perform at least two important market functions: (1) it has a quality encouragement function-trademarks create an incentive to keep up a good reputation for a predictable quality of goods. Thus an important purpose underlying trademark law is the protection of trademark owner’s investment in the quality of the mark and the quality of goods the mark identifies; and (2) it reduces customer’s search costs.[12]
Another important reason for protection is the consumer protection policy of trademark law. ‘Today, the keystone of that portion of unfair competition law which relates to trademarks is the avoidance of a likelihood of confusion in the minds of the buying public’.[13]
But it must be remembered that though many modern scholars equate trademark law with consumer protection, trademark law was not traditionally intended to protect consumers. Instead, trademark law, like all unfair competition law, sought to protect producers from illegitimate diversions of their trade by competitors.[14]
Now that the normative foundations of trademark laws have been explained, the paper seeks to explore how the internet revolution has given rise to new forms of trademark ‘uses’ which the court find it difficult to conclude whether such use of trademark names constitutes trademark infringements.
New Challenges to Trade mark protection: Google’s AdWords Programme
In the information age, the trademark infringements have become very sophisticated, so much so that courts find it difficult to determine whether there is infringement at all in the first place. The infringement in cyber space have taken many forms-prior 2000, it was cybersquatting, then came infringement through metatags[15] and now the most controversial ‘infringement’[16] is through ‘keyword triggered advertising programme’. The important keyword advertisement programme in the internet now is ‘AdWords’ by Google[17]. It is also the most important stream of revenue for Google.[18] Essentially, the AdWords program allows advertisers to bid for words or phrases (keywords)-including competitor’s trademarks- related to their businesses that will bring up their websites under "sponsored links" when those keywords are typed into Google's search engine[19]. These sponsored links appear alongside or on top of the organically generated search results. Another related tool is Google’s ‘keyword tool’[20]through which Google itself suggests the advertisers based on the search trend in Google which keyword to bid for[21].
Though many trademark holders see it as infringing their trademarks, courts haven’t conclusively decided whether such practice amount to trademark infringements. Though Google have been sued a number of times, different and often opposite conclusions have been reached by the courts. The approach of the court has been varied and courts have attempted to settle this issue by analogising with offline advertising practices.
Now the paper proceeds to look at how the U.S courts have approached the issue of keyword advertising.
Approach of the Courts
In Geico v. Google[22], court rejected Google's motion to dismiss the petition for failure to state claim stating that petition has successfully alleged trademark use[23].The court held that Internet search engine operators' practice of selling advertising linked to search terms, with links to websites of paid advertisers appearing in users' search results as “sponsored links,” constituted commercial use of trademarked search terms, for purpose of determining whether such conduct was infringing trademarks under Lanham Act. But the court didn’t go into the question of whether there was a trademark infringement as it was a motion to dismiss petition for failure to state claim.
But the New York district court took a completely different view in the recently decided case of Rescuecom v.Google[24]. In this case, the court held that Internet search engine operator's internal use of computer services franchising company's trademark to trigger sponsored links was not a use of a trademark within the meaning of the Lanham Act, absent allegation that search engine operator placed company's trademark on any goods, containers, displays, or advertisements, or that its internal use was visible to the public. Court went on to say that even if Internet search engine operator was capitalizing on the good will of computer services franchising company's trademark by marketing it to competitors as a keyword to generate operator's own advertising revenues, competitors believed operator was authorized to sell company's trademark, or that Internet users viewing competitors' sponsored links were confused as to whether sponsored links belonged to or emanated from company, none of these facts, alone or together, established trademark use; although facts could suffice to satisfy the “in commerce” and likelihood of confusion requirements at the pleading stage, without an allegation of trademark use in the first instance, they could not sustain a cause of action for trademark infringement.
In other jurisdictions also different courts have come to different conclusion. For example, while in France the Court decided against google (Google France v. Viaticum, 2005), in Germany (Nemetschek v. Google) and in Austria (Longevity Health v. Google), the Court held that there was no trademark infringement.[25]
Thus the courts are indecisive as to whether keyword advertising infringes trademark rights or not. Now the researcher attempts to see whether resorting to the normative foundations of trademark laws discussed in the beginning of the paper can provide a satisfactory explanation to this issue.
Looking at normative foundations to resolve the issue
In all these cases, the courts instead of looking at the normative goals of trademark laws, tried to resolve the issue by trying to analogise it with offline infringement[26]. But such an approach is defective not only on the point that such analogies are incomplete and therefore incorrect, but more importantly the issues involved in the cyber space are different and therefore a solution to the issues in cyberspace cannot be resolved by analogising with offline world[27].
In order to consider whether Google’s advertisement programme of selling trademark names as keywords should be allowed to continue or not, we have to necessarily begin by looking at whether Google’s keyword advertisement programme is fair or conforms to commercial morality, since as pointed out earlier in the paper, law prevents trademark infringements because it is unfair and is against commercial morality. Google is a virtual monopoly in its field. Though there are other search engines in the web space, none of them can match Google in the volume of indexed pages or in the user base. The Google search has become a primary online activity[28] and control the access to information in the net.[29]Because of this special status enjoyed by Google, it should be bound by a higher degree of morality and fair business practice. Unfortunately, through its Adwords programme, Google is exploiting the monopoly it enjoys. A company builds up its goodwill and brand name after years of investment by way of providing quality goods/services and by investing in advertisements. But Google, by selling the trademark name of company as keyword to its competitors, is actively contributing to divert its customers to the competitors. This is unfair on the trademark holder who has spent millions of dollars in building up the trademark name. Also when a web user searches in Google with the sole purpose of reaching to the trademark holder company’s site, Google affects his last minute decision making process by recommending him the competitor’s websites.
From an economic point of view also, the Google’s advertising program cannot be justified. The keyword advertising thwarts quality encouragement function of trademarks because now to reach to customers, competitors will not invest on building brands by improving quality of goods, but will only be spending money to bid for competitor’s brand name as ‘keyword’. Economic Analysis also maintains that if all take a free ride on the successful seller’s mark and reputation, there is no incentive to distinguish one’s own goods and services[30]. Google’s keyword advertising program is allowing exactly this kind of free-riding to happen.
There are those who suggest that Google’s practice is not a ‘trademark use’ because consumers are not confused and also that trademark use should be narrowly constructed so as to exclude contexts like keyword advertising as they promote consumer choice[31]. But what is ignored in these statements is that trademark laws were not intended to protect customers. It was originally sought to protect the producers from illegitimate diversions of their trade by competitors. The Google thus infringes the trademarks by allowing diversions to its advertisers when a user uses Google to get to the website of the trademark holder[32].
Conclusion
This article has shown that normative foundations of trademark laws can successfully solve the perplexity judges find themselves in while deciding whether the keyword advertising programme as practiced by Google constitutes trademark infringement or not.
Google might be able to come out of the law suits against them successfully by showing that the requirements for infringement under Lanham Act haven’t been satisified, But if it is to be asked whether the Keyword advertising which use trademark names ought to be banned, all the normative foundations of trademark law points to one direction-that it is an unfair business practice.
Bibliography
Articles:
- Mark P. McKenna, “The Normative Foundations of Trademark Law”, 82 Notre Dame Law Review 1839 (2007).
2. Paul Bonewitz, “Beyond Confusion: Reexamining Trademark Law's Goals in the World of Online Advertising”, 81(01) St. John's L. Rev. 899 (2007)
- Stephanie Yu Lim, “Can Google Be Liable For Trademark Infringement? A Look At The "Trademark Use" Requirement As Applied To Google Adwords”, 14(01) UCLA Ent. L. Rev. 265 (2007).
- Urs Gasser, “Regulating Search Engines: Taking Stock And Looking Ahead”, 8(01) Yale J. L. & Tech. 201 (2006).
- Peter Benson, “Philosophy of Property Law”, in The Oxford Handbook of Jurisprudence, (Jules Coleman and Scott Shapiro eds, Oxford: Oxford University Press, 2002)
Books
- Matthias W. Stecher, “Webvertising, Unfair Competition and Trademarks on the internet”, AIJA Law Library, 1999
- J. Thomas McCarthy, “McCarthy on trademarks and unfair competition”. 4th ed. [St. Paul, MN] : West Group, c1996
- Morcom, Roughton et al, “The Modern Law of Trademarks”, (London: Butterworth Publications, 1999)
[1] Sec.1(1) of Trademarks Act,1999 defines ‘trademarks’ as: “any sign capable of being represented graphically which is capable of distinguishing goods or services of one undertaking from those of other undertakings. A trademark law, in particular, consists of words (including personal names), designs, letters, numerals or the shape of goods or their packing.”
[2] Morcom, Roughton et al, The Modern Law of Trademarks, (London: Butterworth Publications, 1999).
[3] As Memorandum on the creation of an EEC trademark (Bulletin of the European Communities, Supplement 8/76 states -“while quality function (of trademarks) predominates the mind of the consumer and publicity function predominates in the mind of the producer, but so far as legal aspect is concerned, the decisive criterion is the function of the mark as an indication of origin…only if the proper purpose of the trademark is maintained, can it fulfill its further role as an instrument of sales promotion and consumer information.” (Emphasis the researcher’s).
[4] J.Thomas McCarthy, McCarthy on Trademarks and Unfair Competition, ( 4th ed. St. Paul, MN : West Group, 1996). (Henceforth referred to as McCarthy)
[5] Peter Benson, “Philosophy of Property Law”, in The Oxford Handbook of Jurisprudence, (Jules Coleman and Scott Shapiro eds, Oxford: Oxford University Press, 2002) at p.753.
[6] In Dior v. Milton, 9 Misc. 2d 425, wherein the Court reasoned that : “The theoretic basis of the law of unfair competition is obscure, but the birth and growth of this branch of the law is clear. It is a persuasive example of the law’s capacity for growth in response the ethical, as well as economic needs of society. As a result of this broad background, the legal concept of unfair competition has evolved as a broad and flexible doctrine with a capacity for further growth to meet changing conditions.”
[7] McCarthy has quoted from Restatement of Torts and stated that ‘unfair competition law enforces increasingly high standards of fairness or commercial morality in trade’. Also see the quotation in the above footnote.
[8] Mccarthy §2:9
[9] Chemical Corp. of America v. Anheuser-Busch, 306 F.2d 433, cited from McCarthy at § 1:18
[10] McCarthy § 1:18
[11] As Posner points out ‘trademark law can be best explained on the hypothesis that the law is trying to promote economic efficiency’, Landes & Posner , “The Economics of Trademark Law”, 78 Trademark Rep. 267 (1988).
[12] McCarthy §2:5; Also see Paul Bonewitz, “Beyond Confusion: Reexamining Trademark Law's Goals in the World of Online Advertising”, 81(01) St. John's L. Rev. 899 (2007).
[13] McCarthy §2:8.
[14] Mark P. McKenna, “The Normative Foundations of Trademark Law”, 82 Notre Dame Law Review 1839 (2007).
[15] To understand more about how court have dealt with the issue of infringements through meta-tags refer to Brookfield Communications, Inc. v. West Coast Entertainment Corp, 174 F.3d 1036 (9th Cir. 1999).
[16] Within quotations because there is no agreement as to whether the practice is infringement or not.
[17] For more information on how Adwords work see - http://adwords.google.com (last visited on: November 17, 2007).
[18] More than 97% of the revenue of google comes through advertisement Source: Google, Inc., 2004 Income Statement (2005), available at http://investor.google.com/findata.html .
[19] For example, if you are a competitor of dell laptops (say ‘Bangalore laptops’), you will bid for and buy keywords like ‘dell’ ‘dell laptops’ etc. Thus, when a user searches for dell website in Google, either on top or along side the organic search results, your website’s address will appear as ads (with such descriptions as buy laptop at cheapest rate) which looks exactly similar to the search results.
[21] For example if you type ‘soft drinks’ and click the get keyword ideas button, Google will suggest such keywords as ‘coca cola’, ‘pepsi soft drinks’, ‘fanta soft drinks’ etc which are all trademarks.
[22] 330 F.Supp.2d 700.
[23]To prove trademark infringement under the Lanham Act, a plaintiff must establish that: (1) it has a valid mark that is entitled to protection under the Act; and that (2) the defendant used the mark, (3) in commerce, (4) in connection with the sale or advertising of goods or services, without the plaintiff's consent.( Trademark Act of 1946, §§ 32(1)(a), (5), 43(a)(1))
[24] 456 F.Supp.2d 393; 2007 case.
[25] Rose Hagan (Senior Trademark Counsel, Google Inc.), ‘Keyword advertising and Google’s trademark policy’, State Bar of California Internet Conference oct 2005. from www.fdfdsfdsf.com last visited on: 15th November 2007.
[26] In 1-800 Contracts v. whenU.com, 414 F.3d 400, wherein the court analogised keyword advertisement to product placements in a drug store.
[27] For example, when the issue of cybersquatting was at large, analogizing the practice with real world (argument that in real world properties are sold on a first-come first serve basis) have led to disastrous results. However, the Congress clearly saw the different issue involved in the case of cybersquatting and passed the anti-cybersquatting laws.
[28] ‘Googled’ is now a verb in the revised Oxford Dictionary.
[29] Urs Gasser, “Regulating Search Engines: Taking Stock And Looking Ahead”, 8(01) Yale J. L. & Tech. 201 (2006).
[30] McCarthy on trademarks §2:4 , See also McCarthy, “Compulsory Licensing of a Trademark: Remedy or Penalty?”, 67 Trademark Rep. 197.
[31] Stephanie Yu Lim, “Can Google Be Liable For Trademark Infringement? A Look At The "Trademark Use" Requirement As Applied To Google Adwords”, 14(01) UCLA Ent. L. Rev. 265 (2007).
[32] The argument that customers are not confused in itself is not valid because it has been proved that awareness among consumers on the distinction between organic results and sponsored links are low. See, Paul Bonewitz, Paul Bonewitz, “Beyond Confusion: Reexamining Trademark Law's Goals in the World of Online Advertising”, 81(01) St. John's L. Rev. 899 (2007).
