EU Courts Rule on Trademark Use in AdWords

The Paid Search world was alight with debate last week in anticipation of the European Court’s impending ruling on Google’s allowing bidding on trademark keywords, a matter brought to a head by a dispute with LVMH, Viaticum and Eurochallenges, all of whom took action against the search engine.

The crux of the case was that anyone is allowed to bid on trademarked keywords via the AdWords system and have their ads appear alongside search results, however, only the trademark owner may use the trademarked term in their ads (this is something lots of people outside the PPC industry are unaware of). The brand owners were concerned that ads directing users to counterfeit products were being shown, thereby violating their rights.

Very few people in the business expected anything other than a ruling in Google’s favour and the court obliged by saying:

“Google has not infringed trademark law by allowing advertisers to purchase keywords corresponding to their competitors’ trademarks”

Google’s Litigation Counsel responded in an official blog post with:

Trade marks are part of our daily life and culture, helping us to identify the products and services that we may be looking for. They are key for companies to market and advertise their products and services. But trade mark rights are not absolute.

We believe that user interest is best served by maximizing the choice of keywords, ensuring relevant and informative advertising for a wide variety of different contexts. For instance, if a user is searching for information about a particular car, he or she will want more than just that car’s website. They might be looking for different dealers that sell that car, second hand cars, reviews about the car or looking for information about other cars in the same category.

Why Was Quality Score Ignored?

I haven’t seen anyone mention the AdWords Quality Score mechanism and I do wonder why as it provides a certain degree of economic control in favour of brand owners in situations like this.

Speaking simply, if I decided to start bidding against an LVMH Trademarked term, my Quality Score would probably be much lower than LVMH’s as 1) my adverts wouldn’t use the trademarked term (so the click through rate would probably be low) and 2) I wouldn’t be sending someone to a site that was heavily associated with the trademark. The resulting low QS would mean higher click costs for me compared to the price LVMH would pay, possibly making my bidding grossly uneconomical.

Thus, despite the threat of lawsuits and general opprobrium, there is also a serious and possibly terminal financial disincentive inherent in the AdWords system that actively discourages bidding against any brand term that isn’t your own. They didn’t talk about that, did they?