Googlers will be breathing sighs of relief today that the European Court of Justice has indicated the search group can continue selling trademarked advertising keywords to anyone.
But for advertisers, the legal battle is far from over.
Google’s move to allow brands to bid on their rivals’ trademarks in Adwords in the UK last May caused consternation among many advertisers. They feared the cost of buying ads that show up when people search for their brand names would be pushed up, by allowing new bidders to the auction process that controls paid search advertising on Google.
Others, however, were pleased. Moneysupermarket.com, for instance, told the FT that it was “delighted” by the potential for buying links to its site which would appear when people searched for brands of car insurance or mortgages. Today, sponsored results for its rivals GoCompare, Confused.com and BeatThatQuote appear when Google users search for “Moneysupermarket”.
But taking on Google in the courts to prevent this competitive activity was always going to be tough, says Gavin Ailes, managing director at the Search Works, a search agency owned by TradeDoubler.
“I don’t think really anyone expected Google to fall foul of this,” he says of the LVMH suit. “It’s too much of a giant.”
However, Interflora, a Search Works client, is taking its own steps to rectify the problem. Interflora has had to spend “an arm and a leg” since last May to defend its brand from rivals bidding on its trademark, Mr Ailes says.
“Interflora were not bidding on their brand at all and were relying on their number-one position in natural search when people searched for their brand name,” he says. “People jumped all over their brand and the cost of their brand term went up significantly.”
So Interflora is taking Marks & Spencer to court for trademark infringement after the UK retailer advertised its flower delivery service to people searching for “Interflora”.
According to court filings, Interflora saw the cost of its keywords rise from 2p around Valentines Day in 2008 to up to 28p in 2009, after Google changed its policy.
M&S argues that consumers are unlikely to confuse the two services; if they want Interflora they can still click on that result.
The High Court in London has referred the case to the ECJ. Now that the practise of bidding on rivals’ trademarks has become commonplace, the case could have serious repercussions for advertisers.
“If the precedent is allowed that you are infringing their brand, people will be able to sue for lost revenue. In search it would be possible to come up with a calculation of what that might be,” says Mr Ailes, because search is so directly linked to online purchasing. “You could be in a lot of trouble. If this goes Interflora’s way there could be some very big cases.”
