Yahoo Limits Advertising With Competing Trademarks

Yahoo plans to stop allowing advertisers to buy ads against searches on their competitors' trademarks. But Google continues the practice, and lawyers say it's undetermined whether the ads are legal.
On Wednesday, Yahoo will no longer offer advertisers the option to bid on search keywords containing a competitor's trademarked terms. Last week, the company notified its advertisers via E-mail that it planned on March 1st to modify its editorial guidelines regarding the use of trademarked keywords.

Yahoo Search Marketing requires that advertisers agree not to violate the trademark rights of others with their ads. To date, it has allowed advertisers to bid on a trademarked search term in three different circumstances: if they are resellers of the trademarked product advertised, if they operate an informational site that doesn't compete with the trademark owner's products or services, or if the "advertiser's site offers detailed comparative information about the trademark owner's products or services in comparison to the competitive products and services offered or promoted on the advertiser's site."

It's this last condition that Yahoo will no longer consider a valid excuse for using a trademarked keyword.

A spokesperson for Yahoo said via E-mail, "Yahoo! Search Marketing believes that this change in our policy enhances our ability to provide the best experience for users that search on trademark terms."

"That's nonsense," Electronic Frontier Foundation attorney Corynne McSherry said in a statement. "It's as if Walgreens decided generic aspirin manufacturers could no longer bid for shelf space next to the more expensive name-brands. Putting the generics near the name-brands promotes generic aspirin sales, of course, but it also helps consumers by saving them the time and effort of hunting around the shelves for cheaper alternatives."

Lee Bromberg, co-founder of Bromberg & Sunstein LLP, a Boston-based firm specializing in intellectual property law, argues otherwise. "It seems to me it’s a prudent move by Yahoo," he says, noting that using keywords trademarked by a competitor seemed likely to cause confusion--a critical determination in trademark law. "It's one thing to put your billboard up next to the other guys. But this, it seems to me, is different in nature and kind because you're employing search engine technology to guide customers from the Internet to you."

Either way, the change in policy should improve Yahoo's ability to please brand-name advertisers that would rather not worry about being outbid for their trademarks by competing search advertisers.

The issue of trademarks has become increasingly fractious for search engines. In January, CNG Financial Corp., an Ohio-based company that owns some 1,300 Check 'n Go stores nationally, filed suit against Google claiming that Google's sales of trademarked keywords harms its business by helping competitors poach customers. In its financial statements, Google has warned that adverse legal rulings in this area could impact its revenue.

While Google will prevent advertisers from using a trademarked term in ad text when the trademark owner objects, it allows trademarked keywords to be purchased. The issue remains far from resolved, though a recent court ruling suggests Google's approach may be lawful.

Last September, Google settled a trademark lawsuit filed by Washington, D.C.-based insurance company GEICO. The terms were not disclosed, but Rose Hagan, senior trademark counsel at Google, says the judge supported Google's policy "because the court there found that our use of the trademark 'GEICO' as a keyword wasn't going to confuse anyone."

Google has two policies, Hagan says. One is for the United States and Canada, and the other is for the rest of the world, due to differences in trademark law. She explains that in the United States and Canada, Google doesn't take any action with regard to the use of trademarks as keywords in general. "But if we receive a complaint about use of a trademark in the ad text, we will make the advertisers remove that before the ad can run again," she says. "That's because we don't believe that Internet users are likely to be confused just because ads show up when they've typed in a term. But we recognize there could be confusing uses of the ad term in the ad text by the advertiser."

Outside the United States and Canada, Google will take action if it receives a complaint about the use of a trademark in ad text or in a search keyword purchased by an advertiser.

Michelle Cooke, a partner with Los Angeles, Calif.-based law firm Greenberg Glusker, says the courts are still trying to sort the issue out, and that she expects that trademark issues on the Internet will be decided on a case-by-base basis. Noting that the link between trademarks, domain names, and keywords has been fairly loose historically, she observes, "The courts are trying to devise ways to divide the pie."