The next time you run an internet search on Google and click on one or two of the top results, you might find yourself participating in a covert trademark theft that spans the globe – all in the space of around 0.08 seconds, depending on your connection speed.
At least, so think the heads of legal at some of the UK’s leading brand owners. As revealed in The Lawyer last week (2 June), top lawyers from retailers such as Arcadia Group, Dorothy Perkins and Lastminute.com – as well as those from Saga and the Association of British Travel Agents (Abta) – have convened a war cabinet to discuss Google’s new AdWords policy.
Google now allows companies to bid for keyword searches of brand names owned by rivals. That means a Google search for Thomas Cook could bring up a rival company at the top of the results.
Google introduced the change to its AdWords policy on 5 May, and may have inadvertently moved itself into the firing line of a series of High Court battles.
Putting brand names up for auction leaves them vulnerable to unscrupulous advertisers who could use them in their own ads to bring traffic to their site.
Before the change of tack a few weeks ago, companies could not bid for rivals’ trademarks on AdWords. But the switch came about following a Google legal review that found there to be nothing in UK and Irish law against the practice. The only problem is that there is very little in the law that can be said to condone it either.
It feels, sounds and smells like trademark infringement, but no one can tell for sure.
Arcadia head of legal Mary Geraghty says: “It’s a cutting edge bit of law at the moment. It’s not trademark infringement yet, but all it would take is for one person to take it to the courts as a test case.”
Few companies are taking this kind of threat to their trademarks lying down. The sectors with most to lose are high street retail and travel, because of high competition and the amount of sales conducted online that result from Google searches.
“At the moment we’re just sitting and watching. There are loads of people involved. We might do something, we might not – it could easily gain momentum,” says Geraghty.
Google will be hoping it does not come to High Court blows. So far, all the talk of litigation and court battles is yet to produce ink on a claim form.
AdWords has been in the dock more than once outside the UK and has not fared well. At the end of last year the Paris Court of First Instance ruled against Google after a bedding maker, Belle Literie, found that a search under its name brought up sponsored links to competitors. Google was hit with damages of around e70,000 (£54,000) after being found to have infringed the Belle Literie trademark and to have misled people with the advertising.
These damages may not sound like a lot, but companies such as Lastminute.com and Thomas Cook have trademarks with a much greater value, which would result in higher fines.
What can be at stake with just a few words on a website? Well, everything really. It is easy to get caught up in the virtual world and forget the people and money behind it.
AdWords is Google’s flagship product and main source of revenue. This quarter it contributed around $3.4bn (£1.73bn) to the company’s $5.1bn (£2.59bn) revenue.
If a momentum builds against it and enough courts rule that the product infringes companies’ IP rights, then Google could be forced to shut it down or risk a never-ending series of court cases. The policy change could generate more money for Google, or it could cost the company its golden goose.
Meanwhile, at stake for the brand owners are trademarks and reputations that have taken time to build up and money to promote. They are more than just words on a screen – the trademarks are backed up by personalities and people’s livelihoods. As a result, many of the companies feel they would be willing to fight Google on a point of principle.
Experienced IP litigators love those types of cases because clients rarely give in and settle. And a dispute of this nature around AdWords would run for a long time given that there is no definitive precedent in the UK.
Thomas Cook executive director of legal Michael Hallisey warns: “We’re disappointed with Google’s decision on this. As with a number of people out there, we’re considering it.”
The ‘it’ in that quote means ‘suing’. The question is who to sue. There are three possible targets, with Google looking the ripest for court action, but others are also in the firing line.
The companies that bid for other brands are obvious targets, and Thomas Cook has a strict and aggressive legal strategy to prosecute them when it can.
Hallisey says: “Our policy has been well publicised, and it is that we don’t allow people to bid on our AdWords. That’s our position and that’s what we seek to enforce.
“You deal with these issues on a commercial basis. Clearly, if these people have no connection with us – are just pirates – we’ll take action as necessary.”
The picture gets more complicated when business relationships are on the line. It is difficult to rebuild a working rapport when you are on different sides in a room in the Royal Courts of Justice.
Where the infringer is a third-party doing business with Thomas Cook, then talking and reconciliation will replace instant litigation. It is just good business sense.
“When it’s a situation where we have a commercial relationship, it might be different,” says Hallisey. “In that case, it’s not in the interest of anyone to rush in and issue legal proceedings straight away.”
Human relationships are the key to the mess Google has got itself into. As Thomas Cook’s policies show, a company is more likely to sue when its relationship with its opponent is weaker.
Google’s mistake had nothing to do with trademark advice from its legal department. The legal territory is uncharted and it will be up to the judges to decide what Google can and cannot do. The problem stems from the fact that Google is aloof. It made a major policy change without talking to some of the people who would be most affected by it, perhaps out of fear. And it is much easier to sue someone you will have little contact with outside the courtroom.
In Google’s defence, a spokesperson said: “We’ve listened to different feedback since the announcement was made and understand that brand owners and agencies have questions around the change. Since we made the announcement we’ve been working with our partners to answer those questions and make sure the transition has been as smooth as possible.”
Which is great, but surely a consultation before the fact would have been preferable.
The company, whose corporate philosophy is ‘Don’t be evil’, forgot that diplomacy is an important part of a legal strategy.