47:5 Quality Scores a Lawsuit: Google’s New Trademark Rules and Advertiser Liability for Trademark Infringement

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Abstract

In June of 2009, Google loosened its trademark usage policy, and in February of 2011, Yahoo and Microsoft (Bing) adopted similar trademark policies. Google and other search engines allow advertisers to bid on third-party trademarked keywords, and now, in limited circumstances, allow advertisers to use those trademarked keywords in their ad text, despite the trademark owner’s objection. The comment explores a small portion of the world of pay-per-click search engine marketing and its relationship to current trademark law. The comment provides a detailed overview of the Google AdWords system, examines Google’s cost-per-click model and Quality Score, and explains the financial incentive for Google to allow advertisers to bid on trademarks. The comment analyzes three hypothetical situations where Google permits an advertiser to bid on trademarked terms and use those terms in its ad copy. The comment concludes that the risk of incurring liability when bidding on a competitor’s trademark is substantial, but there is less risk when the trademark is owned by a non-competitor.