AdSense policy riles trademark owners

A long-held Google AdSense policy, and the recent decision to expand it to more than 190 new countries by the end of this month, has not only triggered accusations that Google is goosing its own revenues at the expense of hapless trademark owners, but it's now led to a class action lawsuit.

At issue is the policy whereby Google lets companies buy someone else's trademark as a keyword to trigger an ad. The New York Times reports that Audrey Spangenberg, owner of software firm FirePond, launched the lawsuit in federal court in Texas, claiming that Google's policy infringes on her trademark and those of all trademark owners in the state of Texas. Her argument is that that the policy forces trademark owners to bid on and pay for their own trademark in Google's system. In effect, it lines Google coffers at their expense.

And as if that weren't enough of a problem, Google also decided to allow advertisers to make limited use of trademarks in text ads. Up until now, Google had banned the policy, even in the face of criticism from political activists who accused it of curtailing free speech. While the new policy will probably make them happy, it's set off a firestorm with trademark holders. As the Times article explains:

Google acknowledged that some advertisers may be upset by the new policy. But the company said that the change would result in ads that are more relevant to users. For instance, someone who types “Godiva” into Google may see an ad not just for a seller of chocolates, but for one whose ad specifies that it sells Godiva chocolates. With the latest policy change, Godiva would no longer be able to prevent such ads from appearing.

What's interesting is that currently, Yahoo and Microsoft also allow such use of trademarks in text ads--but they don't currently let advertisers trigger ads on trademarks they don't hold. And that's the part that incenses trademark holders the most.

For example, the Times quotes Terrence Ross, a lawyer who represented American Airlines in a suit against the policy:

“I know of several companies spending millions of dollars a year in payments to Google to make sure that their company is the very first sponsored link” on searches for their own names. It certainly smacks of a protection racket.”

The suit and the extension of the policy come at an especially delicate time for Google. Both the U.S. Dept. of Justice and the EU seem poised to pounce on the search engine giant at the least whiff of bad business behavior. While it's understandable that Google needs to increase its AdSense revenue, especially now as online advertising revenues decline, perhaps an AdSense policy that smacks of a protection racket may not be the best avenue.

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