Google Loses A Round In Sponsored Search Litigation

Google has lost the most recent round of litigation over alleged abuse of sponsored search, the sale of keywords based on corporate trademarks, and misdirection.  No, this decision does not change anything in Google’s business practices. It does not prove that Google did anything wrong. And it does not create financial liability for Google. It merely sends one case back to court for another trial. It should not send Google stock plummeting. But it does require that we in the online tech community think carefully and debate carefully about Google’s business model.

Some readers, and indeed some fellow bloggers, have complained that my calling sponsored search misdirection rather than advertising was outrageous, and that they have never heard anyone but me complain about it.  The jury is, quite literally, still out on this one, but a recent appellate court ruling against Google suggests that the issue is still hotly debated in the courts, even if not quite as hotly as in the blogosphere.  MediaPost reports the details:

A federal appellate court handed Google a defeat today in a trademark lawsuit stemming from AdWords ads. The 2nd Circuit ruled that allowing a trademark to trigger a search ad is a “use in commerce.”

The decision doesn’t mean that Google will ultimately lose the case. It also doesn’t stop Google or other search engines from allowing companies to use trademarks to trigger ads. But it makes doing so riskier: If those ads are found to confuse consumers, search engines could be on the hook for trademark infringement.

Here, Google was sued by computer repair shop Rescuecom for allowing rivals to appear as sponsored listings when consumers typed “rescuecom” into the query box.

The case (Rescuecom V. Google) has been public since the initial decision was reached in 2006 but it does not appear to have entered into our collective consciousness.  Google is innocent until proven guilty and this latest decision does not prove it guilty of anything; it merely remands the case back to the lower court for reconsideration. But again, we in the online tech community need to understand how businesses are affected, positively and negatively, by Google and its use of its very considerable market power. The Electronic Frontier Foundation believes that there are freedom of speech issues, and others believe that sponsored search increases consumer choice by counter-balancing the power of the largest corporations. The issues surely are complex enough to demand our attention. The ruling is embedded below:

Rescuecom v Google 04-03-09