If you own a business, are Google Ads your best friend, your worst enemy, or your pesky enemy? These are the ads that appear in Google search results, usually at the top.
Businesses hate it when a competitor runs an ad on Google triggered by a search for their name. For example, Spacely Sprockets hates it when Cogswell Cogs runs a Google ad that pops up whenever someone searches for “Spacely Sprockets” on Google.
It could get worse. With Google Ads, you can have the search term appear in the body of your Google ad. This is called “keyword insertion”.
A problem arises if someone searches for your company by name. This can make an ad appear to come from your company when it doesn’t. If Cogswell Cogs ran an ad on Google for people searching for “Spacely Sprockets” and used keyword input, it would cause “Spacely Sprockets” to appear in the body of the ad. This might make people think the ad is from Spacely Sprockets. This is pretty clear trademark infringement.
People are also reading…
You can also stop your Google ad from showing in certain situations by using negative keywords. This will prevent your Google ad from appearing when specific terms are searched for.
For example, if you sell reading glasses, you don’t want to pay for your ad to appear when someone searches for wine glasses. You would use “wine” as a negative keyword.
A recent case involving 1-800-Contacts raises the intriguing possibility of using an established trademark dispute between competitors as a way for competitors to avoid each other with Google ads without incurring antitrust liability.
1-800-Contacts is a large online seller of contact lenses, but it charges more than most of its competitors.
In an effort to stifle competition, he threatened trademark infringement claims against other online contact sellers who bought Google ads triggered by a search for “1-800-Contacts.” This threat is weak because courts these days generally think it’s okay for your Google ad to trigger a search for a competitor’s name.
1-800-Contacts used this threat to persuade competitors to enter into settlement agreements in which each party agreed not to display Google ads triggered by the other’s name and to use negative keywords to ensure that Google ads not appear when a search includes a competitor’s name.
The Federal Trade Commission alleged that the agreements violated antitrust law. About a year ago, the 2nd Circuit threw out the FTC charges. She held settlement agreements on trademark infringement claims should ordinarily be left undisturbed by antitrust law, and any regulator (such as the FTC) or private plaintiff bears a heavy burden in attacking such agreements on antitrust grounds.
The court focused primarily on whether it is OK for competitors in an agreement to agree not to publish Google ads in each other’s names. The court declined to address whether an agreement to use negative keywords could violate antitrust law because the FTC did not independently develop that part of its case. This is about coding your Google ads so that they don’t appear when specified competitors’ names are searched.
So, after the 1-800-Contacts case, can you agree with your competitors not to run Google ads from searches for each other’s names? And can you agree to use negative keywords so that your ads don’t appear when a search includes a competitor’s name?
You will need a large legal budget and a large appetite for legal risk. Your competitors probably won’t be deterred from buying Google ads triggered by your name unless you make a credible threat of a scary and expensive trademark infringement lawsuit.
Even if you scare your competitors into a “settlement” agreement in which you mutually refrain from targeting each using Google Ads, you still face significant antitrust risk.
1-800-Contacts has fared poorly in several antitrust cases brought by private plaintiffs, although it has beaten the FTC so far. And the FTC may not end up fighting back. While it now has a heavier burden of proof, it can win. And if you lose an antitrust case to the FTC or a private plaintiff, you’re likely to be hit with big damages.
Even if you’re not that aggressive, don’t be passive to Google ads that unfairly target your business. If someone uses your business, product, or service name in the body of a Google ad, and if you’ve registered it as a trademark, you may be able to get Google to remove the ad. A cease and desist letter to the competing advertiser would usually be appropriate.
John B. Farmer is an attorney with Leading-Edge Law Group PLC, who specializes in intellectual property law. He can be reached at www.leadingedgelaw.com.