As expected, the European Court of Justice ruled today that Google is not liable for search ads purchased by competitors on search ads.
As it stands now, TM owners can prevent all ads from displaying on trademarked terms in most European countries. In the US anyone can purchase ads on trademarked terms, and many advertisers can even use the trademarks in their ad copy (competitors can't though).
The ruling moves TM use in search ads to a more DMCA-like environment. Google is protected for the most part, but must respond to requests for removal and cannot encourage abuse. However, as the NY Times explains:
The decision says Google is generally not liable for trademark infringement if it removes ads when brand owners complain that those trademarks have been violated by advertisers. But individual advertisers could be held liable if their ads are found to mislead consumers, the court said.
Google could also be liable if its business practices were found to encourage trademark violations, the court ruled.
Of particular interest to trademark owners is likely to be suggestions made by the AdWords keyword tool and Google's Broad Match functionality. For example, if you use the Google AdWords tool, and give it the keyword 'fendi handbags', it suggests keywords such as 'imitation fendi handbags'.
The Broad Match functionality is the default for AdWords campaigns and it can result in a range of ad to keyword matches. The algorithm that drives broad match is a black box, but it can result in some pretty wacky matches - including ones that a court might think encourages trademark abuse.
While I wouldn't expect an immediate policy shift, I would expect changes to the AdWords trademark policy in the near future. Soon companies will be able to purchase the trademarks of their competitors.
