Something Rotten in Online AdLand

From time to time, we have highlighted on this blog some of the concerns that we have heard being expressed about AdWords trademark policy and how it affects brandowners. The main concerns are that allowing advertisers to buy AdWord search terms which are trademarks belonging to third parties can cause consumer confusion and can lead to higher prices and a loss of control over use of the trademarks.

Evidence of the scale of this harm has been made public in a High Court Judgment adopted today in London, 22 May 2009. The case concerns action being taken by Interflora against Marks & Spencer as a result of M&S having bought up a number of AdWords based on Interflora’s trademarks. According to the High Court, the

“direct financial effect on Interflora’s advertising costs as a result of Google’s change in policy in May 2008 is quite striking. According to Interflora’s evidence on the application presently before me, Interflora’s bidding costs for their keywords during the nine days leading up to Valentine’s Day increased from 2p per click in 2008 to 23-28p per click in 2009. … Interflora estimate that in total their costs will have increased by about $750,000 in the year from 5 May 2008.

Interflora also contend that there is evidence that they have lost sales as a result of the acts complained of. According to the evidence before me, in the period from 1-13 February 2008 it took an average of 3.37 click-throughs for Interflora to obtain an order, whereas in the period from 1-13 February 2009 it took an average of 3.75 click-throughs.”

These figures are indeed striking and there is no reason to think the Interflora case is a one-off. On the contrary, there are AdWords related cases working their way through the courts in many jurisdictions at the moment. Such a volume of litigation is pretty clear evidence that all is not well in the world of online advertising.

The full Interflora judgment can be found here http://www.bailii.org/ew/cases/EWHC/Ch/2009/1095.html.

Kind regards

David Wood
ICOMP Legal Expert

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