Class action lawsuit says Google's sales of keywords illegal

Google encourages advertisers to purchase other companies' trademarks as targeted search terms. And they're expanding the practice into 190 countries. Is that fair use or a protection racket?

Audrey Spangenberg, CEO of FPX, a SaaS company that owns the FirePond trademark, thinks Google's use of her trademark as an term for sale by Google is an outrage, since anyone searching on the word will the sponsored links of her competitors at the top of Google results page, The New York Times reports. (Actually when I searched on "firepond," I didn't see any sponsored links.)

She's suing not just for the infringement of her own trademark but as lead plaintiff in a class action against Google on behalf of all Texas trademark holders. Since trademark infringement is a fact-specific inquiry into whether the alleged infringement causes confusion, it's unlikely the federal court will certify the class, The Times' legal experts said.

For its part, Google says the plan is legitimate, even if trademark holders don't like it. But even if it's not a trademark infringement, "it certainly smells of a protection racket," said attorney Terrence Ross, who represented American Airlines in its own trademark infrngement claim against Google. That case was settled.

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.

Bryan Wiener agreeds: “There is no question that it is going to increase Google’s revenue,” Mr. Wiener said. He said that companies that offer products or services, like computer makers or hotel chains, may not like the new policy because it will force them to place higher bids to advertise on searches for their own brand names.

This is a problem purely because of Google's market dominance. You have to be obsessed with your ranking on Google and you have to be on top. If Google is selling the use of a company's trademark to its competors and there is no other game in town, you really have no choice but pay Google's price. That's the beauty of a monopolistic position: You name the price, they have to pay.