UPDATED: Google ordered to face a jury trial on ad trademarks. U.S. District Judge Jeremy Fogel of the Northern District of California sets Nov. 9 for jury selection.

In the wake of the first case ruled that the rights of trademark holders are violated when their terms are used by others in search ads, Judge Fogel on Friday scheduled a jury trial in the trademark infringement lawsuit brought against Google Inc. by American Blind & Wallpaper Factory Inc.

This is the first case where the trademark infringement/keyword advertising issue is being submitted to a jury and Google is going to have to tread some pretty choppy waters.  According to my legal sources, the likelyhood of Google winning a jury trial in this case is between slim and none.

The question following a decision against Google would be this:  Would only companies deemed as “direct competitors” to holders of a trademark be disallowed from bidding on said registered trademark, or would they finally put an end to the underhanded practice by the company that brought us “don’t be evil” by halting advertising on federally protected terms and phrases?

(Original story below, Google Abuses Search Leadership)

Google unlawfully allows advertisers to bid on federally protected trademarks. As a result, U.S. and Canadian-based companies lose big due to brand reputation issues and substantially increased advertising costs.

For the record, I am staunchly pro-Google. Thank you Google for leading the evolution of the online marketplace.

However, I am frustrated as a brand marketing consultant how search engines conduct business with total disregard for federally protected trademarks in an effort to make more money.

Google’s policy for advertising on trademarks is the following:
“As stated in our Terms and Conditions, advertisers are responsible for the keywords and ad content that they choose to use. We encourage trademark owners to resolve their disputes directly with our advertisers.”

I encourage Google to respect the rights of trademark holders, and hopefully the courts will eventually see it that way too. This policy does nothing to address violations of trademark infringement, nor the capacity of an organization to police this abuse on their own.

I know I am not alone when I tell you that I believe this to be a grossly flawed and unethical policy, and Google appears to be in direct violation of U.S. Federal Trademark law, the Lanham Act, and some state statutes. While it is apples and oranges, do you remember when Napster.com was shut down in 2000 for violating copyright protection laws? They tried to claim that they had no responsibility for the actions of the users of their technology. The music industry (RIAA) claimed to have lost around $300 million in sales due to Napster.com. Google’s Adwords trademark policy is costing brands millions in annual expenditures, likely in excess of the figure the music industry claims to have lost.

Google has already been stopped from allowing bids on trademarks across the Atlantic (see Google loses trademark cases in France), yet continues to defy the rights of it’s U.S. and Canadian-based clients with stupefying audacity. As a result of European courts, here is Google’s updated trademark policy by geographic origin:

Trademark rights in the US and/or Canada:
Keywords – we do not investigate trademark terms as keywords
Ad text – we are able to investigate the use of a trademark in ad text

Trademark rights outside the US and/or Canada:
Keywords – we are able to investigate trademark terms as keywords
Ad text – we are able to investigate the use of a trademark in ad text

Is this fair? Is This In Line With Google’s “don’t be evil” Motto?

Furthermore, Google has no right to tell a trademark holder how many ads they can or can’t place on their own trademarks. By virtue of Google even being allowed to use federally protected trademarks in commerce, they should not have the ability to curb the trademark holder from running multiple ads on a trademarked keyword. The reason they do this is to generate revenue by making it attractive for third parties to siphon away branded traffic.

To fully understand the severity of Google’s practices, this particularly egregious example of trademark infringement should make it clear to anyone:

In summary, Google is making money on the marketing of illegal, pirated, or knock-off merchandise. Google’s version of “don’t be evil” however, is to block advertisements for the keyword phrase “buy marijuana,” which, FYI, is not a federally protected trademark.

My conclusion is this. I don’t believe there should be intent to pursue punitive damages against Google, but rather, to halt this illegal practice and to recover the compensatory damages legally entitled to every trademark holder affected by a legal action.

Technorati tags: Google lawsuit, trademark infringement, Adwords, don’t be evil, keyword advertising