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October 7, 2008

Legally Speaking: Recent Legal News About Search

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Jeffrey K. Rohrs, our moderator, is a “recovering attorney” but he still likes to moderate these types of panels. I agree that legal issues can be very interesting and, of course, important.

Mark Rosenberg, Of Counsel, Sills Cummis & Gross P.C., says that there are a lot of legal issues being addressed at the moment. The press and politicians are starting to care about the legal ramifications of search marketing.

Privacy Concerns in Behavioral Marketing

There’s a general squeamishness about private user data being collected and there was a Congress committee hearing recently. We’ll probably see a consent or opt-out mechanism coming out of this.

Google and Antitrust Scrutiny

Google has 60 percent of the search market and may have as much as 80 percent of paid search, so they’re a large presence. The words antitrust and monopoly are being used by the media in reference to Google. It’s only when the market position is abused that antitrust regulations come into play. The current scrutiny will only increase if the Yahoo deal goes through. In anything it does, Google probably realizes that everything they do will be scrutinized.

Trademarks and Search Marketing

There hasn’t been an alignment between Internet commerce and brick and mortar commerce. According to a growing number of courts, search marketers can use their competitors’ trademarks if certain qualifications are met. Trademark law says that the use of a trademark that will likely cause confusion is prohibited. Usually it’s a simple matter of asking yourself why you’re using someone else’s trademark.

Why and How Am I Using Someone Else’s Trademark?

The following are permitted ways to use another’s trademark:

  • To identify a product or serviced offered on a site
  • To let users know that a site offering a product or service
  • To make a comparison
  • To let a user know the site selling a generic version

It will likely be okay if there is no other readily identifiable way of identifying the trademarked product or service.

Courts don’t care if Internet users cannot see the trademark. Most courts believe that Meta tags are the most important factor in search marketing and so consider use in a Meta tag to be infringement. You may think that a user that ends up clicking on the ad and getting to your landing page will be savvy enough to realize where they are. Initial user confusion, however, is not acceptable. There’s an exception in Michigan, but I’m personally not going to worry about that. Sorry Michigan readers!

Improper Trademark Use

These are the ways you can’t use another’s trademark:

  • Overuse
  • Overly claiming
  • Causing confusion
  • Using the logo
  • Something that suggests affiliation or sponsorship

Fake Articles

He hasn’t seen any cases on this issue but his guess is that courts will find such action to be confusion.

Jonathan Hochman, Founder and President, Hochman Consultants, will share with us a cautionary tale. The names have been changed to protect the innocent! So Violet runs a home security business. She installs alarms throughout the U.S. Nemesis is her competition. Benedict is who Violet hires to build her site and manage a PPC campaign. They start small and nobody bothers with a contract.

Then, Benedict realizes that Violet is making lots of money. He starts looking for a better deal. Benedict meets Violet’s competitor, Nemesis, and they start to work together. One day Benedict locks Violet out of her AdBlurbs PPC account. Violet goes to Bobble, the search engine, and asks for help. Bobble says, sorry, but we’re not here to dictate ownership. Then Benedict clones Violet’s AdBlurbs account, providing multiple copies to Nemesis. Violet sues Benedict and Nemesis. Violet got a preliminary injunction granting custody of the AdBlurbs account and removal of the copies. Then, Bobble asks Violet to pay her balance due for AdBlurbs. Violet shrieks that Bobble must pay high damages for denying access to her account.

The judge had never heard of PPC advertising, but she figured it out within ten minutes. Ancient legal concepts like property and agency can be applied to online assets. Common sense prevailed and it’s decided that the person who pays the search engine and who pays the manager probably owns the account.

Evidence Cited

As an expert witness for this case, Jonathan cited the following evidence:

  • Domain registration info of landing pages
  • AdBlurbs change history. Transactions are logged and date-time stamped.
  • PPC account peculiarities, such as misspelled keywords and account structure, are like fingerprints.

SEM Assets

PPC accounts are valuable business assets that may include trade secrets:

  • Keyword performance history
  • Ad version test results
  • Quality score

Replacing these assets can be expensive.

Four Important Questions

  1. Do you have a contract with your consultants/clients that specifies who owns what? Is your relationship work for hire?
  2. Have you read the search engines’ Terms and Conditions?
  3. Who has access to your SEM accounts? Can you revoke access? Can you get locked out?
  4. If you leave your agency, can you take your accounts with you? Are they portable?

Protect Your Property

  • Google: Create your own account and allow the manager to link via My Client Center.
  • Yahoo: Create an account and add a revocable login in for the manager. Don’t use a sub-account.
  • Microsoft: Create own account. Give your login to the manager and hope they are honest. Don’t use a sub-account.
  • Ask: Create own account and a login for the manager.

Roy Shkedi, Founder & CEO, AlmondNet, will be giving us an operational perspective of using behavioral targeting and where it fits in the law.

Consumer Behavior

Behavioral targeting is the delivery of ads to a person, wherever they go, based on their observed online behavior. Post-search behaviorally targeted ads are delivered based on purchase-intent data. Use searched trademarks to behaviorally deliver your ad to your prospect on the sites he or she spends 95 percent of their online time on.

BT Legal Challenges

Data ownership:

  • Who should be rewarded for the valuable data?
  • Who owns the data?

Data is owned by whoever the consumer gave the data knowingly and willingly:

  • Visited sites
  • ISPs

Are data owners allowed to share data with others? The sharing of PII (Personal Identifiable Information) requires data owners to task for consumers’ permission (opt-in)

Privacy is the biggest challenge faced the behavioral targeting industry. BT requires data scale. An opt-in solution historically does not generate a very large scale. Data scale requires an opt-out solution. What determines when opt-out is enough and when opt-in is required? As a rule of thumb, if you have PII you need to ask for opt-in.

Who monitors the implementation of privacy safeguards? So far, the industry does through the NAI (Network Advertising Initiative). But congress is watching. He believes self regulation of the industry would be better and a behavioral targeting initiative is seeing some adoption.

Deborah Wilcox, Partner, Baker Hostetler, LLP, will be looking at two cases that have caught her eye.

To the Top of Google

Punchclock.com owned a federal trademark registration for “punch clock”. It was for time clock and computer payroll software. Punch-clock.com was Canadian but sales were in the U.S. as well. The U.S. company sent a cease and desist in 2001. In 2007, they filed a lawsuit in Florida federal court. The defendant punch-clock.com ranked higher on Google. Alexa traffic rank was much lower for the plaintiff than for punchclock.com.

The Canadian defendant did not defend the litigation and just ignored the lawsuit. The judge found trademark infringement, cybersquatting and unfair competition. The judge transferred punch-clock.com to the plaintiff and awarded $100,000 in cybersquatting statutory damages, plus $30,000 in attorneys’ fees and costs.

The judge also awarded over $1 million in corrective advertising damages. They figured that it would take $136 per day to purchase keywords from Google for seven years for the following keywords:

  • Punch clock
  • Punch clock software
  • Punchclock
  • Punch clocks
  • Punch time clock

The $1 million was reached because the judge multiplied the number you get when you multiply $136 per day for seven years by three since it was considered a willful violation. Today a search for any of the terms doesn’t show punchclock.com because the company actually isn’t bidding on the terms.

Acknowledgement Page

TrafficSchool.com and eDriver were both referring drivers to traffic schools. eDriver was using the domain DMV.org and designed the page to look like an official government page. At the end of the page was a small disclaimer that says it’s not owned, operated or affiliated with a government agency.

DMV.org saw 70 to 80 percent of its traffic coming from top search engine placement. The consumer confusion led to the finding of false advertising.

The court found that the plaintiff also had “unclean hands” because it had also registered DMV domains. So, no money damages went to the plaintiff, but the court ordered a mandatory acknowledgement page for the defendant. Now, before anyone can get to the site there’s a page that states that the site is a private site not affiliated with a government site. They also had to redesign the site. DMV.org dropped in the Google rankings.

Takeaways

Courts are still grappling with search engine marketing and how to remedy infringement. Businesses need a careful legal review of:

  • Domain names
  • Content
  • Consumer confusion (this is key)
  • International issues
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