Posted on Feb. 29, 2008

The Keyword Advertising space, encompassing everything from Pay-Per-Click (PPC) to Cost-Per-Action (CPA), is currently struggling to define legal precedents arising from issues surrounding the purchase of competitive keywords.

As more and more companies begin to enter this arena, they've found that buying their own trademarked or branded phrases isn't as easy as it should be. Why? Because there's more going on behind the scenes than meets the eye. Oftentimes their competitors have beaten them to the punch, purchasing keywords using another company's trademarks to bolster their own online advertising. In effect, a search for one company might provide links to a competitor.

You would think this practice would be illegal, yet there is currently no legal precedent to define this hazy issue. Past cases have only muddied the waters, as recent rulings were characterized by diverse opinions on whom is responsible for protecting trademarked keywords. Is it the search engines, the advertisers, or the owners of the trademark? No federal precedent exists, and a consensus has yet to be reached.

Still, there are several lawsuits taking place in various courts that many hope will finally define the legality (or illegality) of this practice once and for all. Take for instance the most recent lawsuit filed by 1-800Contacts against its competitor LensWorld for trademark infringement. LensWorld had purchased the keywords "1800Contacts," "1 800 Contacts," and "1-800Contacts," in turn using them to display their own online advertising messages.

So what policies do the high-profile search engines adhere to? Interestinly, the "big three," Google, MSN, and Yahoo, each prohibit the mention or inclusion of a trademarked name in the text of the advertisement. But, none of them have forbidden the purchase of the keyword itself.

In accordance with these search engines' policies, LensWorld did not technically violate any rules by purchasing these keywords as long as they never mentioned 1-800Contacts in the ad text itself. As you can see, this is a somewhat ambiguous policy that can easily be taken advantage of by unethical search engine marketers.

Many in the industry are now struggling to define their own ethical approach to competitive keyword advertising. The majority seem to hold to the policy that you should not bid on keywords that you do not own the trademark for. From an ethical point of view, this makes sense. A company must invest valuable time and resources to create and maintain a brand or trademark; thus, they are due the right to control and protect what they've developed.

Still other search engine marketing companies are approaching this debate from a usability perspective. They claim that bidding on a competitor's trademark misrepresents that company and misdirects users while diluting the message.

In many cases however, it is the pricing structure inherent to keyword advertising that exacerbates the issue. Because there is more competition for specific branded terms than generic words, it has become much more expensive for brand owners to purchase and thus protect their own keywords. Again, the burden of keyword protection falls on the brand owner, as so far they have been responsible for maintaining their brand and trademark integrity in the online space.

Due to this fact, it seems that the overwhelming majority of search marketers would like to see the search engines themselves take a more proactive stance in defining competitive keywords purchasing policies and bidding guidelines to protect advertisers using their services.

Either way, the ethical void continues to grow as legal or industry standards have yet to be defined.

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