Posted by Barry Silverstein on March 22, 2010 05:13 PM
It's bad enough when luxury brand knock-offs appear on the street in the real world – but apparently, it's just as much of a problem in the digital world. Louis Vuitton and other companies are trying to prevent the unauthorized use of their trademarks as keywords in search ads on Google.
The problem is a double whammy for companies like LVMH, owner of the Louis Vuitton brand. Not only does another company trade on a luxury brand's name and get consumers to click on a link to counterfeit products, but also the owner of the luxury brand ends up paying more to use its own brand name on Google. That's because the cost per click rises as others buy the brand names as keywords.
LVMH began to press its case against Google in 2003, but the dispute could come to a head as early as Tuesday, March 23, when a high court in Luxembourg is scheduled to rule on the case. To date, French courts have ruled in favor of LVMH, but last year, an adviser to the European court published an opinion siding with Google.
Interestingly, because of French court rulings, Google must block the sale of keywords if requested by the trademark owner. But in Britain and the United States, Google has no such requirement. According to The New York Times, "Google has faced similar lawsuits in the United States, but it has settled some of them, and no clear precedents have been established." That is why the case in the Luxembourg court is being watched closely, since it could be seen as setting a potentially worldwide precedent.
The money lost by brand owners can be significant. Interflora, an online florists' network, saw the cost of buying its own name go from 2 pence per click to as much as 28 pence (42 cents) per click when Google made it easier for anyone in Britain to buy brand names as keywords two years ago. Interflora claims it cost the company an additional $750,000 in the first year alone. That's why Interflora sued Marks & Spencer in Britain: The retailer bought "Interflora" as a keyword to promote its flower delivery service.
Whether or not a brand owner purchases the keyword, Google gets revenue – and that irks brand owners. Hannah Kimuyu, director of paid search for Greenlight, a London-based digital agency, tells The New York Times: "Obviously, if everyone is bidding on everyone else's brand, it inflates the cost and undermines the value of the brand."