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Google faces legal action over advertising rule changes

Practice group: Corporate & commercial legal services

06 May 2008

Internet giant Google could be about to face serious legal action over a proposed change to its rules regarding the use of trademark in advertising.

Presently, searching for a specific company name in Google will only produce that company's adverts.

However the new system, which is already in place in the US, means that this same search will bring forth a range of different associated company adverts.

Big name brands such as Tesco and Auto Trader are reportedly ready to mount a group legal challenge to Google, particularly on grounds of breach of trademark.

Ian McCraig, chief executive of lastminute.com, told Channel 4 news that the proposals could cost the company millions of pounds.

"We believe that Google's policy change is a big problem and we object to it."

"We are investigating with vigour the legal position and if that investigation concludes positively then we will absolutely pursue a legal case, no question," he added.

The Internet Advertising Bureau estimates UK internet advertising expenditure at around £2.8 billion, a figure which is increasing by 38 per cent year-on-year.

Rebecca Samuel, associate in the Technology & IP team, comments: "The action by Google will erode the protection trademark owners may have in relation to their marks (which grants them an exclusive right to use the mark to indicate the origin of their particular goods or services).

"In effect, it will allow competitors to feed off the goodwill associated with competing marks, by allowing them to advertise on its coat tails.

"While no doubt bolstering Google's revenue streams it may have a serious effect on the protection provided by a registered trade mark."