Google Revises Trademark Policy - More class-action suit?

Google has revised its trademark policy thereby allowing advertisers to include brand names in the text of their ads. Earlier, companies could not run ads with a trademarked brand name in the text if they did not own the trademark. Starting next month this new policy would come into effect. Google believes that this change will help both their users and advertisers by reducing the number of overly generic ads that appear across their networks in the U.S.

Google uses a newspaper analogy to explain the reasoning behind the move: "Imagine opening your Sunday paper and seeing ads from a large supermarket chain that didn't list actual products for sale; instead, they simply listed the categories of products available - offers like 'Buy discount cola' and 'Snacks on sale.' The ads wouldn't be useful since you wouldn't know what products are actually being offered."

Google said it would limit the use of trademarks in text ads to three types of companies: resellers, component sellers and information providers.

Its all about money, honey!!!
This policy shift is expected to be highly beneficial for Google and could improve its bottom-line.

Google's Ads are displayed through a keyword auction process which involves a combination of bid amount for per click and quality score. The quality score of an Ad is largely dependent on the click-through rate. Currently, most of the advertisers are forced to write generic ads leading to a low click-through rate consequently hurting their quality score. With this new policy third party vendors get the right to use brand names and this may ultimately force companies interested in preserving their brands to bid higher for per click to make sure their ads appear on those searches. This in effect will significantly improve Google's bottom line while companies themselves may see a huge dip in their ROI from Google.

Class-Suit action
We had reported yesterday that FirePond (FPX), a US based software company filed a class-action suit against Google in federal court in Texas. Reason being, a search for their company name on Google shows their company’s site as the top search listing but just above it, Google shows ads of competitors who paid Google to display their marketing messages whenever someone searched for FirePond, a registered trademark. Google has already settled similar suits with Geico and American Airlines.

With this new policy, Google stands in great danger of getting sued by many more companies. It will be interesting to see what revolution this new policy brings up.