Saturday, February 05, 2005

French court slams Google, twice

From Search Engine Watch: is reporting that a Paris District Court today ruled against Google in a October 2003 lawsuit filed by high-end fashion designer Louis Vuitton. Google has been ordered to pay $257,430 (200,000 euros) for trademark counterfeiting, unfair competition and misleading advertising.

The issue before the French court was that vendors of knockoff Louis Vuitton products were advertising on Google's search ads.

I wonder how much money Google is raking in from those ads and how it compares to the court-ordered payout. I suspect they're still turning a profit, for two reasons:
1. This is a highly competitive market, so ad prices will be higher than average.
2. The advertisers in question have limited advertising options, by their nature, so they must rely more heavily on Google/online ads than other advertisers.
This is the second recent case of Google losing in French court:
    In a blow to Google's keyword-bidding engine, the French court ordered the company to stop linking ads to Le Meridien-trademarked terms by Monday or face a daily fine of $194 (150 euros). The company must also cease linking ads related to Le Meridien brands within 72 hours of whenever Le Meridien notifies it of listings in violation, or face a daily fine of 150 euros. Finally, Google must pay all court fees and a fine of $2,592 (2,000 euros). Google will appeal the decision.

These cases set a worrisome precedent for Google. The French courts, at least, have decided that Google is liable for trademark violations of third parties advertising on its network. A substantial portion of their revenue must come from trademarked keywords, via paid search arbitrage with affiliate programs such as Ebay's and unauthorized vendors like the Louis Vuitton knockoffs. The legal costs do not seem to be very high so far, but if they get out of hand, perhaps Google will require AdWords member to indemnify it against lawsuits arising out of trademark disputes.

The picture is not all gloomy for Google, however. So far, the US courts seem to be a bit more forgiving, as in the Geico case. But Google must prepare itself for the legal uncertainties that come with managing such a large and diverse data set.