The Prior Art

Americans can't defeat Wal-Qaeda, but Brits will duel with Google: Trademarks stateside and across the pond

Google's feeling tough enough to fight its wars on two fronts when it comes to trademark law.  As I mentioned below, our May issue includes a story about the Rescuecom v. Google lawsuit at the 2nd Circuit, where Google is looking for a big win; today, Slashdot points to this TV news story about how Google intends to allow U.K. advertisers to buy ads on trademarked keywords, as they already do in the U.S. Of course, some mark-holders already are threatening to sue, as several have in the U.S. (they've all either lost, or lost badly.) No word in this story on when Google will implement this new policy, or such changes are in the works anywhere else.

Currently, if a British searcher types in "Ford cars," she'll see an organic link to Ford and possibly a paid ad for Ford, but won't see an ad for, say, Honda, while an American making the same search may see such competitors advertising. (Yahoo doesn't sell trademarked keywords in the U.S., but they'd like to—they weighed in with an amicus brief supporting Google in the Rescuecom case, together with eBay.)

Last month, I talked to Keker & Van Nest lawyer Michael Page, who is representing Google against Rescuecom in New York, and we talked about the differences between American & European trademark laws.

"European trademark laws are very different beasts," says Page. "They really think of it as owning the words, and you can’t use them. American laws are about protecting consumers." Some of the European trademark decisions have been "very harsh," he notes. "Germany and France are very both anti-speech; it's a sort of thought control. eBay has lost a series of decisions... They can’t allow anyone to list for sale World War II or Nazi memorabilia anywhere. It’s a fairly hostile environment for commerce and speech."

So, for example, it might be tougher for Georgia computer store owner Charles Smith to sell T-shirts and beer steins with slogans like Wal-Qaeda and Wal-ocaust outside a Wal-Mart in, say, Paris. (Is there such a thing?) But Smith resides in Georgia, where he is free to thumb his nose at the world's largest retailer and create bizarre and disturbing images like the ones pictured here. After Wal-Mart told him to cease and desist, Stanford Professor Larry Lessig hooked Smith up with lawyers from Public Citizen and the ACLU, who helped Smith win a complete victory in March after a two-year battle against the mega-store. In an 82-page smackdown, a federal judge basically told Wal-Mart that 1) Smith is a parodist, 2) it's a free country, and 3) deal.

Wal-Mart apparently paid $200,000 just to conduct a survey to measure alleged "consumer confusion," and probably paid millions to their Quinn Emanuel lawyers. And for what? Here's the best part: Smith sold all of 62 T-shirts, including 15 to one of Wal-Mart's outside law firms! Not exactly a weapon of mass dilution. (which law firm bought the shirts?? Inquiring minds want to know! Please email pics of any lawyers seen wearing Wal-Qaeda T-shirts.) Wal-Mart lost more than just money in this litigation: the judge ruled that the store has no common-law trademark claim to its yellow smiley face; that's not good timing, since the company's trademark on that symbol is being challenged at the Trademark Trial and Appeal Board.

Speaking personally, I think the term "Walocaust" is a heavy-handed and unfortunate metaphor that's likely to offend folks with connections to the real Holocaust. Using a Holocaust reference to discuss anything that's not actual genocide just isn't helpful to anyone, including would-be parodists and critics.

But Wal-Mart's attempt to label Smith as a lawbreaker for "diluting" and tarnishing their trademark is a good example of how trademark laws, like copyrights and patents, today reach far beyond their historical roots. Unlike copyrights and patents, which are monopolies granted as incentives to creators, trademarks are granted so that consumers clearly understand the true source of a good or service they're buying. We're all better off with only Wal-Mart being allowed to slap up a sign on its stores that says "Wal-Mart," because we know who we're buying from; but the thinking is, we're also better off knowing that if push comes to shove, we can always start selling Wal-Qaeda T-shirts.

Highlights from the May issue

The May issue of IP Law & Business is out. The cover story profiles 50 top IP people  under 45, and is available online. (free registration required)

More highlights from the May issue (subscribers only):

• Patent bar to E.D. Tex: enough is enough. AIPLA has filed a brief urging the U.S. Court of Appeals for the 5th Circuit to force East Texas judges to transfer more cases out of the district. It's an effort to head off more heavy-handed venue reform that could come from Congress, but there are already early signs that the local judiciary is thinking of ways to keep the patent docket heavy even if they lose this case, which involves a product liability lawsuit against Volkswagen.

• Keyword-advertising showdown in Manhattan: Google brings in the big guns, hoping for a solid win at the 2nd Circuit to make it clear that selling trademarked keywords is perfectly legal, pro-consumer—and not so different than traditional advertising practices.

New Media, Old Media, and the Google factor

Last week I heard NYT columnist Jason Pontin refer to Google as a "giant parasite," video here, I wrote why I disagreed with him here, and he promptly responded here. Well, I’m not going to win the “fastest blogger” award for this response, but I did want to come back to this briefly.

First, my original post on Pontin’s comments was a bit too snarky, so I apologize for that, and I appreciate his response. I do continue to disagree with him and here’s why.

“I have to make money to survive, despite our ownership by MIT. Sam Zell doesn't determine what profit margins are acceptable to Wall Street's analysts and investors. Both Zell and I must live in real markets, not within the speculative future of a media blogger, and those markets have become punishingly difficult.”

Agreed. But, getting more non-profits to own media outlets is a good strategy toward relieving part of that market pressure. So is taking companies private, something that Cox Communications did a couple years ago.

For public companies that can’t escape the demand for 20 percent plus profit margins every quarter, I don’t see how they’re going to make it in the long run. I don’t see a way out for Gannett or MediaNews. Investors in those companies have become convinced they can see monopoly-sized profits every quarter. And they can, for a time, while they drive these papers into the ground. But unless a publication has some kind of insulation from the public markets, like the family ownership structure of the Times or the Post, I don’t see a rosy future for it. The solution is to buckle down, invest in web sites, and capture some of the billions pouring into online ads; which have were up 25 percent year-over-year throughout 2007.

"If you want the journalism upon which all three parts of the media industry depend, who is going to pay for it? Readers won't, if they can get content for free (and as you say, both the Times as well as many other magazines have abandoned pay-to-play.). Advertisers won't pay enough, because AdSense and AdWords and similar networks are cheaper and more effective than display."

Well, one could argue the advertisers are in a more transparent market now, and they are getting a better deal for their money. They just didn't have many options before, and the newspapers could force them to accept higher rates.

The Times' abanonment of its pay model seems a success story to me, not a failure. They had over 200,000 online-only paying subscribers, I believe, (including myself.) They made a calculation that it was better to make that paid content freely available so that it could be found through search engines. The online ad revenue will more than make up for the subscription money of TimesSelect folks (that’s the plan, anyway).

Yes, it’s unfortunate that readers aren’t willing to pay much for print content. But throughout the entire pre-digital age, not many newspapers made it past the 25 cent mark in any case. And we’ve always been competing with free (television). So consumers have been trained to put a pretty low price on the news in any case. The future of for-profit print media is going to come from advertisers.

It is happening. Some web publications are starting to make money, like the sites represented by Federated Media. I know in the legal media there are a huge number of lawyers who are blogging a variety of topics, and it’s tough for us reporters to figure out what we have left to contribute when the events are followed so closely.

The Sunday papers in San Francisco, like most big cities, are full of inserts. Those inserts account for an enormous amount of the newspapers’ profits. In a sense, the journalism business has been subsidized by the coupon business. That game is ending. We’re actually going to have to get read, by someone who cares, and can’t just say ‘we’re the experts, pay us.’

"How are we pay for this very expensive enterprise of creating first-rate, quality journalism? It's not clear, although I am working on the problem, because Google isn't going away."

Very few metro papers are going to be able to have the kind of independent globe-spanning coverage they had in the 1980’s. Papers are becoming more locally focused. And that makes sense, since readers—increasingly coming through search engines—have lots of other choices, often better choices, about how to get world news.

Overall, I think Jason’s critique is aimed more at the Internet as a whole than at Google. And I’m not being pollyanna-ish about the real dangers that are posed to journalism. But I think those dangers are posed by competitors—people who have a right and ability to express themselves, whether they do it for money or not. I don’t think those people, or the search engines they use, are “parasites” on the media business. There are grandmas who want to talk about when to plant azaleas in Baltimore, to paraphrase a recent interview I had with an executive at a new media company. Much of that “evergreen” or seasonal content in the Home or Style sections has been giving a free ride to us serious-furrowed-brow journalists, too.

NYT's Jason Pontin on Google: swing and a miss.

Since I’m already bashing my own industry, I thought I'd comment on this ridiculous commentary on Google by New York Times columnist Jason Pontin that came to my attention today. 

In a two-minute clip, Pontin manages to be wrong on about five different levels. It’s hard for me to believe that someone who edits a technology magazine would have a view of the Internet economy that’s so simplistic and flat. To wit:

“Google is like a gigantic parasite that hollows out existing businesses.”

Google is just a service provider, albeit a dominant one. Its search abilities rest on top of an almost infinitely efficient distribution system for information. They’re in the business of distributing and sorting, not producing, content produced by the media. Calling Google a parasite makes about as much sense as Pontin running out of his office at Technology Review and screaming at the truck driver who deliver his magazines. I mean, isn’t that guy a “parasite” as well? He doesn’t produce anything, after all. He costs more than Google, too.

“They hollowed out the existing classified business.”

Google doesn’t have classified ads. Blame craigslist.

“Then they began to hollow out the existing news businesses.”

No, the news business started giving itself away for free, because it didn’t have any other choice. If you don’t want Technology Review to be “hollowed out,” then keep Google out, or insist that users pay for your content. It didn’t work out for the New York Times, but hey, give it a go. (It still works for some parts of the legal press).

Then he gets to his real gripe: online ads don’t pay him as much as the print ads. He doesn't get enough money. Well, arguably the advertisers had been paying too much for print ads, and are enjoying a more efficient market. In any case, they have a lot more options.

“In the long run, that’s bad for Google. Unless they can find some way that I can have some value to attach to this incredibly expensive enterprise of creating clever, thoughtful, groundbreaking content, they’re not going to have anything to live parasitically off forever.”

It's true--good journalism is expensive. But newspaper stock prices are only dropping because investors don't see the monopoly profits of yesteryear. Ousted LA Times editor Jon Carroll told the New York Review of Books that if the new boss was willing to take 10 to 15 percent profit margins--extraordinary in most businesses--the paper would be a journalistic "juggernaut."

Essentially, Google is a "parasite" because it’s harder for Pontin to make money. The new media universe is tough, and there’s a lot more competition. But competition is generally a good thing, especially in the information business.  Pontin may have successfully isolated himself from those pressures, since Technology Review is owned by a non-profit, MIT.

But as he points out, Google doesn’t make any content. Pontin's ad dollars have been competed away, and he’s shooting the messenger. Pontin is a smart guy and I like his writing in the Times, but here he sounds like a sore loser who has had two magazines die on his watch.