Now don’t get me wrong.  These are great domain names because they’re fantastic for generating  traffic.  But as business names they suck.  Why?  Because you can’t get exclusive rights over such names by way of a trade mark.  See Hotels.com case which recently failed to get a trade mark despite having traded with this name for some 20 years.  Sure you can register the name with a logo, but that effectively protects the logo rather than giving you a monopoly over the name.

Failing to secure a trademark over a word means that you can’t stop others using the word to attract business.  So, you set yourself up with an inadequate name for brand protection.  This inevitably affects the brand value too.

Imagine if Google had named itself searchengine.com.  Would it have the name recognition and brand it now enjoys?  Of course not.  The fact that it has become one of the world’s top brands today, has quite a lot to do with the distinctive nature of the name itself.

Reading the Law Society Gazette about the aspirations of a new grouping of Law Firms QualitySolicitors one of my first thoughts as a trade mark lawyer was ‘what a poor choice of name’.  Then I had a look on the trademark registers and sure enough they have had to abandon their application for the word mark, and console themselves with a logo trade mark which is currently being advertised.

They won’t be able to stop me or anyone else bidding on Google adwords for the term Quality solicitor.  If they aim to become THE first household name as a solicitors brand, they should immediately rebrand and drop this misguided name.  The sooner they find themselves a distinctive name the better for them.  Michael Scutt also has advice for them in his article here.

When you start out in business or in any venture at all  begin as you mean to go on.  Assume that you will be the next major brand in your industry, the next Google, Amazon, or Nike.  One thing you will notice about each of these, is the distinctive nature of the brand name they have chosen, unrelated to their target market, but memorable.  If you choose a name that describes your business there would be nothing standing in the way of competitors providing similar services, under a similar name, and you would be one provider amidst a whole host of others.  If you rebrand at that time, think of all your wasted advertising expenses in becoming known under your descriptive name!  You would then have to spend even more letting people know about your new name.  Getting it right at the beginning has to be the answer.

Branding is extremely important in business, and if only more businesses appreciated the need to consult a trademark lawyer before settling on their name.  They would then know how important it is to do everything in their power to choose a distinctive, memorable name, and to protect it.

Googol?

Harvard University researchers in a recent study, estimate that Google could be making $497million a year from the practice known as ‘typosquatting’ according to ZDNet

How does typosquatting work?

Typosquatters register domain names, usually a well-established trade mark, in bad faith to gain a commercial advantage. This usually involves holding the domains in a portfolio for web advertising revenue. The function of the domain is to attract traffic and generate click revenue.  The revenue is by way of a commission from Google or other search engines. Although the amounts per click may be quite low, for a high volume site the numbers soon mount up to large figures.

Pay Per Click advertising

The reason the revenue comes from Google or other search engine is that these will feature their advertisers’ Pay Per Click ads on the ‘content network’ (those of their advertisers that have not opted out of the content network distribution).  These include sites run by cybersquatters, who receive payment whenever someone clicks on the ads.

The way Pay Per Click works is that in order to get their ads listed high in Google’s or other search networks’ paid search results advertisers bid on keywords.  So, if the amount being paid per click for a keyword like “computer equipment” were $3.06, then Google or other search engine would keep the entire amount if the click on the advertiser’s ad came directly from the results displayed on its own pages.

But if the ad is sub-contracted out to others who are part of the wider content network, then these third party sites will display the ad too.  So if the click on the advertiser’s ad comes from a third party’s page or website then Google or whichever other search engine has the primary contract with the advertiser, would share the $3.06 with the click farmer, as they are sometimes called.

Click farming

The model specifically depends on the small number of surfers (15-20%) who type a url into a web browser rather than entering the name into a search engine. So, if a common mistyping of a brand’s url is entered into the browser, this “direct navigation” traffic (as opposed to indirect traffic through a search engine like Google) goes straight to the page at which the domain is “parked”(that is the place the domain address arrives at), or to its website if there is one developed, as there sometimes will be.  Then ads relevant to that brand will be displayed on the page in question. 

Example of typosquatting

So, for example, if the typosquatter has registered ‘micresoft’ and  by accident when you are seeking information from Microsoft, you type into your web browser “micresoft.com”.  Instead of going to  Microsoft’s page you reach a website populated with related keywords – possibly selling computers or software. The domain owner, (sometimes referred to as a “click farmer”) would collect revenue each time you clicked on one of the featured ads, while Google or other search engine, would also take their cut from the advertisements.

The difficulties that have arisen between trade mark owners and registrants of certain domain names have been some of the main reasons giving cybersquatters a bad name, and it is interesting how online businesses such as Google are profiting from what is direct trade mark infringement by the cybersquatters.  Until the trade mark owner takes action to recover the domain name from the typosquatter, money is made from the ‘wrong’.  Also interesting is that while the typosquatter might receive a claim in damages from the trade mark owner, Google seems to get away scott free, although there were moves last year by litigants in the USA to claim against Google. Do any readers have more information about that?

Deciding what to include and what to exclude from a 30 minute talk on Reputation monitoring was not easy.  Here are my slides:

I opted to tackle the subject by first painting a negative scenario illustrating the difficulty in having something undesirable about yourself removed from the web. Then, I gave an example of the positive power of web 2.0 to catapult a business to success.  Dr Helaine Smith, a US dentist whose e-book Healthy Mouths Healthy Sex has been downloaded thousands of times, has quickly established her credibility as an expert, to the benefit of her dental practice.

My aim was to communicate that brand protection and brand promotion are different sides of the same coin.  If I were addressing an audience of larger brand owners, I would focus on brand protection.  For smaller businesses who may not yet have much of a brand to protect, I place the emphasis on using web 2.0 to build the brand, and attract business.  However, the same basic approach outlined in the talk is relevant whether promotion or protection is the focus.

I gave some pointers to beware of when seeking to protect brands online – specifically how not to fall victim to the Streisand Effect.  Use lawyers who understand the web, and can forewarn you of unintended consequences.

There was little doubt among the audience that social media is not a fad, and is here to stay.  All agreed that we are at the beginning of a revolution.  Clearly the message in this video about Social Media has therefore reached far and wide but as I really like it and it communicates the power of the web well, I am embedding it here:

So, social media is changing the rules in many industries, and I mentioned the marketing and advertising industry in particular.  New rules of ‘engagement’ on social media are replacing the old rules of so called ‘interruption marketing’.  My ideas are more fully expounded in the opening chapter of my new book, a book I am publishing gradually  through the blog as explained more here (When someone asked a question about protecting intellectual assets from copying and theft, I did explain that although I want to get content and ideas out into the public domain, I take care to protect some ideas by withholding them.  They will only be available to those who buy the book).

The rise of search engines as the first port of call for many of us looking for products and services, means there are huge opportunities for those whose content appears in front of their potential buyers at the time when these buyers are seeking it.  So for social media to yield benefits, it is important to understand your customers.  Otherwise, social media is unlikely to yield much business, and will just be a waste of time.  So a strategic approach is the aim.

By strategy I mean being clear about your positioning, how you differ from your competitors, and what you uniquely offer to the market.  This is a difficult subject, that many businesses could be grappling with for years.  It  is easier said than done. Generally, the narrower you go the more likely you are to identify your niche.  Then developing an understanding of potential buyers, and the words they use to look for solutions to their problems should be easier, as should keyword research.

Also anyone who wants to use social media marketing for their business should establish a blog.  It’s the most powerful way of producing content that potential buyers will be interested in.  However, to reap the benefits of blogging, the aim should be to produce remarkable content at least sometimes.  So, before beginning a blog, listen to other blogs, comment on some maybe, and then when you’re ready set one up.

Finally, I ended by discussing monitoring, by using Google alerts to keep track of mentions of your name, your keywords, and that of competitors.  The results could be received by email or, if you have a large number, sent through an RSS feed to Google reader – a free service.

There were a number of questions, including one by someone who had experienced a situation where an advertiser on Google had used their company’s brand name in the text of an ad, and sent the ensuing traffic to its own website.  This was felt to be deceptive, and wrong.

The topic of Google Adwords and Google’s policies has many dimensions.  The basic position is that Google’s policy will “not disable keywords in response to a trademark complaint” (see here). This is an overall policy that applies across the board. The legality of some of Google’s policies is awaiting the decision of the European Court of Justice. (In the meantime, the advocate general  has submitted an opinion as discussed here. We have also discussed Google Adwords in other blog posts here, here, here, and here.)  From this it may be guessed that this is an involved subject.

As regards the question raised at the event, Google will investigate the use of trademarks belonging to third parties in ad text. Google has made it clear that this will depend on the territory – for a list of the countries where such investigations will occur see link.  Also, the US policy is slightly more lenient allowing some ads to be ‘displayed with a trademark in ad text if the ad is from a reseller or from an information site’ (US Google trademark policy).  Not knowing more about the facts of the case raised at the event, I can’t comment further.  However, if further facts can be added here, or others have further comments, questions or remarks please leave them here.

On the 22 September 2009 the Advocate General Poiares Maduro delivered his opinion on the question of the legality of Google Adwords in relation to EU trade mark law.  He found that Google is not infringing trade mark laws by allowing people to bid on keywords corresponding to trade marks in their Adwords service. This is an ‘opinion’ from an independent officer of the court who is not a judge and the ECJ has yet to deliver its judgment. It is considered, however, that Advocate Generals’ opinions are persuasive, with the Times noting that 80% of AG opinions are followed by the ECJ. With such a high level of co-concurrence, it is not exaggerated to take Poiares Maduro’s opinion rather seriously.

But was Maduro’ opinion ground breaking in respect of the state of EU law? Or was he taking a more conservative approach?  On the whole, with the majority of his opinion favourable to Google, he appears to be following a prudent line as the AG is apprehensive about the “unpredictable consequences” of taking an alternative view.  There are a number of referrals outstanding before the ECJ, but how far does he go in dealing with all these questions?

Limited Scope
One thing is for sure that Adwords has been a popular subject for referral to the ECJ over the past few years.. “There is an Austrian (C-278/08), a Dutch (C-558/08), a German (C-91/09) referral pending before the ECJ. In the UK, Mr Justice Arnold, in making the latest referral to the Court mid this year, explained “that there is at least a real possibility that the rulings by the ECJ on the existing references will not clearly resolve all the issues of law which arise in the present case” (para 93, Interflora v. Marks and Spencer Plc).
All of these referrals deal with the question of the legality of Google Adwords. The current AG’s opinion deals with 3 French cases which were grouped together (C-236/08, C-237/08, C-238/08), so, strictly speaking, the scope should be limited to those cases. Moreover, the current case is being brought against Google, the provider of the Adwords service. In Interflora, the case is between 2 private parties, one of which is being accused essentially of using the Adwords service to redirect interest towards their sites. The AG is analysing Google’s use of a trade mark and his finding will not unequivocally answer whether Marks and Spencer’s use of the trade mark ‘INTERFLORA’ is an infringement of Interflora’s trade mark.
Lastly, the AG emphasizes the limitations in his own opinion stating “that the Court is being asked only about the use of keywords which correspond to trade marks; it is not being asked about the use of the trade marks in ads”.

The Opinion – Technical Failing
The AG analysed the claims made in all three of the French Cour de Cassation references and gleaned the essential differences. He distinguished between the first reference (Louis Vuitton) which involved counterfeit goods and the other references (Google v Viaticum and Luteciel; Tiger v. CNRRH) comprising competitor sites, then consolidated all the questions so that he could present his findings comprehensively.

He summarised the standard conditions for trade mark infringement:  the infringer’s use of a sign and their goods and services must overlap, in the sense of being similar or identical, respectively with a trade mark owner’s sign and goods and services. Also, the ‘use’ has to be done in course of trade and there must be a likelihood of confusion on the part of the public.

But what type of ‘use’ is Google providing? The AG dissected the different types of use into 2 parts and assessed each separately for trade mark infringement: 1) the practice of selling trade marks as keywords in the AdWords facility; 2) the display of AdWords generated by a keyword search where the keyword corresponds to a trade mark.

1.    Strictly speaking, Google does not sell good or services identical or similar to the trade mark proprietors, i.e. they are not in the business of selling handbags such as Louis Vuitton. This was enough for the AG to find that the usage was not in infringement of trade mark law.

2.    However, the displayed advertisement triggered by trade mark keywords is advertising because a link is established “ between the trade mark and the goods or services advertised” (§79). But this was not enough to establish infringement. There must also be confusion on the part of the consumer. But the AG was very sure that the internet user was much more discerning than the trade mark owners had made out: “internet users are aware that they will have to sift through the natural results of their searches”. He thought that we decide on the origin of goods or services not from the results page of a search engine, but from actually leaving the page and clicking on the link provided by the search engine. On this ground, amongst other considerations, infringement was not found.

The AG’s conventional application of EU case law to this situation, where he stated that he would not depart “from the well-established case-law of the Court”, demonstrated plainly the technical failings of the case against Google; this seemingly not down to deficient argument but rather due to a rather particular set of facts. EU trade mark law was maybe not designed to apply to information service providers such as Google as they are relaying information and are not actually selling counterfeit or competing goods or services. So, on mainly technical points, Google was out of the reach of EU trade mark law.

The Bigger Picture -  Unpredictable Consequences
But beyond the technicalities, the AG took upon himself to look at the bigger picture, as much of his discussion revolved around the risk of an ‘overspill’ as a result of finding a trade mark infringement in the Google Adwords service. The AG was concerned that a decision made against Google Adwords would lead to trade mark proprietors wanting to target the natural results of the Google search engine (para 109), as there is not much difference between the two services: AdWords is clearly the commercial pillar of the Google search engine but the natural results could also be indirectly commercial, as root of the income of AdWords relies heavily on the performance of the general search facility. Also, both AdWords and natural results characteristically are the same in terms of their presentation (a short piece of text and a link).

The AG was concerned that the Court would not be able to limit the scope of the case to Adwords and that, as a result, the normal search function might be impeded by trade mark owners trying to stop anyone from using their trade marks on the internet.  The AG didn’t want to give too much control to trade mark owners, stating that the effect of accepting a trade mark infringement by Google  would provide trade mark owners with an “absolute right over whatever shown and said in cyberspace “ (para 108). Essentially the AG was balancing the consumer/ commercial interest and that of trade mark owners and in this balancing act, the AG noted that trade marks were inherently relative concepts, not equatable with traditional property rights where one has absolute rights over a physical space to the exclusion of others.

Contributory Trade mark Infringement
The AG provided a strict application of EU law that made the claims fail on technicalities. There was no desire to look purposively at the application of EU law to this specific situation. But even if Google was not directly responsible for trade mark infringement what about their contribution to such infringement? Should not that be a cause of action in itself? The AG was well aware from the outset of his presentation that contributory infringement was the right format for the Adwords set of facts. He deferred the issue to later in his discussion but unsurprisingly wasn’t prepared to make such a concession to the trade mark proprietors on this point.

Contributory infringement was not an EU doctrine and, in principle, the AG was convinced that it should not become one. He referred to the ambition of the trade mark owners, due to the difficulties of enforcing their rights on the internet, as now wanting to stop the “messenger rather than the message” and referred to cases in the US, where the aim was to ban the manufacturing of video recorders, as being most unwelcome. The AG wasn’t prepared to accept such an extension to EU law.

Where does that leave Google?
It may appear that the AG was falling down on the side of Google, but he did emphasise that although trade mark infringement did not apply to this situation, Google had not reached complete immunity. The AG applied the exemption for service providers such as Google in the Information Society Services Directive and found that although the keywords function of Google was content neutral, the AdWords side of the service was not. The effect being that Google would have exposure in this particular area of their service, and could still be held liable at national level for “civil or criminal matter[s]” (para 127).

Google and Yahoo, who allow use of competitors’ brands as keywords in pay per click advertising, have both had to defend their position in the courts across Europe.  The issue turns on whether use of competitors’ brands as keywords constitutes ‘use’ for trade mark purposes.  If it does then advertisers expose themselves to an action for trade mark infringement.

Understanding of Search Engines

Many people are still unaware that the search results appearing at the top of Google and along the right hand side are paid for advertisements.  So, whether out of ignorance or otherwise, or because searchers know they can expect more relevant websites when they click on the sponsored advertisements, advertising with search engines is increasingly popular and effective.  It allows advertisers to immediately appear in the search results  on page one of google   whenever their desired search terms are searched on by potential customers.

The fact that Google changed its policy on adwords in order to allow companies to choose keywords that are their competitors’ trade marks has given rise to misunderstanding.  It is important for companies to be aware that just because Google allows them to use competitors’ keywords does not mean it is desirable or risk free to do so.  Indeed it would be prudent to only use competitors’ trade marks as keywords once fully appraised of the potential risk of trade mark infringement litigation.

Recently Marks and Spencer as noted in my earlier blog post ‘Beware keywords in Google Ads’ was threatened with litigation by Interflora.  Interflora objected to the fact that whenever a search was made for the term INTERFLORA a sponsored ad belonging to Marks and Spencer promoting flowers would appear among the search results.

Last year, the English High Court decided that Yahoo had not infringed the trade marks of the trade mark owner of “Mr. Spicy” when users searched for the term “spicy”. As Laurence Kaye points out the case only concerned the position of the search engine. It didn’t look at the position of the advertiser who bought the search term (although this would have been a weak case given the generic nature of the trade mark itself).

The case establishes, for now, that a search engine does not “use” a trade mark as a trade mark merely by displaying an ad with keywords featuring all or part of such a trade mark in sponsored search results.  However, the case does not answer the question whether the advertiser (that is, Marks and Spencer in the above example) using Interflora’s mark as a trade mark when it bids on a competitor’s mark as a keyword.

The recent cases in Europe on whether use of adwords can constitute trade mark infringement are briefly mentioned below.  Decisions of the European Court of Justice are anticipated this summer.

France

The French courts have joined three cases to be referred for preliminary rulings. These cases are part of the ongoing dispute between Google France and Louis Vuitton Malletier over the use of keyword advertising and internet searches that display sponsored links referring users to sites selling rival products and even counterfeits. The Court heard arguments in the dispute recently.  Lawyers for Louis Vuitton contend that Google advertising gives companies which sell counterfeit goods the unprecedented ability to promote their products in ways beyond their wildest dreams. Google argues that the decision to click or buy ultimately rests with the internet user and not with them.  The Court’s decision will be pivotal for the future of search engine advertising.

Germany

Recently, the German Federal Supreme Court ruled on two other ad word cases and has referred a third to the ECJ.  All three cases were based on instances when the defendants had purchased the claimant’s trade mark as an ad word. This was shown as a sponsored link. None of the actual internet advertisements included a reference to the trade mark or the trade mark owner.

The first case concerns the ad word “Beta Layout.” This case is slightly different from the others because the word in question was registered as a company name which is protected as a trade mark under German law. Therefore this case did not involve a point of EU law but simply German law. The Court found that internet users would not assume that the sponsored link, which was visually separated from the search results, originated from the claimant.  Therefore this was not an infringement.  It also decided, given that the legal protection of company names was not based on harmonized European law, that this matter did not have to be referred to the ECJ for a decision. A problem with this decision is that Germany may be left with two different levels of protection for trade marks and company names which is incompatible with the German law principle that company name rights enjoy the same protection as trade marks.

The next case concerns “PCB” and both parties are active in the field of printed circuit boards. The claimant had a registered mark for “pcb-pool.” The defendant purchased the ad word for “pcb” only.  However when typing “pcb-pool” into a search engine the defendants sponsored search results were retrieved. The court ruled that the trade mark owner could prohibit use of the descriptive term “pcb” which is an acronym of “printed circuit board.”

The last case is on the purchase of the ad word “bananabay.” Both the defendant and the claimant are in the field of selling adult entertainment products.   The claimant owned the trade mark “bananabay” and the defendant had purchase an adword for that term. The Court has referred the question to the ECJ whether adwords used in this way is trade mark use. The decision will also have a huge impact on other ad words cases throughout Europe.

The Netherlands

A recent case has recently been referred to the ECJ. The dispute is between two companies Primakabin / Portakabin who both offer cabins for sale via online advertisements. Primakabin had purchased the ad words of “portakabin” as well as other similar words. The Dutch court has referred the question of whether this constitutes trade mark use to the ECJ. It is likely that the Court will decide this case as well as the previously mentioned German case at the same time.

Conclusion

The decisions in these cases will be important but they are unlikely to be the end of these types of disputes since they are unlikely to be able to answer all questions on how adwords relate to trade marks.

What will be interesting is to see is the extent to which Google will be able to disclaim all responsibility for giving advertisers a platform from which to promote their counterfeit and infringing goods to consumers.

Google Adsense?

As a result of a recent decision against Google in the USA, a new weapon should be considered by  trademark owners like Microsoft in the battle against cybersquatters.  If misspellings or other versions of trademarks are registered as domain names by third parties who are earning click revenue from Google’s adsense program,  suing Google may be an option worth considering.

The adsense program effectively allows Google to profit from cybersquatting.  To understand why that is, it is worth taking a  look at how Google’s Adwords program works. 

When a surfer searches for specific terms Google’s search results along the top and on the right hand bar of the page are the advertisements of businesses who are participating in Adwords – that is paying Google to feature their ads 

Adwords involves ‘bidding’ on keywords, so that whenever your desired keyword is searched on by a surfer (for example, Azrights bids on the keywords ‘register trademark’) your ad will appear among the results.  As such your site stands a chance of being visited (clicked on) by the surfer.  As these surfers are specifically looking for the product or service that your website offers it is a good way of promoting your services to potential buyers Each time a surfer clicks on one of youre ads, you pay google something  for the click.  Some keywords are more expensive than others.  If  only very  few advertisers are bidding on a keyword that term will be less competitively priced. 

Google uses a number of third party sites to display its advertiser’s ads, in order to promote your ads more widely.  Amazon is an example of a third party site that participates in Google’s adsense program.  So, for example, if you are looking at books about brands and  trademarks on Amazon you will notice some ads by our competitors about trademark registrations.  Our ads would not appear because we have opted out of  adsense. 

Similarly, many  domainers or ‘click farmers’ websites and parked pages also participate in adsense, so that their parked pages or websites will feature lists of  Google’s featured ads. .  Sometimes such pages purely exist as a page of links, such as trademark.co.uk does for trademark ads.  ,

If a cybersquatter has registered a misspelt trademark name such as MIROSOFT they too are likely to use a parked page to receive Google’s ads.  Their page   will feature a selection of ads by Microsoft’s competitors or by businesses  offering similar goods and services to those that Microsoft would sell.  So, the technology Google uses clearly enables it to decide which of its advertisers have suitable ads for such a page, and therein lies the argument as to the liability Google should bear for the wrongdoing.

The third party site receives a share of Google’s  revenue.  So if Google collects 60 pence per click from the advertiser it may  pay 20 pence a click (this is a complete guess) to the owner of the third party site.  Therefore whenever a surfer  clicks on an ad on a third party’s site rather than on google’s own search result page the surfer’s click generates revenue for the cybersquatter (a term that applies to anyone who has registered someone else’s trademark as a domain name).  What’s more it is Google that has created the possibility for the cybersquatter to earn anything from its wrongdoing..Google’s practice was  successfully challenged in the recent litigation by Vulcan Golf in the US District Court in Illinois see here .   They argued that under the Anticybersquatting Consumer Protection Act (ACPA) Google’s role in facilitating such profiteering by cybersquatters should attract liability.  The court agreed.

Of course, there are perfectly legitimate uses of parked pages, and it is difficult for anybody to claim rights in names like ‘trademarks’.  Therefore, the question is to what extent should  Google be expected to police the rights of trademark owners.  Where should it draw the line when if it notices that the parked page could possibly belong to a cybersquatter rather than to a legitimate domainer who has good reason to own a domain name, that on the face of it might be someone else’s trademark. 

While for brands like Microsoft it may be quite clearcut that a variation of the name Microsoft is likely to be held by a cybersquatter, it is not always easy to know whether or not a domain name is actually infringing someone’s trademark rights, especially where the brand name is a generic word like APPLE.

the fine print....

Following my earlier post I noticed this piece by Dayne Kaufman in Net Search Direct about Yahoo’s US terms for PPC advertisers.  He concludes

“after you spend hours creating your campaigns, adding your keywords and deciding how much money you want to bid on each term, Yahoo has the right to “optimize” however they feel necessary.  Not only can they delete some of your keywords and replace them with different ones, they can also increase and/or decrease your bids.  Best of all, you are not told about the modification(s) until afterwards.”

So I took a look at Yahoo’s terms for UK users.  Clause 7 pretty much allows Yahoo to do anything it wants with its customers’ advertising materials.

So it’s not the terms and conditions per se that interest me so much as what Yahoo is actually doing in practice judging by the comments to Andy Beal’s post here.

English contract law and European Directives give the judiciary plenty of scope to find a contract term unenforceable if it is unusual or unfair.  So tucking an unexpected provision away in the small print is not the best approach to ensuring a water tight contract  capable of standing up in court.  If you want an unusual term to be effective, you should specifically draw it to customers’ attention.

However, in practice as few can afford to take the likes of Yahoo to court, unfair terms apply until the customer complains.  It remains to be seen whether the complaints Yahoo has received will be enough to deter Yahoo from interfering in their customers’ pay per click campaigns.

This makes me wonder whether in this Net age when information overload is such a real problem, it is appropriate for every business to have its own unique contract terms?  Surely people cannot be expected to read lengthy, and often incomprehensible terms each time they sign up for something?  For example, is it appropriate each time you buy a piece of software that you should have to wade through the minutiae to find out what a particular icensor does and not permit you to do with their software?  Isn’t there a case for drafting industry standard terms?  Something like the equivalent of Creative Commons for terms of business.

Imagine how much simpler and fairer it would be if every industry arrived at a common set of terms following full discussions and negotiations with all interested parties, including representatives of consumers.  Then if a business wanted to add extra terms, it would be so much easier for users to notice the deviations from the norm.  Some industries already have standard terms – for example, Royal Institute of British Architects.  If only this practice could spread to industries like software.

The whole issue of terms of business is in the meantime highly unsatisfactory.  The way we lawyers generally approach contract drafting is becoming increasingly inappropriate.  Our entire training requires that we draft terms that will be the most favourable to our own clients.  The traditional reasoning behind this is that the other side, if it is smart enough to notice which terms are adverse to their interests, will negotiate.  In this way a more favourable set of terms will be arrived at for the deal in hand.  However, given that many contract terms are not negotiated means that terms are generally biased in favour of the supplier.  Commercial realities then come into play with regards to how those terms are used.  In Yahoo’s case, they have little competition (given that Google owns Yahoo), and customer backlash is the main force that will restrain them from applying their contractual powers in the ways they have reportedly been doing.

Where standard (non negotiable) terms of business are drafted lawyers will bear in mind legislative provisions, such as in the Unfair Contract Terms Act to ensure that the exclusions of liability conform with the rules.  But there are a host of provisions in contracts that are not governed by rules imposing requirements to be fair, and these will be biased very much in favour of the business itself.

It is therefore inappropriate to expect a lawyer drafting terms for one of these parties to be fair to both sides.  So, the whole area of contracts is extremely unsatisfactory and something that needs to change.