Trademarks, Triggers, and Online Search

Journal of Empirical Legal Studies, Forthcoming

48 Pages Posted: 19 May 2013 Last revised: 13 Jul 2014

Stefan Bechtold

ETH Zurich

Catherine E. Tucker

Massachusetts Institute of Technology (MIT) - Management Science (MS)

Multiple version iconThere are 2 versions of this paper

Date Written: July 12, 2014

Abstract

Internet search engines display advertisements along with search results, providing them with a major source of revenue. The display of ads is triggered by the use of keywords, which are found in the searches performed by search engine users. The fact that advertisers can buy a keyword that contains a trademark they do not own has caused controversy worldwide. To explore the actual effects of trademark and keyword advertising policies, we exploit a natural experiment in Europe. Following a decision by the Court of Justice of the European Union, Google relaxed its AdWords policy in continental Europe in September 2010. After the policy change, Google allowed advertisers to select a third party’s trademark as a keyword to trigger the display of ads, with only a limited complaint procedure for trademark owners. We use click-stream data from European Internet users to explore the effect this policy change had on browsing behavior. Based on a dataset of 5.38 million website visits before and after the policy change, we find little average change. However, we present evidence that this lack of average effect stems from an aggregation of two opposing effects. While navigational searches are less likely to lead to the trademark owner’s website, non-navigational searches are more likely to lead to the trademark owner’s website after the policy change. The effect of changing keyword advertising policies varies with the purpose of the consumers using the trademark, and it is more pronounced for lesser-known trademarks. The article points to tradeoffs trademark policy is facing beyond consumer confusion. More generally, the article proposes a novel way how to analyze the effect of different allocations of property rights in intellectual property law.

Keywords: Trademark, keyword advertising, liability, Google

JEL Classification: K00, K29, M37, O34

Suggested Citation

Bechtold, Stefan and Tucker, Catherine E., Trademarks, Triggers, and Online Search (July 12, 2014). Journal of Empirical Legal Studies, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2266945 or http://dx.doi.org/10.2139/ssrn.2266945

Stefan Bechtold (Contact Author)

ETH Zurich ( email )

IFW E 47.2
Zurich, 8092
Switzerland
+41-44-632-2670 (Phone)

HOME PAGE: http://www.ip.ethz.ch/people/bechtold

Catherine E. Tucker

Massachusetts Institute of Technology (MIT) - Management Science (MS) ( email )

100 Main St
E62-536
Cambridge, MA 02142
United States

HOME PAGE: http://cetucker.scripts.mit.edu

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