This story in today's Washington Post about the new trademark lawsuits against Google contain this interesting tidbit:

While Google once prevented competitors from buying ads linked to registered trademarks owned by other firms, the company relaxed that policy in April, saying it is in the consumer's interest to receive the broadest possible mix of ads when searching online.

I'm not sure what aspect of trademark law prevents Google from selling ads for company X that appear in the sponsored results section when a user searches using a term that is company Y's registered trademark. It stinks for company Y, but I don't see where their recourse is. Then again, I don't know much about trademark law.

Maybe Martin Schwimmer of the excellent Trademark Blog will have something to say about the matter.

UPDATE (from Mr. Trademark himself Marty Schwimmer, via email):

I drove to Home Depot last weekend pretty much decided on a Troy-Bilt leaf blower and wound up leaving with an Echo leaf blower. Diversion of 'prospects' occurs all the time. Did my temporary interest in Troy-Bilt create something proprietary to Troy-Bilt?

There are two interesting quotes in the Post article. The representative of American Blind characterizes Google as selling ads to "competitors who snare people searching for his Web Site and products." He also distinguishes Overture from Google because Overture ". . . knows when someone types in AMERICAN WALLPAPER or AMERICAN BLINDS that the consumer is looking for our web site."

In the real world of my trip to Home Depot, the historical test of what should be actionable has been likelihood of confusion at the circumstances regarding purchase. Certain cases, the 'foot in the door' cases such as Mobil/Pegasus (and the tortured 'deception on the Interstate exit' hypo from the MovieBuff case) articulate fact patterns where confusion pre-purchase might be actionable. This 'initial interest confusion' doctrine is not universally accepted - Professor Eric Goldman has suggested that perhaps IIC should only be actionable if the switching costs of correcting an initial mistake (i.e. getting back on the highway after you exited due to a misleading sign) were so high that the defendant made the sale. He also suggests that on the Internet, hitting the 'back button' reduced switching costs to zero. Therefore he's skeptical whether IIC fact patterns (which would cover many of the keyword cases) should be actionable.

On the other hand, there's a Seventh Circuit case, Equitrac, that deals with metatags, that to me is the highwater of IIC doctrine. It appears to suggest that the mere opportunity to present one's case to the user, the diversion of eyeballs, is an ill-gotten gain and should be actionable.

So the American Blind case should provide some interesting law, if we ever get to that part of the case - is traffic proprietary? Is diverting eyeballs actionable confusion?