The Search for Search Engine Placement: Pay or Perish?
 
December 13, 2002
 
Stephen "Steve" Young- Boston

For businesses large and small,  a Web site is an ideal means, if not the sole means in some cases, for marketing and selling that business' goods or services.  First, the business decides upon, pays for and registers a domain name.  Next, the business engages a Web designer/master to create an appealing and user-friendly Web environment for customers and potential customers to visit and use.  Finally, the business pays a search engine registration company to assist it in submitting the site to the hundreds of search engines so that the customers and potential customers can find their way to the site.  Now all is prepared for the influx of visitors to the site. 

Three months later, however, the only visitors to the site have been the business owners' close friends and relatives.  The business has thrown a party – at a cost of tens of thousands of dollars – and nobody has come.  Why not?  Perhaps, as described in a suit recently filed by San Antonio, Texas, weight-loss company, Mark Nutritionals, Inc. d/b/a Body Solutions, because they did not make yet another payment on their way to achieving Web success -- namely, a payment to obtain favorable placement on search engines.

Background on Paid Placements

Before looking more closely at the claims included in the Mark Nutritionals case, a brief look at the context within which the case arises may be helpful.  When a business engages a Web master to design its Web site, it expects that the Web master will format the Web site and use metatags and various techniques to cause the business' name/Web site to pop up if not first, at least on the first page, of each of the hundreds of search engines' listings of responses to a particular word or phrase a potential customer might use to search for the desired goods or services.

The business’ desire for this result is understandable since it is generally acknowledged that most Internet users begin their search with a search engine, and end their search with the first page that appears in response to the search.  Thus, for example, if someone is searching for weight reduction pills, a company that manufactures such pills wants its site to appear prominently when the phrase “weight reduction pills” is used to search the Web.  The business would think that an able Web designer, by the use of the methods mentioned earlier, can make the content/format of the business’ Web site most relevant to the word or phrase used by the potential customer, and, therefore, cause the site to pop up first or at least early in search engines’ results.

Up until about two years ago, relevancy of the Web site to the search word or phrase was the primary method by which a Web site appeared in a search via a search engine.  Now, that has all changed.  Many search engines, being in the business of making money, and realizing the value to advertisers of prominent placement on their engines, now provide favorable placement by levying a charge – the so-called "paid placement" procedure.  In addition, many search engines now charge Web site owners simply to be included in the results of a search, without any assurance as to how prominently they are included (called paid inclusion) or, particularly in the case of commercial sites, to just have their sites submitted to the engine for consideration (called paid submission).

While this additional layer of payment may seem unfair to a business that is simply seeking to establish its Web site on the Internet, the search engines point out that charging a business for placement or inclusion on or submission to a search engine is no different than charging a business to be listed in a certain manner in the yellow pages of a telephone directory.  Some advertisers, however, disagree, especially where the search phrase or word being use is their trademark. 

The Mark Nutritionals, Inc. Suit

Earlier this year, Mark Nutritionals, Inc., a manufacturer of a dietary system, turned to the courts to try to stop what it believed to be the misuse of their mark by certain search engines.  The protected mark at issue is “Body Solutions,” a name that Mark Nutritionals uses for its weight loss program.  The use Mark Nutritionals alleges violates its mark and constitutes unfair competition is the practice of search engines’ selling high placement on their Web sites to the highest bidders for a particular name or phrase that is trademark protected – in this case the term “body solutions.”  The result of that practice, Mark Nutritionals alleges, is that competitors or others not authorized to use Mark Nutritionals’ protected mark are able to have their sites appear first or at least prominently (meaning above Mark Nutritionals' site) when Web users search by using the phrase “body solutions.”  That result, they say, infringes their rights in and to the trademark “Body Solutions.” 

On January 28, 2002, Mark Nutritionals filed suit in the Western District of Texas, San Antonio Division, against Overture Services, Inc.  In that suit, Mark Nutritionals is seeking compensatory damages of not less than $10 million and punitive damages of not less than $100 million.  The basis for its claim as it states in its complaint, is that “Overture allows advertisers . . . to buy their way to the top-ranked results for search queries using ‘key words’ . . . [and] where there are multiple purchasers of the same key word, Overture lists the Web sites according to price, with those advertisers who agreed to pay more receiving a higher rank than those who pay less.”  The result of that procedure is that either a competitor or an advertiser whose goods or services have nothing to do with “Body Solutions” displaces Mark Nutritionals’ Web site from a favorable spot on the result page(s) of advertisers and pushes Mark Nutritionals’ site to a lower position than would a result based upon relevancy of the site to the search phrase.

This sale by Overture of Mark Nutritionals’ trademark, it alleges, constitutes trademark infringement, dilution of its mark and unfair competition.  In addition to compensatory and punitive damages, Mark Nutritionals is also seeking an injunction against Overture’s continuing to engage in this practice.

It is noteworthy that Mark Nutritionals did not name as defendants in this suit any of the bidders who had obtained a favorable position on Overture's result page by bidding for the phrase “body solutions.”  While there may be several explanations for why Mark Nutritionals did not name bidders in the suit, an important one may be that none of the bidders actually is a competitor of Mark Nutritionals, even though a dilution theory, and perhaps others, might have been a sufficient basis for Mark Nutritionals to have made the claim against the bidders.

On the same day Mark Nutritionals filed suit against Overture, it also filed separate suits against AltaVista Company, FindWhat Services and Innovative Marketing/Kanoodle.com, Inc. alleging the same wrongdoing by those search engines that it had alleged against Overture.  It did not, however, sue the popular search engine Google even though Google, like the other search engines, had paid ads on its results page for the term “body solutions.”  Speculation regarding why Google was not named is that Mark Nutritionals’ site appeared first on the Google listing, even though, apparently, Mark Nutritionals did not pay to be included.  See www.searchenginewatch.com, “Search Engine Submission Essentials,” 4/10/2002.

The Future of Paid Placements

As of the date of this article, the search engine defendants have not filed formal answers to the Mark Nutritionals’ complaints.  Until they do, and until the court rules on the validity of Mark Nutritionals’ allegations, we will not know whether and to what extent the paid placement practice will be affected.  These suits, however, merely seek to restrict the paid placement practice as it is applied to searches performed by using a word or phrase that is trademark protected.  These suits will not, at least not directly, impact the general practice of search engines’ obtaining payment for permitting advertisers to receive favorable placement on the search engines’ result pages.  Only time will tell if other legal theories pursued in other claims against search engines will further restrict that practice.  In the meantime, each business must decide whether it is receiving acceptable placement on search engine result pages simply by application of the relevancy approach to placement, or if they will have to enter the paid placement bidding practice to obtain the results they desire.

For more information, contact Steve Young, toll free, at 888-688-8500.