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McHale Slavin NewsletterMchale Slavin

APRIL 16, 2012

Joseph J. Stafford

Intellectual Property Attorney

Google’s New Wave of Advertisements is Ringing in the Ear

          From keyword advertising to Gmail advertising, Google consistently finds innovative ways to allow marketing to wade into an Internet user’s personal space. Such practices by Google have become the norm and have been very profitable for the Silicon Valley starlet. However, just as society starts to become keenly aware of Google’s Internet advertising tactics, the search engine baron has found a new way to make sure advertisements keep “ringing in our ears.”

          On March 13, 2012, Google was issued a patent for “Ringback Advertising” (U.S. Patent No. 8,135,613). A “ringback” is what is heard by a person using a phone when the number that person dialed is ringing. Under the patent, Google can basically play an advertisement instead of the normal “ring” that a telephone user hears while the user is waiting for the other party to answer. Google can associate a particular advertisement with either the number that is being called, or the number from which the call is made.

          It is likely that “Ringback Advertising” was spawned out of Google’s highly successful and profitable “keyword advertising,” AdWords model. Google’s AdWords model allows businesses to bid on certain “keywords” that a Google search engine user will enter while “surfing” the Internet. Whenever a user enters a “keyword” that has been purchased by a specific business, an advertisement or website link for that business will appear on the search engine results page.

          Throughout its existence, Google’s AdWords has faced claims of unfair competition and trademark infringement. Google’s “keyword advertising” potentially allows competitors to bid on each other’s’ words and trademarks so that when a user enters search term such as “Coca-Cola” into a search engine, Pepsi advertisements pop-up.

          In the past, when a company like Pepsi would bid on the keyword “Coca-Cola,” Coca-Cola Company might have a claim for trademark infringement because that term is actually a registered trademark. In these cases, trademark infringement is directly implicated because the actual word is a source identifier of that company.

          While “keyword advertising” directly implicates trademark rights, “ringback” advertising may present a similar, but much more interesting dilemma. “Ringback” advertising presents a new problem in that telephone numbers are not trademarks or source identifiers of a company, but are instead direct links to that company.

          Google intends to market this new form of advertising in a fashion similar to their AdWords model. Google’s AdWords model currently comprises the majority (95%) of Google’s $38 billion a year business. By expanding into this new form of telephone advertising, Google plans to have advertisers bid for the amount they are willing to pay in order to have their advertisement played as a ringback. A possible scenario could involve Google licensing this patent to major phone companies, and the phone companies then allowing advertisers to bid on specific telephone numbers to place their ads on.

          For instance, Starbucks is one of the largest coffee companies with over 15,000 stores worldwide. While Starbucks’ corporate office has a few telephone numbers, it is also safe to assume that a majority of the 15,000 individual stores have their own telephone numbers as well. Therefore, as an example, one of Starbucks biggest rivals, Dunkin Donuts, might begin bidding on these telephone numbers so that when a customer calls Starbucks, they would hear a Dunkin Donuts advertisement while waiting for the Starbucks employee to answer the phone. Such a tactic could require Starbucks, and other companies, to engage in a defensive and costly strategy of registering all of the telephone numbers that may be associated with their stores or departments.

          Ultimately, Google may be forced to implement a policy that such practices are not allowed because they result in unfair competition; however, if the only company allowed to bid on a telephone number is the company to which it actually connects, then Starbucks would essentially only be bidding against itself, which would not generate much profit for Google. Therefore, while Google has truly taken the solicitation of advertisements to a new level and might have found a gold mine with their new patent, “Ringback Advertising” may also create serious intellectual property issues.

By: Joseph J. Stafford

Intellectual Property Attorney