February 26, 2006 | By corynne mcsherry

Yahoo!'s New Advertising Policy Shortchanges Customers

In the interests of expanding its big brand advertising base, Yahoo! has turned its back on consumers. SearchEngineWatch reports that Yahoo is sending emails to all advertisers warning that, as of March 1, Yahoo will forbid them from bidding on keywords with competitive trademarks. In other words, Coke can no longer bid to use "Pepsi." Yahoo! insists that the purpose of the policy is to "more easily deliver quality user experiences when users search on terms that are trademarks."

That's nonsense. It's as if Walgreens decided generic aspirin manufacturers could no longer bid for shelf space next to the more expensive name-brands. Putting the generics near the name-brands promotes generic aspirin sales, of course, but it also helps consumers by saving them the time and effort of hunting around the shelves for cheaper alternatives. As SearchEngineWatch notes, Yahoo!'s more likely goal is to attract big brand advertisers that want to prevent consumer traffic from being redirected to competitive sites.

Ironically enough, Yahoo!'s new trademark policy undermines the fundamental purpose of trademarks: to improve consumer access to accurate information about goods and services. Trademarks are just shorthand terms that designate the origin of a product. If I buy a soft drink with "Coke" on the label anywhere in the United States, I know it will taste exactly the same because it was made from the same Coca-Cola formula. Comparative advertising simply uses that shorthand term to provide more information about the trademarked product and competitive products. That's why comparative trademark use is clearly protected under U.S. trademark law. If it weren't, Pepsi wouldn't be able to tell consumers that more people think its cola tastes better than Coke, and Sony wouldn't be able to explain why Playstation beats the pants off any Xbox.

If Yahoo! really wants to "deliver quality user experiences," it should promote comparative advertising so that users have easy access to as much information as possible. After all, isn't providing more and better information the main purpose of a search engine?

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