Last week, in our continuing series of Foolish duels over the merits of various companies, I laid out several arguments against purchasing Google (Nasdaq: GOOG ) . As it turns out, our readers seemed to agree. I was surprised to see Foolish readers turn their backs on Wall Street's Internet darling, but yesterday we learned why there's such a huge difference between being a Foolish investor, and merely being foolish. One of the Google-risks I highlighted is about to come to fruition.
As reported on Motley Fool Rule Breakers recommendation CNET (Nasdaq: CNET ) yesterday, two of the foreign companies that I cited last week as having prior claims to the trademark "Gmail" -- a trademark that Google usurped to such fanfare last year -- are planning to file lawsuits against Google in the U.S. Worse for Google, one of the plaintiffs has already won a temporary restraining order against the company in Germany, forcing Google to elongate the name of its email service there to "Google Mail" pending the outcome of that trial -- so the challengers' claims appear to have some merit.
The company with perhaps the best claim to the Gmail trademark is London-based Independent International Investment Research (IIIR), which has offered its clients a G-Mail service since May 2002. That's an important fact in U.S. trademark law, where rights accrue to the first person to use a trademark, rather than the first person to register the mark (although, as we discussed last August, Google wasn't exactly Johnny-on-the-spot in that department, either.)
IIIR has reportedly been negotiating to sell or license the rights to the Gmail name to Google for well over a year. But according to the CNET story, those negotiations have broken down, and IIIR now intends to file suit to enforce its intellectual property rights. It looks like the German litigant, Giersch Ventures, will join in that lawsuit to more readily resolve the three companies' rights to the Gmail name.
Clearly, Google has completely bungled the trademark aspects of its Gmail venture. However, Google investors should know that all is not lost. It's not the Gmail service that's at risk from the pending lawsuit -- just Google's right to use the catchy Gmail moniker. In the worst case, "Gmail" can always survive under another name. But in the best of all worlds, Google will ultimately admit its gaffe and pay what it must to acquire the legal right to use the Gmail name. It might just learn a valuable lesson in the process: Whether you're big, or whether you're small, the trademark laws apply to all.
Did you miss the Google duel? Revisit it in:
- Dueling Fools: Google Bull
- Dueling Fools: Google Bear
- Dueling Fools: Google Bull Rebuttal
- Dueling Fools: Google Bear Rebuttal
True, trademark infringement is one way to break the rules. ButMotley Fool Rule Breakerslooks for a different kind of rebel: companies with market-changing products and the potential for explosive growth. See for yourself with a free 30-day trial subscription.
Fool contributor Rich Smith does not own shares in any company named above.