February 1, 2012

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Google (B)AdWords

Avoiding Trademark Infringement in Search Engine Advertising

H. Matthew Horlacher

February 1, 2012

As the world’s largest marketplace, the internet presents businesses with enormous sales opportunities, as well as significant obstacles in assuring that their products appear in the storefront windows of that marketplace. Transportation to the internet marketplace is most frequently provided by search engines, such as Google, Bing and Yahoo!, and storefront windows take the form of their results pages.

The desire to appear on the first page of those search results, combined with the willingness to pay to increase the likelihood of that result, has spawned an entire industry of companies focused on search engine optimization (SEO) and related services. But no company has capitalized on this phenomenon as successfully as Google. Via its AdWords service alone, Google generated almost $28 billion in revenue in 2010.

Keyword Advertising

The AdWords program allows businesses to bid on and purchase “keywords” from Google. When a Google user enters those keywords in a search, that business’ advertisements and links appear in the Google “Ads” bars, located prominently at the top and right side of the first page of the search results. For example, entering the term “LEGO” in the Google search engine produces an advertisement and link for the official LEGO.com site in the Google Ad bar at the top of page one of the results. Other search engines offer similar keyword advertising services.

As part of an overall marketing strategy, businesses will occasionally purchase keywords associated with a competitor’s products. Continuing the LEGO hypothetical, a less well known manufacturer of plastic interlocking bricks could purchase LEGO as a keyword so that consumers searching the internet for LEGO products would see its competing products in the paid search results. But LEGO is a registered trademark, and analogous uses of a competitor’s trademark as a keyword have led to litigation, requiring courts to address whether such use constitutes trademark infringement.

To prove trademark infringement, a trademark owner must show both that its trademark is (a) being used in commerce, and (b) is likely to cause consumer confusion. Many of the first keyword advertising lawsuits were dismissed on the grounds that a keyword hidden from public view is not a use in commerce. Recent cases have reversed that holding, however, and today most courts accept that keyword advertising constitutes a use in commerce, even if the consumer never sees the trademark.

Once use in commerce is established, trademark owners must prove that use of the trademark in keyword advertising is likely to cause consumer confusion. Under a traditional trademark infringement analysis, the trademark owner must show that a search engine’s users are likely to be confused about the source of a defendant’s advertisement appearing in the search engine’s paid search results, a highly unlikely outcome given that most results identify only the defendant’s product without reference to the plaintiff’s trademark. To overcome this, plaintiffs have relied on the judicially created “initial interest confusion” doctrine.

Under the initial interest confusion doctrine, a defendant may be liable for trademark infringement if it uses a plaintiff’s trademark as part of a “bait-and-switch” scheme, diverting consumers from the trademark owner’s products or advertisements to defendant’s products and advertisements. Although consumers are not ultimately confused as to the source of the advertisement or products, the doctrine provides that trademark infringement has occurred because those consumers would have never seen the defendant’s advertisement or website without use of the competitor’s trademark as a keyword.

Practical Guidelines

The law in this area is far from settled and is still being developed. The federal court of appeals covering Utah, for example, has adopted the initial interest confusion doctrine, while others have rejected it. Similarly, most courts have held that search engine companies are not liable for trademark infringement, even when knowingly selling registered trademarks as keywords to competitors, although several of those legal issues are still being addressed on appeal.

Not wanting to stay on the sidelines, some politicians have also argued for adopting state and federal legislation to address this issue.

Until the law in this area becomes settled, the following practical guidelines can be helpful for businesses adopting a keyword advertising strategy:

  • Use generic or descriptive terms as keywords where possible.
  • For non-generic or non-descriptive terms, search the keyword in the USPTO search system (tess2.uspto.gov) to assess if someone else claims trademark rights in the term.
  • Understand that purchasing a competitor’s trademarks as keywords could result in litigation.
  • If using a competitor’s trademark as a keyword, do not use the trademark in the actual advertisement or link appearing in the search results.
  • Consider adding a competitor’s trademarks as “negative keywords,” thus preventing your ads from showing for searches containing those keywords.
  • Familiarize yourself with and follow each search engine company’s policies and complaint procedures.

 

H. Matthew Horlacher is a partner with Holland & Hart.

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