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Advertisers get sued for competitive keyword use & find law on their side

By   /  December 3, 2014  /  No Comments


TV star Judge Judy telling plaintiff to “zip it!”

Since competitive keyword use is so popular and commonly used, it may be surprising to hear that until 2004 AdWords users were not allowed to bid on trademarked keywords that were not their own. Following this rule change, a slew of lawsuits were filed against Google and competitors using trademarked keywords by trademark owners. The legal actions filed in the decade since the change have made the laws related to online advertising and trademarked material more clear, although there are some differences in the ways that the issues are addressed in the United States and Europe.

In an effort to not make anyone’s brain melt, my own included, I’m going to address US law and cases first and then look at the law and cases in Europe. Finally, I’ll explain why you’re better off using cash as firewood than filing one of these lawsuits.

U.S. Trademark Law and Online Advertising

While you will face few hurdles filing suit against a competitor for alleged trademark abuse through AdWords, winning one of these cases is about as easy as nailing a live octopus to a wall. The reason for this is the way that the law is written and has been interpreted. According to this Links and Law article that quotes the law in question, to win a trademark claim, the plaintiff must prove that they have a trademark, someone used it in commercial activities in connection to the sale or advertisement of goods and that they did so without consent. Additionally:

The plaintiff must also show that the defendant’s use of that mark “is likely to cause confusion . . . as to the affiliation, connection, or association of [the defendant] with [the plaintiff], or as to the origin, sponsorship, or approval of [the defendant’s] goods, services, or commercial activities by [the plaintiff].”

In other words, not only must the trademark be used to get people to buy stuff, people also must have assumed they were buying something made by the owner of the trademark. This is what derails most US Internet advertising trademark cases.

It has also been established in the case of 1-800 Contacts Inc. v. WhenU.com that the use of a trademarked term to trigger browser pop-up advertising isn’t on its own against the law, and many AdWords cases have been won by defendants using the same premise.

For example, in the case of Infostream v. Avid, it was determined that since the ads in question showed up under the heading of ads and didn’t reference the domain or trademark in question, there was no infringement.

However, even if someone uses a trademarked keyword in an ad as well as bids on it, they may still prevail in court against a lawsuit. Allied Interstate, a debt collection agency, filed a lawsuit against Kimmel & Silverman, lawyers who advertised that they defended people against creditor harassment. In addition to using Allied Interstate’s name to trigger ads, the ads also contained the company’s name, and read, “Stop Collection Calls—Is Allied Interstate Calling You?” Further, Allied Interstate was referenced on the law firm’s website. In this case, Allied Interstate lost the suit because it was very clear that the law firm was an adversary to the business in question. There was no way anyone could really confuse the two companies.

Indeed, Defendants are plainly soliciting complaints about Plaintiff’s services and inviting searchers and visitors to Defendants’ website to consider suing the Plaintiff. Nothing alleged in or attached to the Complaint provides any plausible factual support for the confusion element of Plaintiff’s unfair competition and false designation of origin claims.

However, just because you’re likely to lose your case doesn’t mean the legal system won’t let you spend the time and money required to have the court system take a look see. A judge recently rejected a motion for dismissal from the defendant in Coral Resorts vs. Naert and DuBois, wherein Coral Resorts is a time-share company and Naert and DuBois is a law firm representing 27 people in a legal case against Coral Resorts. Coral Resorts is claiming that Naert and DuBois are using trademarked terms to drive traffic to their site and creating the illusion of a link between the two companies.

Mind you, Allied Interstate v. Kimmel & Silverman and was the same basic premise, and it went down in flames. There may be a lot more going on in the case, and I’m about as far from a lawyer as you can get, but if the law firm is representing people in a legal action against Coral Resorts, it’s hard to see how people would think that the two are connected.

European Trademark Law and Online Advertising

Your chances of winning, or at least not flat out losing, a trademark keyword case in Europe are slightly better. In what many consider to be a landmark case for these types of lawsuits, in 2010, the Court of Justice of the European Union ruled that using the AdWords system itself wasn’t a breach of trademark law, but advertisers could still run afoul of trademark laws if they used them improperly. The case involved keywords related to Louis Vuitton, and it was determined that while Google was legally allowed to let users to bid on these types of keywords, users were limited on how they could advertise. According to Aoife Nic Lochlainn writing for Mondaq:

It is for the national courts concerned to decide in each case whether trade mark infringement has taken place. In short, the use of a trade mark in a keyword without permission may be an infringement of that trade mark where it is impossible or difficult for the average Internet user to determine the origin of the goods or services.

Since the ruling, lawsuit outcomes have been mixed. Commercial Spanish Courts have decided both for and against defendants in relatively similar cases, both of which used a trademarked keyword in advertising. Additionally, the European Court of Appeal recently ruled that the Interflora v. M&S case needed to be retried after many thought it had been settled.

The High Court originally ruled that M&S did infringe on trademarks and that the average Internet user could be confused by M&S’ advertising and believe that they were doing business with Interflora. M&S appealed, and an appeals judge agreed with one of their arguments, which is that it was the obligation of Interflora to prove that M&S was confusing Internet users; M&S were not required to demonstrate that they were not at fault. Another important result of the Appeals court ruling was that:

Therefore, in answering the Infringement Question, the court was entitled to have regard to the effect of such advertisements upon a significant section of the relevant class of consumers, and was not barred from finding infringement by a determination that the majority of consumers were not confused.

In other words, if a significant portion of the population, even if it is less than half, could be confused by advertising, it may still infringe on trademark laws.

Long story short, you can still sue for trademark infringement in Europe, but it seems like they’re still figuring out how to interpret the law in relation to PPC advertising.

It’s just not worth it

Even assuming you do manage to win a lawsuit, you’re still likely looking at having paid way more in attorney’s fees that you ever could have lost to competitors. An article from Eric Goldman on Forbes lists the following cases:

  • King v. ZymoGenetics: the defendant advertiser got 84 clicks.
  • Sellify v. Amazon: the defendant got 1,000 impressions and 61 clicks.
  • 800-JR Cigar v. GoTo.com: the search engine defendant generated $345 in revenue (not profit, just revenue) from the litigated terms.

A study done by David A. Hyman and David J. Franklyn backs up the futility of suing for AdWords trademark infringement. It’s 34 pages, so I’ll just copy a bit of their summary:

We find that competitors account for a relatively small percentage of keyword purchases, and many trademark owners purchase their own marks as keywords. We also find a high degree of fluctuation in the number of paid ads and the domain names to which those ads are linked.

About the author

I'm an avid reader of stuff and devour information of all kind. For the past four years, I've been pursuing my passion for writing. When I'm not reading or writing, you'll find me knitting. Follow me on twitter: @MarilynMaupinTS

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