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Keyword advertising: An important marketing tool or a potential minefield?

Mark McDonald
Keyword Advertising: An Important Marketing Tool or a Potential Minefield?Melinda S. Giftos As consumers continue to migrate onto the Internet to seek out products and services, Internet advertising has evolved into a multi-billion dollar industry. One popular tool for increasing brand visibility online is keyword advertising.

What is keyword advertising?

Keyword advertising is a powerful tool used by companies to improve search engine rankings and increase advertising visibility on the Internet. All of the major search engine companies in the United States, such as Google, Yahoo! and Bing, offer services through which various keywords can be purchased. Keywords can either be trademarks or terms that describe goods and services offered. For example, the Coca-Cola Company could purchase “Coke,” “Coca-Cola” and “soft drinks” as keywords. Then, when consumers enter the keywords into a search engine, the Coca-Cola Company's advertisements and links will be listed in the top of the search rankings as “sponsored” links. Tension comes into play, however, when companies register their competitor's trademarks to attain increased traffic and visibility. For example, a start-up beverage company could purchase “Coca-Cola” as a keyword and generate much more Web traffic than it could by using its own new and comparatively unknown trademarks.

Is it Trademark Infringement?

Many brand owners believe that the use of their trademarks in keyword advertising by their competitors causes them to lose business and constitutes trademark infringement. As a result, numerous lawsuits have been filed, both against the search engine companies who provide the services and the companies who have purchased competitors' trademarks as keywords. 
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The most high profile cases involve the search engine giant, Google, which has aggressively defended its AdWords® program, claiming that it does not infringe upon any trademark rights by selling its keyword advertising services. Brand owners disagree, however, particularly because Google has a “Keyword Selection Tool” by which it suggests various keywords to purchase, including competitive trademarks, and because Google makes 95% of its revenues from its advertising programs.

Unfortunately, to date it remains unclear whether offering keyword advertising services and using third-party trademarks in keyword advertising is trademark infringement. To prove trademark infringement, a brand owner must prove that the mark is used “in commerce” and is likely to cause consumer confusion.

Use in Commerce

In early keyword advertising lawsuits, cases were often dismissed summarily on the grounds that the trademarked keywords were not used in commerce since the marks were generally hidden and were not used directly in connection with the sale of goods and services. However, in April 2009, in Rescuecom Corp. v. Google Inc., 562 F.3d 123 (2d Cir. April 3, 2009), the Second Circuit Court of Appeals held that keyword advertising could constitute use in commerce.

Likelihood of Confusion

If keywords are used in commerce, brand owners must also prove that the use of trademarks in keyword advertising causes consumer confusion. To do so, many have argued that keyword advertising creates “initial interest confusion,” meaning that the company which purchased its competitor's trademark did so intentionally to divert traffic to its own advertising. Even though consumers are not ultimately confused as to the source of the advertisement, they would have never seen the advertisement or Web site absent searching for the competitor's trademark.

Courts are split, however, on whether the initial interest confusion doctrine is valid. Many argue that the concept is dated and that consumers are much more sophisticated when searching the Internet for goods and services than they were when the initial interest confusion doctrine was developed in the late 1990s. Unfortunately, most cases have settled prior to any verdict and therefore there is no definitive U.S. case law on the issue. In addition, the cases and applicable standards vary greatly depending on whether the suit is against the search engine companies that provide the keyword services or the competitors that actually purchase the trademarked keywords.

International Landscape

While the U.S. law remains unsettled, in March 2010, the European Court of Justice (EJC) held that Google did not infringe brand owners' trademark rights by providing its AdWords® program. Interestingly, however, the ruling left great uncertainty as the court also held that Google must remove keywords if it receives complaints and that the national courts are free to set their own rules on whether search engine providers' keyword advertising programs infringe the trademark rights of others. Importantly, the ECJ also held that purchase and use of trademarked keywords by competitors does constitute use of the trademark and could constitute trademark infringement.

Best Practices

Because the legality of the use of third-party trademarks in keyword advertising is currently unsettled, the following best practices are advisable when undertaking keyword advertising:

  • Take caution before purchasing or bidding on a competitor's trademarks. For some companies, the risk may be well worth it, but for others, it could lead to bet-the-company litigation.
  • Be proactive and purchase your own company's trademarks in keyword advertising programs.
  • Because brand owners have an obligation to maintain exclusive rights in their trademarks, it is important to monitor third-party uses of your trademarks in keyword advertising programs and take action as needed.
  • Become familiar with each search engine company's policies and complaint procedures.
  • In using keyword advertising, clearly include your own trademarks in the descriptive portion of the search result. If you have a defensible reason for using another's trademarks (i.e., if you are a reseller or offer products or services that compliment another brand), clearly indicate that relationship to reduce any potential confusion. 

Melinda Giftos is an attorney with Whyte Hirschboeck Dudek S.C. that specializes in helping clients with trademarks, copyrights, domain names and more. She belongs to the Wisconsin Intellectual Property Law Association (WIPLA) and the International Trademark Association (INTA). For more information, please contact Melinda Giftos at (608) 234-6076 or mgiftos@whdlaw.com.

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