The use of trademarks sold as “keywords” by Google and other search engines to trigger “sponsored links” on the side of a search page continues to be a hot button issue for any business with a website.
The dispute is whether a trademark is infringed if a competitor buys the trademark and uses it to trigger an online advertisement for its own company, so that a consumer searching for the trademark will pull up an ad for the competitor.
Courts are split over the answer.
“It’s still a hot issue, because sometimes it looks like the case law is going in one direction, then courts take it in another direction,” said Deborah Wilcox, co-chair of the intellectual property litigation practice at Baker Hostetler in Cleveland.
Meanwhile, there are a growing number of business-to-business disputes over the issue.
The primary target had been Google and other search engines that allow advertisers to bid on trademarks for keyword ads, but that is changing.
“We are now beginning to see more litigation between advertisers as opposed to going after Google and Yahoo. This is the next phase,” said Jeffrey Rohrs, an attorney who is vice president of agency and search marketing for Exact Target, an e-mail marketing firm in Indianapolis.
Clarke Walton, a lawyer in Las Vegas who represents online businesses exclusively, represents companies on both sides.
“I’ve got dogs on both sides of this fight – companies who like liberal policies for purchasing trademarks and trademark owners who really want to drop the hammer on what they consider infringement,” said Walton.

Legal arguments

One of the threshold issues in infringement cases is whether the use of trademarks in keyword ads is a “use in commerce.”
This is because unlike traditional trademark cases where a trademark is put on a competitor’s label or product, a trademark on the Internet can be used to trigger an ad but is not necessarily seen by the consumer.
“Some courts say if a consumer can’t see a trademark, so that nothing is visible on the page or in the ad, how can it be a trademark violation?” said Sarah Bird, general counsel for SEOmoz, a search engine optimization company in Seattle.
But other courts have ruled the use of trademarks to trigger an online ad is a “use in commerce.”
The other contentious legal issue is whether a keyword ad is likely to confuse consumers.
Although comparative advertising is a “sacred cow” of trademark law, it is a different animal where people are surfing the Internet and clicking on links.
“What do consumers think when they see a sponsored link on Google or Yahoo? Do they understand someone has bought a space there, or do they think those are licensees [of the trademark owner]?” said Wilcox.
Until there is more research about what the “average consumer” sees and thinks while surfing the Internet, courts will continue to be all over the map.
Wilcox said courts are more likely to find infringement where there are other attempts to divert traffic from the trademark owner’s site – such as ads that use white text on white background so search engines will read it but consumers cannot.
She predicts courts will trend toward finding consumers are not being duped by trademark-triggered ads.
But Walton said there is no one-size-fits-all answer because it depends how the trademark is used.
“If Walmart bids on Target’s trademark and its ad says ‘Come check out Walmart, we’re better than Target,’ that’s permissible fair use. But if the ad says ‘Come check out Target, click here,’ but the consumer really arrives at Walmart’s site, I have a problem with that, because a company is piggy-backing on someone else’s trademark,” he said.

Handling a dispute

The best advice for handling this type of dispute is to contact the search engine or the opposing company.
“Ninety-eight percent of the time, writing to Google or to the other side will take care of it,” said Boston attorney Douglas Wolf, who co-chairs the trademark group at Wolf, Greenfield & Sacks.
Every search engine has developed its own policies and complaint procedures regarding keyword advertising.
Google, for example, will take down an ad if a trademark owner complains that its trademark is being used in the text or title, said Walton.
“But Google is not going to do anything if the trademark is used as a trigger word,” and is not visible in the ad copy, he noted.
Yahoo, Microsoft and other search engines have their own policies and lawyers should familiarize themselves with their rules and complaint procedures.
Contacting the other side or sending a cease and desist letter can often nip a problem in the bud.
“Maybe they grabbed a little of our goodwill, but we don’t go down the path of demanding money if they are willing to cooperate,” said Wolf.
One grey area is that some search engines sell “broad matching” keyword advertising as an option.
“If I buy the word ‘shoes,’ then anytime anyone types in ‘shoes,’ they show my ad. In broad matching, if someone types in additional words – like ‘Manolo Blahnik shoes’ – my ad will appear,” said Wilcox.
If a company sees a competitor using its trademark this way, “give them a nudge, and tell them to turn off the broad matching,” she said.

State laws

A few state legislatures have weighed in, and that trend may continue.
Utah passed a broad and controversial law prohibiting the purchase of trademarks that also created a state trademark registry. But after intense opposition it was repealed. A narrower law remains on the books that prohibits adware software vendors from using trademarks to trigger pop-up ads, said Goldman.
Alaska also has an anti-adware statute on the books, even though it has not been enforced, he noted.
In addition, the trademark litigation committee of the ABA’s Intellectual Property Section is in the process of drafting two resolutions: one that says keyword advertising is a “use in commerce” for infringement purposes, and one that says it is not.
The committee may get a vote on the resolutions as early as this summer at the annual meeting in New York in early August, said Michael Potenza, an attorney with Debevoise & Plimpton in New York who co-chairs the committee.
The bottom line is that “this issue is not going away,” said Goldman.
Newer advertising models are already burgeoning that will deal with similar issues, such as advertising on cell phones or sponsored ads for direct feeds, said Bird.
“Technology is changing so quickly and advertisers are capitalizing on those. But the law is behind,” she said.