We all know how to use Google. Type in what you want and *boom,* you’re able to access thousands of results, with the most relevant information on the first few pages. Right?

Well, with the rise of paid internet advertising, companies have started to sneak their way into the top of your search results. Companies can purchase “keywords” so that their ad pops up if you type in something containing that keyword.

This can be a viable tool – but what happens if someone else buys the keywords of your trademarks? Or, what happens when a company buys their competitors’ trademarks as keywords so that the they appear ABOVE the actual company? We’re going to try our best to unpack and answer these questions.

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Question 1: What happens when a trademark is used in a direct comparison?

Example Ad: Tri-Star Nachos have 30% more disodium inosinate than Doritos®. Yum!

 

 

 

 

Answer: Generally allowable in U.S. if the comparison is true and not misleading.

Under U.S. law, comparison advertising, if truthful and not deceptive, is legal and does not infringe trademarks in most cases. The FTC believes truthful, nondeceptive comparison advertising provides consumers with important information and allows them to make rational decisions.

For example, Nabisco decided to launch a new candy that would directly compete with one of August Storck K.G.’s Werther’s Originals. Nabisco chose packaging for its LifeSavers Delites that bore the message “25 percent lower in calories than Werther’s Original Candies.” Storck sued, but the Seventh Circuit found in Nabisco’s favor. The court reasoned that consumers would not be confused since the claim was accurate, informational, and simply highlighted the distinctions between the products. Additionally, the trademark was reproduced accurately, and Nabisco did not imply any endorsement or sponsorship by its competitor. (See August Storck K.G. v. Nabisco, Inc., 59 F.3d 616 (7th Cir. 1995).)

However, competitors have inevitably crossed lines using comparison advertising that courts have not allowed. For example, even if the advertising is truthful and non-deceptive, courts will not find such comparison advertising okay if the competitor’s trademark is altered or negatively portrayed.

For instance, the Second Circuit negated the use of the famous deer silhouette logo associated with John Deere products by a competitor who altered the logo without permission in a comparison ad. The comparison ad showed the altered, smaller deer appearing to run away in fear from one of the competitor’s tractors and a barking dog. The court found that consumers would likely attribute unfavorable characteristics to the mark and possibly associate it with inferior products. The court noted that using the deer logo to compare the two products might have been lawful, but the alteration of the logo and its use in this manner could confuse consumers and dilute John Deere products. (See Deere & Co. v. MTD Prods, Inc., 41 F.3d 39 (2nd Cir. 1994).)

Thus, a trademark used in direct comparison is generally allowable if truthful and not misleading. BUT you can’t go overboard by altering logos or confusing consumers.

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Question 2: What happens when a trademark is used as a keyword tag for a marketplace?

Example Ad: A shabby chic Etsy® marketplace called Shictsy uses in its profile keywords “restoration hardware,” “restoration hardwear,” and “restoration hrdwr.”

Answer: Generally allowable when keywords are hidden.

1-800 Contacts, Inc. v. Lens.com, Inc., 722 F.3d 1229 (10th Cir. 2013)

Since 2009, all federal district courts have found that purchasing another company’s trademark to use as a keyword in advertising is a use in commerce. As a result, cases largely depend on whether or not consumer confusion is a factor.

To determine liability, courts usually consider the strength of the mark (which we elaborate on here), the evidence of actual confusion, the type of goods and the degree of care purchasers would likely exercise, and the appearance of the advertisements, how they are labeled, and the surrounding context on the web page. (See, for example, Network Automation Inc. v. Advanced Sys. Concepts Inc., 638 F.3d 1137 (9th Cir. 2011).)

In Network Automation Inc. v. Advanced Sys. Concepts Inc. (638 F.3d 1137 (9th Cir. 2011)), the court determined that using a competitor’s trademark as an internet search advertising keyword did not constitute infringement. The Ninth Circuit found these factors relevant: the strength of the mark, evidence of actual confusion, the type of goods and degree of care exercised by consumers, and the appearance of the advertisements and their surrounding context on search engine results. The court also found that the type and cost of the products mattered. Consumers seeking to purchase expensive products such as software packages were likely to exercise a higher degree of care. The court reasoned that since the products were competing goods, the defendant was simply providing consumers with information about a comparable product.

Courts view the context and content of the keyword advertisement as the most important factors. The context of the ad is viewed in terms of the results page. Basically, are paid ads differentiated from unpaid search results? If they are, consumers would likely assume that the ads may come from sources other than the trademark’s owner and thus not be confused. While context proves important, liability often depends on the ad’s content.

Unauthorized use of another’s trademark in search engine keyword purchases will generally survive an infringement challenge if the trademark owner cannot persuade the court that consumers are likely to be confused.

If you are going to use a competitor’s trademark in your search terms, try to make your ad as distinguishable as possible so consumers are clear about the source of the product or service. Be sure you include your business’ name in the ad. Do not use a competitor’s trademark in your ad unless it is to make a very clear comparison. Any use of a competitor’s trademark in what could be construed as a deceptive manner will be likely to be viewed as infringement. You don’t want that.

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Question 3: What happens when a trademark is used directly in the language of an online ad?

Example Ad A:

(A) Shictsy decides to run a Google ad as follows: “Restoration Hardware – www.etsy.com/shictsy.”

Example Ad B:

(B) Shictsy decides to run another ad as follows: “Restoration Hardware Sold Here – www.shictsy.com.”

 

Answer A:

Probably not likely to cause confusion as most viewers would recognize that Etsy is not a marketplace where retail organizations like Restoration Hardware operate.

Network Automation Inc. v. Advanced Sys. Concepts Inc., 638 F.3d 1137 (9th Cir. 2011); College Network v. Moore Publishers, 378 F. App’x 403 (5th Cir. 2010).

Over the years, trademark owners have sued both the search engines that sell their trademarks as keywords and the competitors who buy those keywords. An example of the trademark owner going after the search engine occurred in Multi Time Mach., Inc. v. Amazon.com, Inc., 804 F.3d 930 (9th Cir. 2015). The plaintiff trademark owner did not sell its products on Amazon. If a potential customer used the trademark in a search on Amazon, a list of the plaintiff’s competitors’ products came up. The district court granted summary judgment for Amazon, and the Ninth Circuit upheld the decision. The Ninth Circuit noted that a consumer accustomed to online shopping would not reasonably be confused as to the source of the goods being offered in the search results.

No court has found for the plaintiff when the claim is based on the use of trademarks as keywords alone. But this is not the result if the keyword advertising is combined with the use of the trademark in other ways such as domain names or within the text of the advertisement. One defendant found this out when the company bought a competitor’s trademark as a keyword and then registered a domain name using the trademark. (See Digby Adler Grp. LLC v. Image Rent a Car, Inc., 79 F. Supp. 3d 1095, 1102 (N.D. Cal. 2015).)

Basically, trademarks do not provide their owners with an absolute right to preclude all use to the mark. The trademark owner suffers no harm if consumers are not confused about the producers of goods in the marketplace. Even us attorneys experience the use of keyword advertising in our firms; the bottom line is a consumer expects to find multiple law firms and attorneys listed when using a single attorney or firm in an online search. It’s the name of the game in today’s marketing environment.

One factor courts examine is trade channels. In the example above with Etsy and Restoration Hardware, most courts would find the trade channels were totally different, which leans in favor of the defendants in such cases. Let’s move on to that second example where Shictsy ran the ad “Restoration Hardware Sold Here – www.shictsy.com.

 

Answer B:

(B) Possibly would cause confusion as even sophisticated Internet users could be misled into believing the retailers are affiliated.

(See Gen. Steel Domestic Sales, LLC v. Chumley, No. 10-cv-01398-PAB-KLM, 2013 WL 1900562 (D. Colo. May 7, 2013); Allied Interstate LLC v. Kimmel & Silverman P.C., 2013 WL 4245987 (S.D.N.Y. Aug. 12, 2013).)

Some courts have found that confusion may be likely if even seasoned Internet users could be misled into believing two retailers may be affiliated with one another. In Gen. Steel Domestic Sales, LLC v. Chumley (No. 10-cv-01398-PAB-KLM, 2013 WL 1900562 (D. Colo. May 7, 2013)), the court held the defendant’s use of the trademark to trigger sponsored link ads was okay and simply evidenced the strength of the plaintiff’s mark. But the court ruled against the defendant on the false advertising claims. This just further emphasizes that using trademarks as keywords is generally okay, but companies need to tread carefully when using competitor trademarks.

Where real problems arise is when a company implies falsities that the average consumer could believe. Then, courts may automatically presume likelihood of confusion. (See Cashmere & Camel Hair Mfrs. Inst. v. Saks Fifth Ave., 284 F.3d 302, 316 (1st Cir. 2002).) In Example B, when the ad reads “Restoration Hardware Sold Here – www.shictsy.com” – it has crossed that threshold of consumer confusion. The company would be better off rethinking the wording to err on the side of caution.

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Question 4: What happens when a trademark is used to develop a sure-fire response to a voice command question?

Example:

The cover band Numford & Sons prepares for its 80’s cover tour “I know you are but what am I” by commissioning a local high schooler to promote its tour as the first response to the question “when is Mumford & Sons playing near me?”

Answer:

Likely depends on likelihood of confusion independent of textual presentation to the consumer.

Courts have not yet dealt with the issues involved with voice recognition search devices as opposed to traditional online search engines. The sales of these devices have grown exponentially in recent years. Google has categorized searches on these devices as micro-moments where users want to know, want to go, want to do, or want to buy. The majority of these searches are local in nature, so it becomes really important to use terms of locale within search keywords.

Voice searches are usually more conversational in nature, so advertisers must think through natural language keywords. Since they are more conversational, voice search queries are usually longer than keyword search queries. Businesses should pay careful attention to what people who call the business ask when they are seeking information about the business. Often, within those consumers’ questions are keys to good search language to use in keywords designed for voice-first devices. Thus, searches for “best security camera” will now become “what is the best, small security camera that will work with my cell phone and send me alerts when motion is detected.”

Companies could claim consumers are more likely to be confused since they would only hear a handful of results chosen by searches that use artificial intelligence. However, these voice devices usually send results on the user’s phone, so the consumer would see other possible products, and confusion would seem to turn on the same things involved in an online search.

With these types of searches, companies could also claim more possible dilution could occur when competitors use their trademarks. Although the dilution doctrine does not require consumer confusion, defendants have routinely defeated dilution claims for competitive keyword advertising in online searches. (See for example, Allied Interstate LLC v. Kimmel & Silverman P.C., 2013 WL 4245987 (S.D.N.Y. 2013); Designer Skin, LLC v. S&L Vitamins, Inc., 560 F. Supp. 2d 811 (D. Ariz. 2008); or Nautilus Group, Inc. v. Icon Health & Fitness, Inc., 2006 WL 3761367 (W.D. Wa. 2006).) However, at least one court has found potential dilution even when a generic term was involved. (See Scooter Store, Inc. v. SpinLife.com, LLC, 2011 WL 6415516 (S.D. Ohio 2011).) It remains to be seen how courts will view the use of trademarks in voice searches.

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Overall, marketing has evolved from magazines and billboards to online ad placement, SEO, and keywords – and it’s trending toward even more recent developments like voice recognition search. In order to adapt, businesses need to formulate a strategy that will give them an edge over competitors without crossing that consumer confusion threshold. The important takeaway is to know your customer and identify how they are finding you.

If you decide to pursue an aggressive strategy (i.e. using competitor keywords), then it may be worth your time to seek business counsel in order to avoid costly litigation. Be informed, know your target customer, and seek help if necessary. Hey Google, post “4 Legal Things to Know When Making Digital Ads” on www.venturelaw.org.

 

Kevin Christopher

Author Kevin Christopher

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RVL® is a business, intellectual property, and technology firm, building today’s companies for tomorrow’s economy.