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Keyword Advertising Quagmire

Posted in Trademark Law

 

By Scott Hervey

“Everyone does it” exclaimed the IT staffer in charge of the company’s website. "Everyone uses their competitor’s brand as a keyword to trigger a paid advertisement."   The company’s chief marketing officer remembers something her mother use to say about jumping off a bridge…but that’s not important right now. They received a letter from a competitor’s lawyer and it’s time to get the company’s general counsel involved.

Over the past 10 years there have been a number of cases in State and Federal courts that have addressed the question of when the use of a competitor’s trademark as a keyword is actionable infringement. For a time the focus was on whether such use was “use in commerce” as required by the Lanham Act. Some courts held that there was no use in commerce when the competitor’s mark was used as a keyword to trigger an advertisement but the mark did not itself appear in the ad copy; other courts held that such use was “use in commerce.”   The debate over whether or not such use is “use in commerce” under the Lanham Act is now dead; most jurisdictions agree that the use of a competitor’s brand as a keyword is “use in commerce.”   The focus is now on whether such use creates a likelihood of confusion.

In Network Automation v. Advanced Systems Concepts, the 9th Circuit advanced a new four factor test for determining likelihood of confusion in keyword cases: i) mark strength; ii) evidence of actual confusion; iii) the type of goods and degree of purchaser care; iv) and the labeling and appearance of the advertisements and the surrounding context on the screen displaying the results page.   

 Addressing these factors, the court noted the strength of the mark is probative of confusion because a consumer searching for a generic term is more likely to be searching for a product category, while a user searching for a distinctive term is more likely to be looking for a particular product, and therefore could be more susceptible to confusion when sponsored links appear that advertise a similar product from a different source. However, the court noted that the sophistication of the consumer may play a role in whether they would be confused. The type of goods and degree of care exercised by consumers is highly relevant to determining the likelihood of confusion in the keyword advertising context.  The court stated that a sophisticated consumer exercising a high degree of care is more likely to understand the mechanics of Internet search engines and the nature of sponsored links, whereas an un-savvy consumer exercising less care is more likely to be confused.

Introducing the fourth and newest factor, the court stated that the labeling and appearance of the advertisements is important and the context in which the ads are displayed by the search engine must also be considered. The court noted:

[E]ven if [the defendant] has not clearly identified itself in the text of its ads, Google and Bing have partitioned their search results pages so that the advertisements appear in separately labeled sections for “sponsored” links. The labeling and appearance of the advertisements as they appear on the results page includes more than the text of the advertisement, and must be considered as a whole.  

So what exactly is the general counsel of our hypothetical company to do? Her first question is whether the company’s advertisement included the competitor’s mark. To her relief, the IT staffer informs her that it did not. In Network Automation, the court made clear that in keyword cases where the defendant’s advertisement does not use the plaintiff’s mark, infringement claims must be limited to realm of “misleading and deceptive” and not expand into legitimate comparative and contextual advertising. 

The general counsel’s research then takes her to Collegesource, Inc. v Academyone, Inc., a recent case in the Eastern District of Pennsylvania that applied the four factor likelihood of confusion test for keywords adopted by the Ninth Circuit in Network Automation. In Collegesource, the court dismissed the plaintiff’s infringement claim because it did not provide sufficient evidence that the defendant’s use of the plaintiff’s trademarks as keywords (and not as part of the defendant’s ad text) was likely to cause confusion. 

The general counsel is feeling much better about the company’s legal position.   In drafting the company’s response, she reminds opposing counsel that in keyword cases consumer confusion is “the linchpin” in determining liability for trademark infringement, and for a claim to be successful a plaintiff must demonstrate likely confusion, not mere diversion. In concluding that there is not a likelihood of confusion, she reminds opposing counsel of the Network Automation court’s discussion of the difference between confusion and diversion: "if a shopper at Macy’s is in route to the Calvin Klein section and is diverted by a prominently displayed Charter Club collection and never reaches the Calvin Klein collection, Charter Club did not infringe Calvin Klein’s trademark by diverting the customer to it with a clearly labeled, but more prominent display.”