In keyword advertising, search engine providers offer advertisers the ability to specifically target consumers through the sale of advertising space linked to keywords input by consumers as part of their search.
When a consumer enters a particular word or phrase in the search engine, the search engine displays advertisements for the advertiser that has purchased that word or phrase adjacent to the search results. A search for "MP3 player" on Google, for example, might not only display the search results for www.mp3.com (and tens of thousands of other sites), but also generate a "Sponsored Link" for Wal-Mart, advertising MP3 players for sale. In and of itself, this practice is innocuous. However, when companies purchase keywords associated with their competitors (for example, Microsoft purchasing the keyword "iPod" in connection with the sale of its Zune MP3 player), there is a potential risk of trademark infringement.
Generally, trademark law ensures that consumers easily can determine the company that is the source of goods or services being advertised. It is meant to protect against consumer confusion. In order to prevail in an action for trademark infringement, a plaintiff must prove two main elements: the use of a trademark by the defendant "in commerce" and that such use was "likely to cause confusion, or to cause mistake, or to deceive."
Given the potential consequences and loss of sales revenue from this nascent advertising medium, many legal actions have been commenced attempting to stop the practice, including by prominent brands such as GEICO, Google, JR Cigars, American Blinds and Wallpaper, Merck and others.
Despite the number of cases that have been brought to date, whether or not the sale of competitive trademarks for keyword advertising constitutes trademark infringement in the United States remains unsettled. Several courts (notably in the federal districts of New York) have decided that the mere sale of a competitors mark did not constitute "use in commerce," and therefore, the question of consumer confusion is never addressed. Without use in commerce, there is no trademark infringement. However, other courts throughout the U.S. have held exactly the opposite, leading to the possibility of infringement if the court finds a likelihood of confusion.
With the cases falling in both camps, the search engine providers now also are divided on the practice. Microsoft and Yahoo!, on the one hand, have sought to steer clear of possible issues arising from sale of keywords; both have policies that forbid the purchase of keywords that violate the trademark rights of others. Market leader Google, on the other hand, continues to allow advertisers to bid on and purchase trademarks as keywords in the U.S. Google, however, does prohibit advertisers from using the marks in the text of the sponsored links. Google's practice is critical in connection with its legal defense of the practice. Google's argument is that, essentially, even if a court finds that a mark was used in commerce in connection with the purchase of keywords, if the mark is not used in the text of the advertisement, there can never be a likelihood of confusion.
Given all the confusion among the courts, purchasing a trademark as a keyword to trigger search engine advertising is a potentially risky proposition. Although the courts are split, the practice subjects the keyword buyer and the search engine company to a risk of claim for trademark infringement.
Here are some ways to help minimize that risk:
