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Posted: September 11, 2013

A fool’s bargain: Part 1

Should you sue over keyword advertising?

Peter Lemire

One thing is guaranteed; the law will always lag technology. That’s just the way it is. However, eventually the law catches up and usually comes up with the right result.

Such is the case with paid search advertising such as Google Ad-words. In case you have been living under a rock for the past decade, paid search advertising is where a company purchases web-based advertising that is triggered by users typing certain keywords into a search engine.  When the user types in their query, the search engine will display the paid ads in addition to the organic search results. The ads generally contain a few lines of text and will have a link that directs you to the advertiser’s website.

Advertisers pay per click and the dollar amount paid, as well as the order in which the ads are displayed, are determined through a bidding system. One of the most common practices and thus far controversial practices is to bid on competitor’s names as keywords. Recent decisions have indicated that while this practice may be annoying to trademark holders, such activities are not a violation of trademark law.

Our firm is involved in one of the most recent and broadest reaching decisions in this area in the case of General Steel Domestic Sales, LLC v. Chumley, 2013 WL 1900562 (D.Colo. May 7, 2013).  Since the case is still ongoing with post-trial activities, specific comments on it cannot be made here, but it is available to read.The case represents the continuing evolution in the law and acknowledges that as a society our use and understanding of technology is also an evolutionary process and as consumers in the marketplace our sophistication also increases as technology advances.

When dealing with keyword advertising, they basically come in two flavors: 1) cases in which an ad is trigger by a keyword that utilizes a competitor’s trademark, but does not mention the trademark in the text and 2) one in which the person is so brazen (insert sarcasm) as to use the trademark as a keyword and mention the trademark in the ad text.  In the past there have been decisions regarding merely using a competitor’s trademark to trigger an ad, but very few cases dealt with using a competitor’s trademark in the ad itself.

Before delving specifically into Keyword advertising it is probably helpful to discuss what trademarks protect and how trademark infringement is judged.  Trademarks/Service Marks are words, logos, colors, sounds or product packaging or product designs that identify the source of goods or services in commerce. 

Essentially, trademarks are brands. In recent years there has been a lot of confusion amongst trademark owners about what these rights actually cover. We have seen an increasing rise in what is commonly called trademark bullies. These are individuals or companies that take an overly broad and often time unjustifiable position concerning the breadth of their rights. A lot of times trademark owners feel as if they “own” words, phrases or symbols and that no one can ever use the same or similar marks – ever. 

Contrary to these positions, trademark law does not solely exist for the benefit of the trademark holder. In fact, the thrust and most important aspect of trademark law (as recited by courts) is to prevent consumer confusion about the source or sponsorship of goods or services. While protecting the value that companies have built in a brand is also a stated objective to trademark law, it is secondary to preventing confusion amongst the consuming public.  Trademarks are an exclusionary right, meaning that a trademark owner can prevent others from using a mark that causes confusion amongst consumers as to the source, sponsorship or endorsement of the goods or services in question. If there is no confusion or a likelihood of confusion, then there is no trademark infringement.

In a trademark infringement analysis courts look at a variety of factors.  Courts may express them in different ways but mainly they all include: 1) how close are the marks in question; 2) how close are the goods and services; 3)how similar or dissimilar are the trade/marketing channels; 4) what was the alleged infringer’s intent in adopting the mark;  5) is there significant actual confusion between the two marks in the market place; 6) what is the relative sophistication of the purchasers/ how expensive are the goods and services in question.  As you can see, certain prongs are going to change as society changes (trade and marketing channels, sophistication of purchasers etc.).  Therefore, as society changes and evolves so does the concept of what trademark infringement is or isn’t.

In the next installment, I will discuss how courts have looked at keyword advertising situations and why the recent trend is to rule against trademark owners.

Peter Lemire is a founding member of the intellectual property law boutique, Leyendecker & Lemire. Leyendecker & Lemire specialize in patents, trademarks and related complex civil litigation. Peter Lemire can be reached directly at 303.768.0641 or peter@coloradoiplaw.com. Visit www.coloradoiplaw.comfor further information, including Leyendecker & Lemire’s weekly blog, “Control, Protect & Leverage.” 

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