Can I Use a Competitor’s Trademarked Words in Keyword Advertising?

For many business owners, search term advertising has become a tried and true part of their marketing efforts to obtain new business.  Keyword or Search Term advertising refers to results that appear alongside or above search results in response to terms ("keywords") that a user entered into the search box. 

Sometimes, search results are easily identifiable and labeled as “Ads,” but other times, search results will appear as part of the initial search query, and the order in which they appear is largely connected to dollar amount the business spent on being associated with certain search terms. 

For example, a search for “contact lenses” may lead to paid ads for specific online contact lens retailers followed by or alongside the normal search results for the terms in the search engine. 

Typically, linking the results of a users’ query to your business does not pose any problems when you have chosen generic, everyday words that are associated with your brand or product. Where an issue may pose problems in terms of keyword searches is when you designate a registered trademark as part of the keywords that automatically link to your website or product (see 1-800 Contacts Inc., v. Lens.com, Inc.) and/or you use a trademarked term in your advertisement. 

What Are the Rules?

In such cases, business owners should tread carefully to avoid any trademark infringement lawsuits. 

In an action for trademark infringement, the Plaintiff (typically, the Trademark owner), must show four elements. That the Plaintiff:

1. Owns a valid trademark,
2. Has prior rights in the trademark,
3. The Defendant used the Plaintiff's trademark in commerce in connection with the sale of goods or services, and lastly
4. That the Defendant’s use of the Plaintiff’s mark causes a likelihood of confusion about product source, or affiliation with the Plaintiff. 

Since 2009, all federal district courts have held that the purchase of another party’s trademark as a keyword to trigger an advertisement constitutes “use in commerce.” The main question, therefore, is whether such a use is likely to cause confusion as to the source or affiliation of the good or service.  In some circumstances, courts have found the advertisers (ie. Businesses) that buy trademarked keywords liable for infringement. 

What Does the Court Consider?

To determine liability, courts usually consider four main factors:

1. The strength of the mark,
2. The evidence of actual confusion,
3. The type of goods and degree of care likely to be exercised by the purchaser, and most importantly
4. The labeling and appearance of the advertisements and the surrounding context on the web page.

The most important factor, however, is the context and content of the keyword advertisement. The context of the ad is viewed in terms of the results page architecture: are paid ads differentiated from unpaid search results?

If yes, then consumers are more likely to understand that ads may come from sources other than the trademark owner, even if they used the trademark as a search term in the first place. The content of the ad is also extremely important. The following examples illustrate what is and what is not acceptable: 

Example 1: CollegeSource Inc., v. AcademyOne Inc.

AcademyOne bought the keyword “CollegeSource,” which was its competitor’s trademark, to be linked to its own website in search results

Advertisement

AcademyOne’s ad appeared when a user typed in “collegesource” into the search engine, but its ad, which appeared at the top of the results page, only included “College Transfer Help” or “Find Transfer Information” and the domain name “collegetransfer.net.” The ad itself did not include CollegeSource’s trademarks. 

Ruling

No Infringement. The Court stated that AcademyOne’s ads were clearly presented to consumers in light of “the entire context of the advertisement’s appearance, especially the clearly differentiated [Sponsored Link] text boxes and the fact that CollegeSource’s name does not appear within the language of AcademyOne’s advertisement.”

Example 2: General Steel Co., v. Armstron Steel Co.

Armstrong Steel bought its competitor’s, General Steel, trademark “General Steel” to use in keyword searches and also used it in its advertisement.

Advertisement

“Don’t Buy General Steel Without Pricing Armstrong First. Price a Steel Building in Minutes! www.ArmstrongSteelBuildings.com”

Ruling

No Infringement. The Court said that “While Armstrong was using the term to refer to plaintiff’s company, the Court does not find the record supports the finding that such use was likely to cause confusion among consumers in light of all of the surrounding information that identified Armstrong Steel as the source of the website and distinguished Armstrong Steel from General Steel."

Example 3:  CJ Products LLC v. Snuggly Plushez LLC

Snuggly Plushez bought the trademarked term “Pillow Pets” to use in keyword search results and used the registered trademark of CJ Products in its advertisements.

Advertisement

“Official PillowPets.CO- Soft Chenille Plush Pillow Pets Low Prices, New Styles Now in stock www.pillowpets.co”

Ruling

Infringement. The Defendant used the trademark in its ad and built its business name and website around its competitor’s trademark.  Additionally, because Snuggly Plushez created knock-off versions of the Plaintiff’s “pillow pets,” the Court found actual confusion created by the Defendants, instead of the likelihood of confusion.

In the end, buying trademarked keywords may or may not constitute infringement—liability largely turns on the content of the advertisement. 

The main points you should take away are:

1. If you are using a competitor's trademark in a keyword search, try to make your ad or web page link  as distinguishable as possible from your competitor, so that users are clear they are not visiting your competitors website.
2. Try not to use your competitor’s marks or business name in your ad, but if you do, only do it to compare and
3. Clearly identify the source of the ad by including your company name in the ad. 

Although most keyword lawsuits fail (they are rarely worth the litigation costs), always consult with an experienced Trademark attorney to go over your possible risks and ad strategies.