PPC Keyword Litigation’s Legal Landscape

indi.rooney Sep 21, 2015

BrandVerity welcomes guest blogger Eric Misterovich from Revision Legal, PLLC.

Do not try to sue a competitor that’s bidding on your trademark(s) as pay-per-click keywords. Seriously, just don’t do it. It’s tempting and we get that, but while victory may seem imminent and even justified, actual instances of plaintiffs winning such cases are exceedingly rare. And recent court rulings will make those instances all but extinct.

Trademark Law’s Dual Protection

While this may sound blasphemous to trademark owners, it is important to remember that trademark law serves to protect both trademark owners and consumers. J Thomas McCarthy, author of the most prominent legal treatise on trademark law, describes the duality as follows:

To select as paramount either protection of the trademark property or protection of consumers would be to oversimplify the dual goals of trademark law, both historical and modern. Trademark law serves to protect both consumers from deception and confusion over trade symbols and to protect the plaintiff's infringed trademark as property. Both Congress and the Supreme Court in modern times have stressed that trademark has these two goals.

1 McCarthy on Trademarks and Unfair Competition § 2:2 (4th ed.).

While elements to trademark infringement vary by jurisdiction, the three main elements always present are:

  1. ownership of a valid trademark by plaintiff,
  2. an unauthorized use of the mark by defendant, and
  3. a likelihood of consumer confusion by defendant’s use of the mark.

When courts apply the likelihood of confusion test (the third element) during trademark infringement litigation, they are focusing much more on consumer protection than the property rights of the trademark owner. If consumers are not confused by use of the mark, courts are reluctant to hold infringers liable and give trademark owners a de facto monopoly over the mark.

Where is the Confusion?

It is the likelihood of confusion test that has all but removed keyword advertising lawsuits from a trademark owner’s toolkit. The test varies by jurisdiction as well, but the seminal case concerning online advertisers, Network Automation, Inc. v. Advanced Systems, Concepts, Inc., highlighted four main factors courts should consider in these cases, and other courts have followed suit. 638 F.3d 1137 (9th Cir. 2011). The factors are:

  1. the strength of the mark
  2. evidence of actual confusion
  3. the labeling and appearance of the advertisements, and
  4. the degree of care likely to be used by the typical purchaser.

Of these four factors, evidence of actual confusion appears to be most important to reviewing courts.

In a more recent decision, the Tenth Circuit further reduced plaintiffs’ ability to prevail in PPC lawsuits. In 1-800 Contacts, Inc. v. Lens.com, Inc., the Court held that in order to show a likelihood of confusion (or technically in this case “initial interest confusion”), evidence of actual confusion must be shown, and click-through rates (CTR) can serve as such evidence.

Using the evidentiary standard of consumer surveys (the standard way to show actual confusion) the Court held that any CTR below 10% on an ad connected to a specific keyword would eliminate an actionable claim. The problem with that decision is that a CTR above 10% is unheard of, so almost no trademark owner will ever be able to show actual confusion and therefore will never be able to recover in an infringement action based on a competitor bidding on its trademark.

This is all grounded in protecting the consumer. If courts do not believe that users are being confused by search results, they will not “overprotect” the trademark owner by giving it the sole right to its trademark as a search term. The 1-800 Contacts court saw no evidence that users searching “1800 contacts” and seeing lens.com in the search results would be confused into thinking lens.com was either part of 1-800 Contacts, or associated with it in some other way. Whether or not you agree, the growing case law featuring identical reasoning is making it impossible to win these cases.

How to Combat Misuse of Your Trademarks in PPC Campaigns

The most effective form of protection, from both a cost analysis and results approach, is to rely on the advertising platform’s rules regarding trademark infringement. For example, the Google Adwords Trademark Infringement Policy gives trademark owners plenty of ammunition to protect their brands.

Consistent with the explanation above, Google Adwords’ Policy does not cover bidding on trademarked terms as keywords. However, it does prohibit some uses of trademarked terms in ad text in certain situations. And this is where things can get a bit more complicated. Many questions arise:

  • How is the trademarked term being used within the ad text?
  • What landing page does the ad link to?
  • Is a reseller using the trademarked term?
  • Does that reseller have permission to do so?
  • What countries are these ads targeting and what law applies there?

All of these factors weigh into whether Google will listen to your trademark complaint. And as you can see, if you are not monitoring what is happening, you have no ability to even start protecting yourself.

Further, Google Adwords will not investigate the use of trademarked terms within a Display URL, even though this may form a cause of action under the Uniform Domain Name Dispute Resolution Policy (UDRP) or the Anticybersquatting Consumer Protection Act (ACPA).

This is when services such as the ones provided by BrandVerity are a good start to protecting your business. First, monitoring what is happening is the first step in knowing the extent of the problem you are facing. Second, BrandVerity’s ability to communicate with the advertising platform may provide the quickest, most cost-efficient resolution.

Conclusion

While keyword-based litigation is not a wise use of resources, understanding and protecting your PPC advertising remains a valuable tool in any marketing budget.

About the Author

Eric Misterovich is an attorney with Revision Legal, an intellectual property and Internet law firm. To understand more about trademark law, get a free copy of Revision Legal’s Asked and Answered: Trademark law ebook here.

Topics: Trademark and Law, Paid Search, Trademark Bidding

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