Keywords (or adwords or keying) are terms (words or phrases) sold by search engines to advertisers. When an Internet searcher types the keyword into a search engine, an advertisement related to the keyword appears. For example, typing the keyword “patent” might trigger specific ads by Nolo for its patent products. Trademark issues sometimes arise when keywords are trademarks—for example a competitor of Nolo buys “nolo” as a keyword.
The key issue, as with most trademark disputes, is whether consumers are confused and when consumer confusion is not found (which has been the general tendency of courts), the practice is permitted. (Gov’t Employees Ins, Co. v. Google, 330 F.Supp.2d 700 (E.D. 2004).) As a general rule, the trend has been that keyword advertising using competing trademarks is not by itself likely to confuse consumers. The results are not always so clear when more than keyword advertising is involved -- for example, the trademark also appears in the rival's resulting advertisement.
The early cases ...
In a 2004 case, a district court held that consumers were not confused by Google’s sale of the keyword “Geico.” (GEICO v. Google, 330 F.Supp.2d 700 (2004).) However, when a competitor’s sponsored link is triggered by its trademark and also includes the trademark within the sponsored ad – for example, a competitor of Gucci buys the Gucci keyword and includes Gucci in its add—a court is likely to halt the sale. See Romeo & Juliette Laser Hair Removal, Inv. B. Assara I L.L.C., WL 750195 (S.D. NY March 20, 2009)). T
In Rescuecom Corp. v. Google Inc., 562 F.3d 123 (2d Cir. 2009), Rescuecom sued Google over its sale of Rescue.com trademark as a keyword to trigger competitors’ ads. The Second Circuit Court of Appeals permitted the case to go forward because 15 United States Code Section 1127 defines “use in commerce” to include when “displayed in the sale or advertising of services.”
Keywords are not “functional” uses of trademarks
Google is the primary target of keyword ad cases and the Fourth Circuit Court of Appeals chipped away at some of Google’s keyword ad defenses. Prior to 2009, Google prevented companies that purchased competitor’s trademarks as keywords, from using those trademarks in the sponsored ads that appeared on the page of search results. In 2009, Google changed its adword/keyword policy to permit the limited use of trademarks in advertising text in four situations: (1) the sponsor is a reseller of a genuine trademarked product; (2) the sponsor makes or sells component parts for a trademarked product; (3) the sponsor offers compatible parts or goods for use with the trademarked product; or (4) the sponsor provides information about or reviews a trademarked product. Sellers of unauthorized versions of Rosetta Stone language-learning software took advantage of this rule and used “Rosetta Stone” as a keyword/adword and also used the trademark in its ads, even though they were not authorized resellers. The Fourth Circuit held that there was a triable issue of fact as to whether use of the Rosetta Stone trademark in competing ads was confusing. The court also struck down Google’s defense that Google’s use of competing trademarks in a search engine comprised a “functional” (and therefore, excusable) use of a company’s trademark. Rosetta Stone Ltd v. Google, Inc. 676 F.3d 144 (4th Cir. 2012).
Ninth Circuit seeks a new standard in keyword cases
It’s time for a different standard to be used in keyword advertising cases, claimed the Ninth Circuit in a case in which a company purchased a competitor’s trademark – ActiveBatch. Ruling that confusion was unlikely, the Ninth Circuit indicated that Internet users have become sophisticated enough to understand the difference between search results and listings found under headings such as “Sponsored Links.” The Ninth Circuit also held that similarity of the marks, and marketing channels used, were not appropriate factors in keyword advertising cases. Network Automation, Inc. v. Advanced Systems Concepts, Inc., 638 F.3d 1137 (9th Cir. 2011). In another California case, a district court held that confusion was likely when a cookware company used a competitor’s trademark in its domain name, metatags, online advertising, keyword advertising and in YouTube video tags. Partners for Health & Home, L.P. v. Yang, 98 U.S.P.Q. 2d 1462 (C.D. Cal. 2010).