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When an advertiser purchases a competitor’s trademark as a keyword, the advertiser’s content may appear in a more prominent position on results pages than the trademark owner’s content.
Of course, any trademark owner desires to stop activity that unlawfully diverts customers to the advertising competitor, but they also have an affirmative duty to police their marks, and they may lose rights to the mark if they fail to do so.
The primary question in any trademark infringement analysis is whether the advertiser’s use of the mark is likely to confuse customers as to the source of the goods or services. This “likelihood of confusion test” is highly fact-intensive and includes several factors, such as the content and context of the advertisement, the strength of the trademark, the sophistication of the target customers, the similarity of the goods and services and any instances of actual confusion.
Some courts also recognize “initial interest confusion” as a basis for trademark infringement, although the authorities are not in perfect harmony on how the theory should be applied to keyword advertising cases. Some courts hold that confusion must continue through the time of purchase for the advertiser to be held liable, while others hold that confusion that simply leads a consumer toward the advertiser’s product is sufficient, even if the confusion is cleared up prior to a purchase. In either iteration, the theory is largely concerned with the advertiser obtaining a “free ride” on the trademark owner’s goodwill.
When a trademark owner discovers that a third party is using its mark in a keyword advertising campaign, the owner often wants to explore strategies to have the advertisement removed. To determine the best course of action, trademark owners should answer four key questions about the third-party advertisement.
Does the third-party advertisement include your trademark? Courts have generally held that an advertiser may purchase a competitor’s trademark as a keyword as long as the resulting ad does not create confusion as to association with the trademark owner. In general, if the resulting advertisement relates solely to the advertiser’s goods and services, it is unlikely to infringe.
If, however, the resulting advertisement includes your trademark or otherwise suggests some connection to your business or your trademark, you will have a much better chance of having the advertisement removed and/or obtaining damages for infringement. For example, a district court in Texas denied a motion to dismiss where a competitor used the plaintiff’s trademark both as a keyword and in the ad copy.