Key Trademark Infringement Principles Marketers Need to Know

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. 

How sophisticated are your consumers? Customer sophistication often plays a significant role in the likelihood of confusion analysis. An advertisement may create a likelihood of confusion where it relates to a low-price consumer impulse product, whereas the same advertisement may not create a likelihood of confusion for a pricier business-to-business product. For example, in Select Comfort Corp. v. Baxter, the Eighth Circuit discussed how the level of sophistication among web-based mattress purchasers could be critical to the likelihood of confusion analysis under an initial interest confusion theory.

Does the website linked to the ad clearly identify the advertiser as the source of the goods or services? Courts have found that an advertiser’s failure to name itself as the source may indicate that the advertiser intends to confuse consumers. Intent to confuse can weigh heavily in favor of infringement liability in the likelihood of confusion analysis. For example, the Fifth Circuit found that the generic nature of a defendant’s advertisements enhanced, rather than dispelled, the likelihood of confusion.

Are there any instances of actual confusion? As with intent to confuse, instances of actual consumer confusion weigh heavily in favor of trademark infringement. For example, in Rosetta Stone v. Google, the Fourth Circuit held that the district court should not have ruled in favor of the defendant where the record included evidence of both survey and anecdotal evidence of actual confusion.

These questions are not exhaustive, nor do they all need to weigh in favor of liability. Instead, by balancing the answers to these questions, trademark owners can make a preliminary assessment of a trademark infringement case to inform whether to seek relief for a third party’s use of their trademarks in keyword advertising. 

If the analysis outlined above suggests that an advertisement has infringed on your trademark, the first step may be to contact the search engine. For example, although Google allows advertisers to purchase their competitors’ trademarks as keywords, its advertising policies include restrictions on using trademarks in ad text. A trademark owner may submit a complaint through Google’s online form. Upon receipt of a complaint, Google will investigate and, if the advertisement violates its policies, Google will remove it. 

Although contacting the search engine can be a helpful starting point, the process can take some time, and the search engine will not mediate disputes if there is a disagreement over whether the ad copy violates the trademark owner’s rights. Accordingly, trademark owners should consider having legal counsel send a cease and desist letter to the advertiser. Many advertisers will agree to make changes upon receipt of a formal cease and desist letter, and the letter is often an important step in negotiating an amicable resolution.

Third, if the advertiser refuses to discontinue its activities, the trademark owner may file a lawsuit for trademark infringement. The trademark owner may use the cease and desist letter in the infringement proceedings to show that the advertiser was on notice of the claim and willfully disregarded the trademark owner’s rights. In some cases, this and other evidence of egregious misconduct can persuade a court to award three times the actual damages and attorney fees to the trademark owner.

Finally, some trademark owners may wish to pursue claims against the search engine that hosts the infringing advertisement. In both Playboy Enterprises v. Netscape Communications and Rosetta Stone v. Google, the courts suggested that search engines can be held liable for trademark infringement in certain contexts based on their keyword advertising practices. Most search engines, however, have adapted their keyword advertising policies based on the guidance outlined in prior decisions. Therefore, suits against search engines are unlikely to be successful. 

The case law addressing trademark infringement in keyword advertising is continuing to evolve and some of the applicable principles vary by jurisdiction. Nonetheless, by following the steps outlined here, trademark owners can put themselves in the best position to stop unlawful use of their marks and fulfill their duty to police.