Does the use of Google AdWords amount to the advertising, promoting, marketing, or offering for sale of goods covered by a registered trademark? Tipsy Elves, LLC. vs. Ugly Christmas Sweater, Inc. is the latest in a string of cases to litigate this issue. Google AdWords is an advertising service offered by Google that allows a sponsor to pay to have their advertising material and website link appear more prominently as a result of a search for a particular keyword.
On May 2, 2017 Tipsy Elves, LLC filed a complaint in the Southern District of California against Ugly Christmas Sweater, Inc. based on Ugly Christmas Sweater advertising material that appeared as a result of googling the term “Tipsy Elves”. The complaint alleges various trademark infringement, false designation of origin, and unfair competition causes of action.
According to the complaint, Tipsy Elves has used its mark since 2011 when it began selling holiday apparel on its website www.Tipsyelves.com. Tipsy Elves’ complaint states that its media popularity, including an appearance on Shark Tank, has brought goodwill to its mark. Furthermore, Tipsy Elves claims that Ugly Christmas Sweater also sells Christmas apparel and that the deceptive advertising tactics would be likely to lead to consumer confusion.
Tipsy Elves alleges that Ugly Christmas Sweater used Google AdWords to direct internet traffic away from Tipsy Elves website and to the Ugly Christmas Sweater website. More specifically, Tipsy Elves claims that in December 2016, Ugly Christmas Sweater used Google AdWords to place the sponsored search result and advertisement shown below.
As seen in the reproduction above, the trademark “Tipsy Elves” is used in an online advertisement above a link to Ugly Christmas Sweater’s website. Tipsy Elves claims that the use of the Tipsy Elves mark over the Ugly Christmas Sweater link is likely to confuse, mislead, and deceive consumers. Additionally, they cite the use of the term Tipsy Elves within Google AdWords as a misappropriation of the mark and trading off of its goodwill.
Google AdWords has been the subject of much litigation with over 50 lawsuits in the last decade, with most results being unfavorable for the plaintiff. Google AdWords cases can involve a plaintiff suing Google itself or suing the company utilizing Google AdWords for advertising. However, trademark owners have rarely won in Google AdWords cases.  In one of the more high profile cases, Rosetta Stone Ltd. v. Google Inc., 676 F.3d 144 (4th Cir. 2012), the Fourth Circuit overturned a grant of summary judgment issued by the district court based on a ruling that Google AdWords was not a violation of the Lanham Act. Before the case went any further, however, the parties settled.
The Tipsy Elves case is of particular interest because it differs from Rosetta Stone Ltd. v. Google Inc. in that Ugly Christmas Sweater is being sued directly for trademark infringement instead of Google. Furthermore, the court could reach a split verdict on the issues of the use of the trademark in Google AdWords and the use of the trademark in Ugly Christmas Sweater’s advertising material shown in the box above. For these reasons, the Tipsy Elves case has the potential to provide online advertisers with more guidance about the intersection of Google AdWords and the Lanham Act.