AdWords Trademark Infringement Claimed

Google AdWords advertisements that use a competitor’s trademarked name as keywords are not necessarily an infringement of the mark – much to the consternation of the companies that own established trademarks.  Rather a Court most likely will apply a traditional likelihood of confusion analysis in judging whether this type of advertising is trademark infringement.

A federal judge sitting in the Eastern District of Pennsylvania recently held that AcademyOne, Inc. had not infringed the trademarks of its larger, more established competitor when it bought Google AdWords on the works “collegesource” and “career guidance foundation.”  CollegeSource, Inc. v. AcademyOne, Inc., Civil Action No.: 10-3542 (E.D.Pa. Oct. 25, 2012).

Keywords in Internet Advertising

Internet advertising using the name of a better known competitor as a keyword is not uncommon.  The technique permits the smaller company to have its Internet advertisements appear directly alongside the larger competitor as an alternative source.  Of course the owners of established marks would like to prevent it entirely and can be aggressive in pursuing trademark infringement claims that seek to prevent the practice.  The claims can be difficult to make, however, as the Collegesource case demonstrates.

We begin briefly with an explanation of Internet advertising based on keywords.  Advertisers can buy advertisements based on keywords.  Most of the time, the advertisers make a bid for the keyword.  These ads are usually pay per click (PPC) – the advertiser pays the “click” price when the ad is clicked – or pay per impression (PPI) – in which the advertiser pays a set rate per 1,000 impressions.  Keywords are based on their effectiveness and ability to generate sales.

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Trademark Protection in PPC Campaigns

Just as an example, “trademark infringement attorney” has a relatively high estimated cost per click of $10.57 on Google AdWords.  (That’s the estimated price to be first on a page of search results.  There are a whole host of other factors involved in pricing and placement which is beyond this article.)    So if I want to be at the top of the first page of search results as a sponsored ad when someone searches “trademark infringement attorney,” I just have to set my bid high enough and all things being equal I should be appear prominently on the page.

Now let’s suppose that I want to buy an ad that appears when someone searches for my competitor’s name.  Let’s say that I am selling a low-sugar alternative to carbonated soft drinks.  I buy advertisements based on the keywords “Coke” and “Pepsi” and run an a d that says “Better that Soda.”  That might well be a legitimate use of the competitors’ marks as keywords.

There may be any number of reasons why an advertiser wants to use a competitor’s mark.  Some of the uses are legitimate, others are not.  For example, it’s generally appropriate to use the name mark of a competitor for the purpose of comparative advertising.  On the other hand, bait and switch techniques are likely to constitute trademark infringement.

In the Collegesource litigation, the smaller competitor AcademyOne bought advertisements using the keywords “college source” and “career guidance foundation”

Protection for Trademark Owners in PPC Campaigns

CollegeSource alleged that it owned the marks and that the use without their permission was infringement.  CollegeSource and AcademyOne are competitors in college information services such as in providing access to course catalogs and transfer information.  The two companies have been in litigation now for several years in the federal courts in both Pennsylvania and California.

To establish trademark infringement, the Collegesource court held, the plaintiff must show that it owns the contested mark, that the mark is valid and legally and protectable and that the alleged infringing use is likely to create confusion about the source of the product or service.

Analysis of Trademark Infringement Claims

Courts considering a claim of likelihood of confusion use a series of factors.  In the Third Circuit, the factors are taken from the decision of Interpace Corp. v. Lapp, Inc., 721 F.2d 460 (3d Cir. 1983) and are known, not surprisingly as the Lapp Factors:

(1) the degree of similarity between the owner’s mark and the alleged infringing mark; (2) the strength of the owner’s mark; (3) the price of the goods and other factors indicative of the care and attention expected of consumers when making a purchase; (4) the length of time the defendant has used the mark without evidence of actual confusion arising; (5) the intent of the defendant in adopting the mark; (6) the evidence of actual confusion; (7) whether the goods, though not competing, are marketed through the same channels of trade and advertised through the same media; (8) the extent to which the targets of the parties’ sales efforts are the same; (9) the relationship of the goods in the minds of consumers because of the similarity of function; (10) other facts suggesting that the consuming public might expect the prior owner to manufacture a product in the defendant’s market, or that he is likely to expand into that market.

In an Internet advertising case, four of those factors are most important, the court held, relying on a decision from the Ninth Circuit Court of Appeals, Network Automation, Inc. v. Advanced Systems, Concepts, Inc., 638 F.3d 1137 (9th Cir. 2011).  These are the strength of the mark, evidence of actual confusion, the labeling and appearance of the advertisements and the degree of care likely to be used by the typical purchaser.

The court found that the marks were strong, but that there was little showing of actual confusion or that the advertisements themselves were likely to mislead the user.  AcademyOne used the marks as triggers, but the text did not appear in the ads themselves.

The Court went on to find that there was insufficient evidence to support the allegation that AcademyOne was trying to capitalize on the plaintiff’s goodwill.  Rather the Court indicated that the use of the mark may properly have been intended to “inform” consumers about alternative sources.

The net result of the Court’s analysis was that the fact that a trademark is used as a “trigger” is probably not sufficient to make out a claim of trademark infringement.  Thus, where a mark is sufficiently well known and used directly as a search term it may not be easy to prevent competitors from trying to capitalize on that search engine traffic.

Collegesource and other similar decisions indicate that the courts will look for something more in a case involving Internet advertising like AdWords that mere use of the mark.  Evidence showing that consumers were actually confused or that the mark was used unfairly – as opposed to without permission – will invariably strengthen the plaintiff’s case.