In some businesses it is fairly common and routine practice: buy the competitor’s trademark as a keyword from Google (or other search engines) and show up in search results when the public searches for the competition’s products. Many companies are asking themselves and their counsel: Will we be sued for trademark infringement? Should we do this?

Let’s start first with “Will we be sued for trademark infringement?” Judging from the increased number of court opinions appearing over the last 18 months regarding keywords and trademark infringement, yes, you could be sued for purchasing your competitor’s trademark for keyword advertising. One theory behind the infringement alleges “initial confusion,” meaning “a customer searched for my blue widgets and your red widgets came up. The customer clicked on your red widgets, thinking we were related. Ultimately, the customer bought yours, not mine, even if he knew what he was buying in the end and was not confused at time of purchase.” Initial interest confusion in some respects is similar to false advertising “bait and switch.”

To prove trademark infringement, your competitor must show that the trademark was “in use in commerce” and that there was a “likelihood of confusion.” Courts differ on the first issue: use. Is it “use” to buy a keyword for trademark infringement? Or because the consumer never sees the hidden search, is it not “use”? Regardless of the angle or the steps used to analyze trademark infringement, the courts seem to agree: without visible use of the mark, ultimately, no trademark infringement exists. The circuits differ widely on how to reach this result.

In the Second Circuit, most cases hold that simply buying keywords is not “use in commerce” and cases get dismissed against Defendants. The Second Circuit reasons that

A company’s internal utilization of a trademark in a way that does not communicate it to the public is analogous to an individual’s private thoughts about a trademark. Such conduct simply does not violate the Lanham Act, which is concerned with the use of trademarks in connection with the sale of goods or services…”)1

Here, companies have avoided liability for infringement based on the threshold argument that the keywords did not appear in the sponsored link or in the text associated with the link, and therefore the trademark was not in “use.” Courts considered this “use” “internal” and not “use in the trademark sense.”2 The Second Circuit compares the advertising practice to product placement in stores “where, for example, a drug store places its generic products alongside similar national brand products to capitalize on the latter’s name recognition.”3

In other circuits, most notably the Ninth Circuit, however, the courts find that the purchase of the mark constitutes “use.” Moreover, California does not seem to differentiate between suits among competitors or a suit against Google for trademark infringement: both scenarios pass the threshold “use” requirement.4 The courts then continue on to determine whether this “use” creates a “likelihood of confusion.” Most times, without some proof that consumers were actually confused by the marks or proof that the infringing use was “visible” to the public, the trademark action will not be successful against the defendant.

Google, a frequent defendant in the keywords actions, thus far has managed to avoid liability either because such “use” does not cause “confusion,”5 or because, as a threshold matter, courts find no “use.”6

In the GEICO case, Google avoided partial liability for those searches in which the “Sponsored Links” search results contained no references to GEICO’s marks in their headings or text because GEICO failed to establish a likelihood of confusion for those search results.7 The search results, however, that did reference GEICO or its marks constituted a likelihood of confusion in violation of the Lanham Act.8 For Lanham Act purposes, the Virginia Court drew a distinction between those search results that referenced the claimed mark and those that did not. As a threshold matter, the Virginia court held that allowing advertisers to pay to have their ads appear next to the normal listings that result when the marks are entered as search terms constituted “use in commerce” under the Lanham Act.9

As stated above, to find confusion and thus infringement, Courts seem to require a “use” that can be “seen” by the consumer. For example, in Storus Corp. v. Aroa Marketing, Inc.,10 the court granted Storus’s motion for summary judgment of infringement against lead defendant Aroa, finding initial interest confusion in part because the Google ad began with a mark identical to the Storus mark, underlined, and in a font size larger than that used for any other text in the ad. Such context would cause Aroa’s ad to “divert” consumers to a web site that is not Storus’s website. In contrast, Google defeated part of GEICO’s suit when the court concluded that the “use” could not be seen by the consumer because the mark did not appear in the Sponsored Links but only in the keyword, thus failing to provide any likelihood of confusion.11 The court found, however, that where the GEICO mark appeared in the Sponsored Link, GEICO established a likelihood of confusion and a violation of the Lanham Act.12 Similarly, in Wentworth, the court did not find a likelihood of confusion where the search results returned independent and distinct links, and no allegations existed that defendant’s advertisements and links incorporated plaintiff’s marks in any way.13 Indeed, even in the Second Circuit, visible use in a search result, in contrast to mere keyword purchasing, will survive a motion to dismiss.14

Although the threshold question of “use” remains distinctly different among the circuits, the end analysis and result appear to be the same nationwide. To support a finding of a likelihood of confusion and hence a trademark violation, the use of the mark must be visible to the consumer.

Companies might conclude, then, that purchasing their competitor’s keywords is “safe” as long as their competitor’s mark is “unseen.” The reality is, however, that buying the keywords may lead to a suit, which can cost time and money, even if ultimately you defeat the suit. But not buying the keywords, particularly if you suspect your competition is buying yours, could also cost you time, money and potential customers. Ultimately, the decision to buy or not to buy (or to sue or not to sue if your competitor is showing up in your search results) should be based on the factors influencing your business, the law of your circuit and the circuits where you do business, and the risks you face. An attorney well versed in this area of the law can help you decide which path to choose.