The Internet has revolutionized how businesses advertise. Search engines have developed highly effective products, such as Google AdWords® (and Keyword Tool), that enable advertisements to be shown to Internet users who enter search terms related to a particular product or even when the user enters a trademark as a search term. Online advertising is now recognized as an essential component of any major advertising campaign. But this new advertising strategy faces an uncertain legal landscape, third parties’ use of trademarks and continual threats to a business’ control over its brand. Implementing a strategy to hedge against these threats is not only good for the bottom line, it is necessary to protect a business’ brand.

What Is Keyword Advertising?

Keyword advertising allows businesses to target their audience based on the words used in every Internet search. The advertising strategy begins with the purchase of terms (the keywords), which can be a single word or a phrase. Once a keyword is purchased, its inclusion in an Internet search will trigger the purchaser’s advertisement to appear in the search results page. For example, the owner of a shoe store may purchase the keyword “sneaker” to ensure that her advertisement appears every time someone types “sneaker” and clicks “search.”

The Risks Involved

Keyword advertising presents several possible dangers to businesses because, at its core, this form of advertising is largely unregulated. Currently, keyword advertisers may purchase generic terms as well as a third party’s trademarked terms and brand names. In fact, keyword advertising tools recommend keywords for advertisers to purchase – including the names of other businesses’ brands and trademarks.1 For example, entering “sneaker” into a popular keyword advertising tool results in a suggestion for the advertiser to purchase the keyword phrase “air force one sneakers” – Air Force 1 is a branded line of Nike basketball sneakers. Purchase of this keyword would allow the advertisement of a competitor not selling Nike shoes or a counterfeiter of Nike products to appear on a search results page with Nike and its authorized distributors. Search engines – and the law – place no limits on who can purchase trademarks or brand name terms as keywords, and leave it to advertisers to police themselves. This scenario presents a potential hotbed for unfair business practices that can direct a consumer away from the owner or authorized user of a brand or trademark.

It remains unsettled whether the use of a trademarked term in keyword advertising creates a likelihood of confusion.

The infinite keyword advertising strategies present new legal issues that are making their way through the courts; most notably, whether keyword purchasing and advertising constitutes trademark infringement. US courts have struggled with this question while focusing on two key elements of trademark infringement: (1) whether the sale of a trademarked term as a keyword is a “use in commerce” under the Lanham Act and (2) whether the use of a trademarked term as a keyword is likely to cause confusion.

Most courts hold that sale of a trademarked term qualifies as a trademark “use in commerce.” The Second Circuit’s Rescuecom Corp. v. Google, Inc. decision is a seminal case on this issue. Prior to Rescuecom the Second Circuit held that a computer program generating pop-up advertising based on the terms typed into an Internet browser’s address bar was not a use in commerce.2 In an apparent about-face, Rescuecom found that the display, offer and sale of a trademarked term by Google’s AdWords® and Keyword Tool programs is a “use in commerce.”3 Courts following Rescuecom would likely find that an advertiser’s purchase of a trademarked term from programs such as Google’s AdWords® qualifies as a “use in commerce.”

It remains unsettled whether the use of a trademarked term in keyword advertising creates a likelihood of confusion. Plaintiffs in trademark infringement actions involving keyword advertising often attempt to fulfill the likelihood of confusion element by relying on the “Initial Interest Confusion” doctrine. Under this doctrine, although the consumer is not confused in the end, a plaintiff suffers harm because the consumer was initially confused (and often frustrated) and “walked through the door” as a result of that initial confusion.4 For example, a consumer runs an Internet search for “X,” company X’s trademark. Company Y has purchased “X” as a keyword. When the consumer reviews her search results, she clicks on an advertisement for Company Y. She is taken to company Y’s website where she buys a product that competes directly with company X’s product. While not confused when the purchase is finally made, confusion led the consumer to Y’s website because company Y used company X’s trademark. The result is a lost sale for company X because it did not have control over its trademark. This pattern can repeat unchecked and result in significant losses.

Some courts5 hold that the Initial Interest Confusion doctrine may not be appropriate in the online context because Internet users are accustomed to “false starts” and can easily hit the browser back button. Other courts hold that Initial Interest Confusion can form the basis of a trademark infringement claim. In Hearts on Fire Company, LLC v. Blue Nile, Inc., for example, the US District Court for the District of Massachusetts found that Blue Nile’s purchase of the “Hearts on Fire” trademark as a keyword, which triggered Blue Nile’s advertisement together with the search engine’s “natural” results, alleged trademark infringement based on Initial Interest Confusion.6

How Can Brand Owners Protect Their Marks Online?

The case law governing trademark infringement in keyword advertising will likely remain unsettled until specific laws are enacted. Until then, brand owners should be vigilant and police the use of their marks by others. A recent decision from the US District Court for the Eastern District of Virginia provides a cautionary tale. In Rosetta Stone Ltd. v. Google, Inc., Rosetta Stone filed a trademark infringement suit against Google over AdWords®. The court held that selling Rosetta Stone’s trademarks as keywords does not create “a likelihood of confusion” as to the origin of Rosetta Stone’s products and entered summary judgment in favor of Google. Divergent opinions are likely to continue in this area of the law.

To protect revenue and brand recognition, businesses should take a multifaceted approach to protecting their trademarks. First, mark owners should monitor their marks’ use on the Internet. When owners note improper uses, they should utilize the search engine’s complaint process and explain how the advertisement confuses users about the origin of their advertised goods or services. Second, mark owners may wish to bid on their own marks.7 This will allow a business to control its brand. Third, mark owners should contact parties improperly using their marks and, if necessary, consider filing a lawsuit in a jurisdiction where favorable law exists. Brand owners should take these practical steps to protect their valuable marks on the Internet – at least until the courts get on the same page or legislation is passed to address the use of trademarks in keyword advertising.