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Adwords Safe From Infringement Claims

February 7, 2013 0 Comments

trademark lawSeveral times a year, a Google advertiser is sued by its competitor for trademark infringement.  Mostly, this happens when the advertiser uses its competitor’s trademark as an Adwords key term. And most times this type of lawsuit is defeated.

Now Google has won its own major battle against the Australian Competition and Consumer Commission (ACCC), with Australia’s High Court ruling that Google did not violate fair trade law by allowing advertisers to purchase trademarked Adwords.

“Five judges of Australia’s High Court ruled unanimously in favor of Google, overturning a previous ruling from the Federal Court, which had ordered the company to set up a compliance program to make sure paid ads on its search engine are not misleading.

In its ruling, the High Court said Google was not responsible for the messages in sponsored links sold through its AdWords advertising platform because it had not created them.”

Under US law this would be more or less a “duh” ruling due to the high standard required to prove contributory trademark infringement (e.g., the advertiser is the infringer while Google would be contributing to said infringement).

We have quite a few cases on the books, mainly dealing with ISPs and Domain Name registrars, where these parties are found innocent of contributory infringement when infringers used their services to purchase infringing trademarks. See Lockheed Martin Corp. v. Network Solutions, Inc.; Gucci Am, Inc. v. Hall & Assocs.; Ford Motor Co. v. Great Domains.com Inc., for example.

However, the more interesting question here is whether advertisers should ever be liable for trademark infringement arising from the unlicensed use of their competitors’ marks in Adwords advertisement.

Back in early 2011 I noted the 9th Circuit’s decision, that use of a rival’s trademark to trigger Google Adwords advertising did not constitute trademark infringement. See the Network Automation ruling. I also noted my partner Tony Handal’s alternate strategy of perhaps suing for unfair competition. So, while it seemed back then that certain strategies could potentially work to stifle “improper” use of competitor trademarks in online advertising, at this point it seems that the industry and use of Adwords has evolved to a point that any court would take a highly skeptical look at any infringement claim no matter the legal theory.

The gist is simply this: Trademark infringement is about consumer confusion (and the likelihood thereof). Courts now feel pretty safe that a little thing like an Adwords link will not confuse consumers into believing that a linked competitor or “ripoff” site is legitimate — this is more or less the case with major products and services.

Of course smaller companies are still vulnerable to being keyword-hijacked by their small competitors in that consumers may not be as likely to differentiate between two competing application developers versus, say, Microsoft and a would-be ripoff website. In such cases I think the courts’ facts-based analyses in the cases above still provide some leeway for businesses to protect against “legitimate” consumer confusion.

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