Google Adwords: Liability for using trademarks as keywords

The Battle: A battle has raged for some time against Google because it sells trademarks as keywords in its very profitable Adwords service. Businesses may purchase keywords containing the trademarks of their competitors. So, when the competitor’s trademark is entered as a search term, Sponsored Links of the company that purchased the keywords will appear along side of search results. For example, someone searches for “Ford Trucks” and Sponsored Links for Toyota Trucks might appear. To make matters worse, Google does not only allow businesses to purchase competitors’ trademarks as keywords, but actually recommends this practice through its Keyword Suggestion Tool. For simplicity, I’ll refer to the purchaser of the trademark keyword as the “Advertiser.” This is a shrewd “marketing” strategy, but is it illegal?

Likelihood of Confusion: Ultimately, the answer to this question will depend upon whether the facts in a particular case demonstrate that this practice causes there to be a likelihood of confusion that the trademark owner’s products are either available through the Advertiser or that the trademark owner endorses the Advertiser’s products. Many factors will need to be evaluated to make this determination.

Recent Case: The recent case of Rescuecom Corp. v. Google Inc. has caused this issue to come one step closer to finding that this practice does result in trademark infringement. Rescuecom sued Google for trademark infringement because Google was selling the name “Rescuecom” as a keyword to Rescuecom’s competitors. The lower court dismissed the claim holding that the keywords are only used internally, and to find trademark infringement, the trademark has to be “used” in a more traditional sense, like placement of the trademark on goods, containers, or use of the mark in the sale or advertising of goods (see Section 45 of the Lanham Act). On April 3, 2009, the Circuit Court disagreed and found that Google did not just use the terms internally, rather it actively traded the keywords and offered the keywords in exchange for “per click” fees.

However, finding actionable “use” is only the first step for Rescuecom.  Rescuecom still needs to prove that such use results in a likelihood of confusion between its services and the services offered by the Advertisers. So, the jury is still out on this one.

PRACTICAL SUGGESTIONS/POINTERS: It is important to note that if this practice is determined to constitute trademark infringement, then not only Google, but also the Google Advertiser that purchased and benefited from the keyword containing the competitor’s trademark may face liability. A finding of likelihood of confusion will be based upon the facts of each case. Areas that Advertisers should focus on to decrease the likelihood of confusion include: (1) the Sponsored Linked content and wording, (2) the nature of the landing page of the Advertiser after the Sponsored Linked is clicked, (3) the nature of the products and services and sophistication of customers, and (4) duration of customer confusion, if any.

By William S. Galkin, Esq. | April 21, 2009



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William Galkin manages GalkinLaw. Mr. Galkin has dedicated his legal practice to representing Internet, e-commerce, computer technology and new media businesses across the U.S. and around the world. He serves as a trusted adviser to both startup and multinational corporations on their core commercial transactions.


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