Keywords Trademark Infringement

What is keyword buying?

Some search engines offer sponsored ads (usually displayed in a separate box alongside search results).  In order to have your ad displayed when a user searches for certain words, you buy “rights” to that word.  For example, if you own an orchard, you might buy “apple,” so that an ad for your orchard is displayed every time someone searches for “apple.”

Search engines will sometimes allow a company to purchase other company’s trademark.  This gives the purchaser the right to have its ad displayed when someone searches for the trademark, even if the purchaser is not the owner of the trademark, and is in fact a competitor of the trademark owner.  Trademark owners are concerned about this because consumers who may be interested in buying their goods or services may instead be diverted to the website of a competitor, where they could buy the goods or services from someone else.

United States Trademark Law

Because some of the keywords purchases are trademarks, keyword buying implicates the Lanham Act, which is the trademark law in America.  Specifically, Section 1114 of the Lanham Act creates a cause of action for the trademark holder against “[a]ny person who shall, without the consent of the registrant, use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive.” (emphasis added).  In order to successfully sue for infringement, therefore, a trademark owner must show that the alleged infringer used the trademark in commerce, and the use itself was related to the sale or offering for sale, distribution, or advertising of goods or services.  In addition, the mark owner will have to show that the use is likely to confuse potential consumers.

There is one main issue that makes keyword buying difficult to consider under the Lanham Act:  is the use of a trademark keyword to trigger a competitor’s advertisement a use in commerce as required by the Act?  The problem comes from the fact that selection of the ads occurs in the coding of the website.  The user of the search engine types in the word, and then the code generates ads using the keywords—but the consumer does not see the process that selects the ads for display.  This raises the question of whether a process that is hidden from the potential consumer can be considered part of the stream of commerce.

Keyword Buying Laws and Regulations?

In general, purchasing a generic keyword does not pose a problem.  It is when a company or individual purchases as a keyword the trademark of a competitor or third party that trademark law is implicated and there is a potential for lawsuits.

The legality of buying trademark keywords is unclear, because different jurisdictions have answered the question different ways.  The American federal courts are broken up into circuits, with each circuit having multiple district courts and one circuit court of appeals.  The courts of appeals throughout the country are split on the question of whether a keyword is a use in commerce.

Some circuits have not addressed keyword buying specifically, but they have had cases involving programs that create advertisements on users’ computers based on the websites visited by the users and the search terms they enter.  While most circuits are clear that the website itself is not a protectable trademark (a URL functions more like a mailing address than an indicator of source), what poses the problem is the use of search terms.  Some courts have held that because the process generating the ads is hidden from the consumer, the use of the trademark by the program is not a use “in commerce.”  Another argument against the idea that a keyword is a use in commerce is that the keyword is not used to identify the purchaser’s goods or services, merely to generate an ad for a related product or service.

Keyword Trademark Infringement

On the other hand, some circuits considering lawsuits by trademark owners against search engine keyword purchasers have held that the use is in fact in commerce, usually in one or both of two ways.  First, the purchase itself is in commerce, because it was the sale of a good (the keyword) for value.  Second, the fact that an advertisement for a commercial website was generated from the use of the keyword—which the courts thought that the consumers saw because they typed it in themselves—meant that the purchaser had used the keyword in commerce while attempting to promote or sell goods or services.

In most cases where the court did find a use in commerce, however, the courts determined that there was no likelihood of confusion, because the ads were clearly labeled with the source of the ad or product.  However, there have been some courts that have found confusion when the ads were not labeled, or labeled misleadingly.

Legal Help

Because the law varies so widely across the country, it is very important that you speak to a local trademark attorney before purchasing someone else’s trademark as a keyword (which can be a significant investment of your advertising budget).  You should also contact an attorney right away if you believe that someone else has purchased your trademark has a keyword for his or her advertisements.  Whether the purchase of a trademark as a keyword is actionable use or leads to a likelihood of confusion is highly dependant upon where the lawsuit is filed, so speaking to a local attorney is very important.