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Buying Your Competitor’s Trademarks as Google Ad Words – Is it Trademark Infringement?

I get a lot of questions on the ad word issue: is it trademark infringement if your competitor buys your marks as Google ad words? The Ninth Circuit is leaning more towards answering that question with a “no.” See Network Automation, Inc. v. Advanced Systems Concepts, Inc., 638 F.3d 1137 (9th Cir. 2011). Reversing a District Court’s grant of an injunction, the Ninth Circuit held that buying a competitor’s trademark as a keyword for a sponsored link promoting the defendant’s product was not enough to get you to a finding of likelihood of confusion and, therefore, an injunction.

Network Automation and Advanced Systems both sell the same type of software. Network Automation sells its software under the mark “AUTOMATE”, while Advanced Systems uses the mark “ACTIVEBATCH.” Network bought keyword ads for “ACTIVEBATCH” so that when a potential customer enters “ACTIVEBATCH” in a search engine, in addition to the search results, an ad for Network Automation’s product appears under the “sponsored links” section.

The Ninth Circuit held that while the district judge focused on the factors laid out in the Brookfield case, i.e., (1) the similarity of the marks, 2) the relatedness of the goods or services, and 3) the simultaneous use of the Web as a marketing channel (Brookfield Commc’ns Inc. v. West Coast Entm’t Corp., 174 F. 3d 1036, 1054 (9th Cir. 1999)), this analysis is not appropriate for all cases involving the internet, especially key word cases.  Instead, the court says that in ad word disputes, the Sleekcraft factors should be considered on a case by case basis. See AMF Inc. v. Sleekcraft Boats, 599 F. 2d 341 (9th Cir. 1979). Looking to theSleekcraft factors, and some“other relevant” factors, the court found the most relevant factors to consider were: 1) the strength of the mark; 2) the evidence of actual confusion; 3) the types of goods and degree of care likely to be exercised by the purchaser; and 4) the labeling and appearance of the advertisements, and the surrounding context on the screen displaying the results.

The court was particularly influenced by the fact that the ads in this case appeared as “sponsored links” which lessens the possible likelihood of confusion. Potential customers can easily see right up front that these other links are ads and do not necessarily come from the same company that the consumer was seeking in its search.

Bottom line: if your competitor buys your trademarks for use as ad words in a sponsored link, you may have a real problem stopping it, at least in the Ninth Circuit.

Thoughts?

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