Google AdWords: Use of competitors’ brand name – Legal implications

1. Background

Keyword advertising has become an important area in digital marketing. There have been several cases where businesses purchase AdWords that may resemble the competitors’ names or trademarks without analyzing the legal consequences of the same.

The Google AdWords system is a referencing service provided by Google based on the keywords purchased. As mentioned by ………’ It enables advertisers to compete for various display brief advertising copy to internet users, based on keywords but predefined by the advertisers, that will link the web user to the content of another page advertised on Google search engine’.[1]

Links related to Google Ad Words are displayed above organic results or sometimes next to them when a search query is entered on the Google search engine. The order by which these sponsored links are usually displayed is determined by[2]:

  • Keywords taken by advertisers;
  • Cost per click that the advertiser is willing to pay to their webpage on each search;
  • The number of views of an advertisement at a given point in time.

The question that arises is what could be the implications if the keyword bought resembles competitors’ brand name/ trade mark – the same is analyzed below. (the analysis is done mainly in European context)

2. Potential legal issues that may arise

a. Trademark issue

In case of trademark infringement, the trademark owner can enforce their exclusive right before a court. Reference can be placed on Article 10 of the Directive 2015/2436 of the European Parliament and of the Council of 16 December 2015[3].

Article 10(2)(a) states that the proprietor of a trademark may prevent other parties from using this mark without his or her consent when the third party uses a sign identical to the trademark in relation to the goods or services which are identical with those for which the trademark was registered.

Article 10(2)(b) states that the owner of a trademark can restrain the third party from using an identical or similar sign to the trademark in relation to identical or similar goods when there exists a likelihood of confusion on the part of the public, which includes the likelihood of association between the sign and the trademark.

Article 10(2)(c) states that the proprietor of the registered trademark can prevent all third parties who have not obtained consent from using in the course of trade any sign which is identical with, or similar to, the trademark in relation to goods or services which are not identical to those for which the trademark is registered, where the latter has a reputation in the Member State and where the use of that sign without due cause could tantamount to taking unfair advantage of or is detrimental to, the distinctive character or the reputation of the trademark.

b. Unfair competition: Internet Domains

Unfair competition is the fact, within the framework of the authorized competition, of making excessive use of one’s freedom of enterprise by resorting to procedures contrary to the rules and customs, causing damage.

Based on the principle of free competition, every economic operator is free to attract customers, even those of his/her competitors. However, this lawfulness is subject to compliance with fair trade practices. Use of purchased competitor trademarked names as AdWords may amount to unfair competition. Further, a claim based on unfair competition law can be made simultaneously along with the claim for infringement of an Intellectual property rights (IPR) mainly because the two legal grounds are perceived as complementary:

  • The legal action dealing with the infringement of an IPR aims at protecting the monopoly of the right holder.
  • The legal action dealing with unfair competition (which is potentially occurring at the same time as the infringement one) aims at repressing the unfairness of the behaviour of an economic operator toward their competitor. 

However, the following conditions must be met:

  • a fault, which refers to any procedure contrary to commercial practices and professional honesty, regardless of the intention to harm;
  • a prejudice, which refers to any damage suffered, generating a commercial disturbance;
  • a causal link generally inferred from the fault and the damage.

3. Certain relevant Judicial precedents

Search engines allow users to run AdWords on any keyword, including the name of the competitors[4]. Over the last years, there have been several cases surrounding the topic, some of which are mentioned below:

a. Google France[5]

In this case, the ECJ addressed mainly two key issues:

  • can bidding for a keyword by an advertiser could constitute the trademark use in the course of trade, and if yes
  • can the advertiser’s purchase of a keyword identical to a registered third-party trademark (which directs users to the advertiser’s website offering similar or identical goods or services) amount to behaviour that a trademark owner is entitled to prevent?

The ECJ held that as the selection of the keyword which is identical to a trademark has the ‘object and effect’ of displaying an advertising link to the site on which the advertiser offers its goods or services for sale, such conduct constitutes ‘use’ pursuant to the EU Community Trademark Regulation (207/2009). For example, trademarked keyword ‘use’ would be limited in circumstances where[6]:

(1) a reasonable internet user would be confused about the origin of the goods or services offered in the ad,

(2) it damages the trademark owner’s ability to maintain its reputation or

(3) the ad takes unfair advantage of the ‘distinctive character or repute of the trademark.

Accordingly, this Court[7] held that a trademark owner can prevent a competitor from buying a keyword which is identical to its trademark and using that keyword to advertise goods or services that compete with those offered by the trademark owner under the trademark under certain circumstances.

b. Marks & Spencer (M & S) and Interflora case[8]:

In this case, M&S purchased the Adword INTERFLORA from Google (along with other keywords additional keywords INTERFLORA FLOWERS, INTERFLORA CO UK, INTERFLORA.COM, INTERFLORA DELIVERY, among others). Consequently, whenever any user entered the word ‘Interflora’ (for example) as a search term, an M & S flower delivery service advertisement appeared under the sponsored links. The question before ECJ was whether the purchase of a trademark as a keyword to advertise goods or services that compete directly with those of the trademark owner constitutes trademark infringement.

The Court held that a trademark owner is entitled to prevent a competitor from buying a keyword that is identical to its trademark and using that keyword to advertise goods or services that are in competition with those offered by the trademark owner under the mark — under certain circumstances. For example, trademarked keyword use would be limited in circumstances where (1) a reasonable internet user would be confused about the origin of the goods or services offered in the ad, (2) it damages the trademark owner’s ability to maintain its reputation or (3)  the ad takes unfair advantage of the “distinctive character or repute” of the trademark.

c. In Bananabay II (I ZR 125/07), the Federal Court of Justice applying the ECJ’s guidance in Google France states that purchasing a sign which is identical to a third-party trademark as an advertising keyword to trigger ads for identical goods or services does not amount to trademark infringement, provided that the ad[9]:

  • does not include the trademark itself;
  • is visually separated from the natural search results; and
  • does not incorporate a ‘display URL’ pointing to the trademark owner’s website.

d. In another case of MOST-Pralinen (I ZR 217/10), the Court held that purchasing a competitor’s trademark as a keyword does not amount to trademark infringement, provided that[10]:

  • the ad displayed contains no reference to the trademark owner or its products and is visually separated from the organic search results; and
  • the ‘display URL’ points to a website that is not that of the trademark owner, even if the ad does not expressly state that the advertiser and trademark owner are not economically linked.

e. In the case of Arsenal Football Club (C-206/01) and Céline (C-17/06), the ECJ mentioned that a trademark owner could not ‘oppose the use of a sign identical with the mark if that use is not liable to cause detriment to any of the functions of that mark’. These functions include not only the ‘function of indicating origin’ but also other functions, such as guaranteeing the quality of the goods or services, communication, investment and advertising[11].

Conclusion:

From the diverse rulings discussed in the previous section, it is clear that the use of Adwords similar to competitors’ trademarked names could lead to infringement issues in many situations. Hence, advertisers should be mindful of how they use the Adword if it resembles a competitor’s trademark.

To protect their interest, trademark holders should notify Google of trademark infringement on their websites to block others from bidding on keywords that infringe their trademark rights. Google policy also has provided protection to a trademark owner in such cases[12]. Also, there is a formal process to petition Google to disallow your competitors from using your name in their ads if you own a trademark. Reference can be placed on the trademark policy of Google.[13]

……………………………….

[1]  Ad Words runs an auction to determine the ads that show on the search results page and their rank on the page using different metrics e.g. Cost-per-click/ cost per thousand impressions etc.

[2] Duru Maximus Chizuru, Keyword Internet Advertisement and EU Trademark Laws: Consumer’s Interest, Fair Competition or Trademark infringement?; available at https://erepo.uef.fi/bitstream/handle/123456789/20542/urn_nbn_fi_uef-20181425.pdf?sequence=1&isAllowed=y

[3]  Duru Maximus Chizuru (ibid n. 2)

[4]  Geri L. Haight, Google Adwords Decision in Europe: Trademark Owners May Prevent Competitors From Using Trademarks As Keywords (2011); available at https://www.mintz.com/insights-center/viewpoints/2251/2011-09-google-adwords-decision-europe-trademark-owners-may-prevent

[5] Bens Hitchens and Birgit Clark, Keyword advertising in the European Union, WTR (04 February 2016); available at https://www.worldtrademarkreview.com/global-guide/anti-counterfeiting-and-online-brand-enforcement/2016-obe/article/keyword-advertising-in-the-european-union

[6] Google Adwords Decision in Europe: Trademark Owners May Prevent, Mintz; see https://www.mintz.com/insights-center/viewpoints/2251/2011-09-google-adwords-decision-europe-trademark-owners-may-prevent

[7]  Cases C-236/08 to C-238/08 Google France and Google Inc. et al. v Louis Vuitton Malletier et al.

[8]  Geri L. Haight (ibid n. 4)

[9]  ibid n.1

[10]  ibid n.1

[11]  Ben Hitchens and Birgit Clark, Keyword advertising in the European Union (2016); available at https://www.worldtrademarkreview.com/global-guide/anti-counterfeiting-and-online-brand-enforcement/2016-obe/article/keyword-advertising-in-the-european-union

[12]  Caroline Cox, Can Competitors Use My Brand Name in Google Ads? (2021); available athttps://hawksem.com/blog/competitors-use-my-brand-in-google-ads/#:~:text=Competitors%20can%20buy%20your%20brand,searching%20for%20your%20specific%20company; https://support.google.com/adspolicy/answer/2562124?hl=en

[13]  https://support.google.com/adspolicy/answer/6118?hl=en


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