Can Competitors Use Your Trademarks in their Webpages or as AdWords to Drive Business to their Webpages?

The article below discusses state of the law regarding competitors using your trademarks in their advertising or web pages, or competitors purchasing your trademarks as what are called “AdWords” or “keywords” so that your competitor’s website comes up higher in a search engine search when people use your trademarks as search terms.

The Problem

Many of our clients are rightfully concerned about competitors using their trademarks in the above ways. Shouldn’t this be trademark infringement?

Short Answer

The law hesitates to make illegal any use of your trademarks by a competitor. It allows fair, comparative advertising, even when it specifically calls out your trademark. To prevail, you would have to show potential consumers are likely to be confused. This can be difficult if the competitor prominently displays its trademarks and only uses your trademark to discuss a comparison of their products with yours. It can be difficult to convince a judge or jury that confusion is likely when the competitor’s trademark is clear and prominent. One way to prevail is to prove numerous instances of actual confusion — e.g. witnesses or documents that show your prospective customers thought your competitor was you, based on their use of your trademark. But, again, this is tough if the competitor uses its trademark.

Similarly, Courts have hesitated to stop others from purchasing your trademarks as keywords or AdWords. Although some courts have disagreed, most courts hold this is not trademark infringement. Keywords or AdWords are normally never seen by the public. They are simply auctioned by search engine providers like Google. When people put your trademark into a search request, the owner of purchased AdWords increases their chance for priority placement in the search results (their website comes up higher in the results). Most courts fail to find any likelihood that potential customers would be confused because of it. In fact, some courts have boldly stated that in an Internet–savvy world, we all expect that search results based on our search terms may bring up sites we are not looking for or are competitive with the one we are looking for, and that we are sophisticated enough through self–help to drill deeper to find what we were really looking for. This view seems debatable, but recent commentaries on this issue conclude it is the present status of the law.

So, can you sue and likely win when a competitor either uses your trademark in comparative advertising or purchases search engine AdWords including your trademarks? It is not impossible, but cases usually require evidence that consumers are actually confused, and not simply an argument that there is the possibility of confusion.

If you do not have compelling actual confusion evidence, typical techniques of trying to show likelihood of confusion include a professional trademark survey. There are companies that run these. They identify prospective customers for your products and services and present questions designed to probe the potential for confusion based on the competitor’s use of your trademark. These take some time and could cost tens of thousands of dollars. Also, courts like to see at least 10% to 20% potential consumer confusion. Competitors can also run their own surveys and sometimes they come up with different results.

Initial Interest Confusion

For a while, trademark owners got some courts to agree that even if savvy Internet users eventually figured out the website with the highest ranking was not the one their search was looking for, it was trademark infringement or unfair competition based on what is called “initial interest confusion”. As the term implies, it was considered evidence of actual confusion – for at least some period of time. Essentially the argument was this was a clear, intentional attempted diversion of customers. On the face of it, it seems squarely to fit the test of trademark infringement.

In the case of 1-800 Contacts, Inc. v. Lens.com, Inc.,722 F.3d 1229 (10th Cir. 2013), LENS.com showed in court over 1,000 initial interest confusion events after 1–800–Contacts bought Google AdWords with the Lens.com trademarks. Lens.com argued that contact lens purchasers ordering online want to do it quickly and, thus, this is clear actual confusion and economic damage. However, in today’s sophisticated digital world, through computer forensics 1–800–Contacts showed only 25 of those 1000 (1.5%) actively clicked through to their website. The court found that this was insufficient to show meaningful actual confusion and Lens.com lost.

Takeaways

Even with provable evidence of possible confusion because of purchased AdWords, the courts are still skeptical unless a substantial number of click-throughs to the competitor’s site resulted in provable lost business. Therefore, unless the competitor uses your trademark in substitution of theirs (e.g. their trademark never appears on their website, which is rare) without strong high quantity evidence of actual consumer confusion, it is difficult to prevail.

Some commentators go as far as to say that the best course of action is self-help is recommended–that you should bid on as many AdWords as you can so that hopefully you get them and not competitors, or at least it forces the competitor to spend more money to out-bid you.

At a minimum, it is good to be aware of this paid search marketplace. To the extent it is possible and economically reasonable to purchase AdWords of your trademarks, it is probably good practice. Otherwise, always watch for and document any events that could be considered actual confusion and evaluate with trademark counsel if it rises to a level to take action.

Article source: https://www.lexology.com/library/detail.aspx?g=97e48742-1803-443d-a986-7402f17c3b52