The internet is filled with many ways for a company to advertise its products and services. One such way is advertising through search engines. Take for example Google’s AdWords search engine. When performing a Google search, two types of search results are produced. One type produces results generated by Google’s search algorithms (i.e., these are not ad driven). The other type produces sponsored links which an advertiser pays to display an ad and a website address. To obtain an ad in a sponsored link, an advertiser bids to reserve a particular word or phrase that when entered into a search would trigger the display of the ad.
Most companies using search engine advertisements bid on common terms or phrases that a user would likely input into a search box. This may include misspellings of words too. The question then becomes what terms or phrases are you allowed to bid on, or more specifically, can a company bid on terms or phrases contained in a competitor’s trademark? This past July, the 10th Circuit Court of Appeals gave an answer to this specific question.
In 1-800 Contacts, Inc. v. Lens.com, Inc., the Appellate Court addressed whether there was a trademark infringement issue when a company used internet advertising to display its ad once customers searched keywords resembling a competitor’s service marks. 1-800 Contacts and Lens.com compete in the retail market for replacement contact lenses. 1-800 found that several searches generated paid ads for Lens’ websites. After attempts to settle failed, 1-800 sued Lens. The district court awarded summary judgment to Lens on all claims stating there was no genuine issue of fact raised regarding initial-interest confusion and the evidence for the rest of the claims was insufficient. 1-800 appealed to the Circuit Court.
1-800 asserted that initial-interest confusion existed contending that although Lens never published ads with 1-800’s mark in the text of the ads, its bidding on keywords caused Lens ads to appear in searches thereby “luring” customer interest away from 1-800 and towards Lens. The Circuit Court affirmed the lower court’s opinion that 1-800 created no genuine factual issue regarding whether the keyword use was likely to cause confusion. The Court stated that users would only view the results of their searchers and would not know which keyword an advertiser purchased – there was no way of knowing whether Lens reserved “1800 contacts” or just the term “contacts”. If confusion did arise, the choice of keyword would make a difference to the infringement analysis, but the Court stated this was not at issue here since the claim would still fail for lack of evidence.
In discussing some of the evidence for initial-interest confusion, the Circuit Court paid particular attention to whether consumers really were lured away from 1-800. A report from the Defendant’s expert stated that of the 1,626 displays of the Lens link in an 8 month period, only 1.5% clicked on the link. Those that clicked on it may have been confused or they may have wanted to see what Lens had to offer. At any rate, this 1.5% could not support an inference of luring consumers away. Furthermore, the Circuit Court stated that when consumers search specifically for 1-800 Contacts, they are likely looking specifically for 1-800 Contacts and will be attentive to click on only the results relating to 1-800 (some would argue that the standard should be different for clicking ads). The rest of 1-800’s evidence, a single incidence of actual confusion and an overly broad consumer-confusion survey, carried minimal weight and could not sustain a finding of likelihood of confusion.
Although the Circuit Court affirmed most of the lower court’s opinion, it did leave a slight possibility that 1-800 could prevail on one issue – contributory infringement. The issue here was that Lens affiliates created ads where 1-800’s marks were in the text of the ad. The Circuit Court first rejected vicarious trademark liability based on agency law. Regarding the contributory infringement by not stopping advertisers from including marks in the text, the Circuit Court reversed the lower court by reopening this issue for a jury. One reason the court did this was because Lens could have stopped the ads by forbidding the use easily through modern technology, like e-mail, but they did not.
This case continues to show that keyword advertising lawsuits are difficult to win and in the end may become more of an economic burden to the Plaintiffs. See here for a Forbes article regarding a similar case. Due to the high standards for proving customer confusion, keyword advertising lawsuits may essentially be worthless. As long as an ad does not include a competitor’s trademark it is unlikely to be deemed trademark infringement.