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In today’s digital age, the prevalence of targeted online advertising is easily felt.   Tech companies are developing increasingly innovative ways for brands to engage with and understand their consumer base on a deeper level. However, the mainstay of these various media continues, at least for now, to be keyword advertising.

September 2013

Since its inception in 1996, keyword advertising has grown to represent the most significant form of digital marketing globally and the largest revenue stream for most of the world’s major internet search engines.  For example, it is estimated that around £3 billion is spent annually on search advertising in the UK alone.  Despite recent doubts as to its efficacy (a March 2013 report by eBay comments "results show that brand keyword ads have no short-term benefits, and that returns from all other keywords are a fraction of conventional estimates"), keyword advertising continues to be extremely popular with brands of all sizes and from across a wide range of sectors.  Put simply, it has become a conventional form of advertising.

trade markHowever, the ability of an advertiser to 'purchase' the trade mark of a rival such that search terms containing that rival’s mark cause an advert for the keyword purchaser to be prominently displayed on the results page has not been without controversy.   Courts throughout the world have heard significant claims for trade mark infringement arising out of keyword advertising – many involving some very well-known brands.  

The approach adopted under European trade mark law in this context can generally be regarded as one of pro-competition.  The mere fact that the brand owner has to (i) intensify its own keyword advertising as a result of a competitor's use of its brand as keywords and/or (ii) adapt its investment efforts or endure some of its customers switching to other goods or services is generally insufficient to amount to infringement.  Broadly this is because keyword advertising is accepted as a practice generally inherent in competition that merely offers internet users an alternative product or service.  The exception to this 'rule' is where the advertising is not fair competition and adversely impacts the image of the trade mark or its ability to inform consumers of the entity to which it relates.

Brand owners are able to object where the advert has any of the following effects:

  • internet users may erroneously perceive it as emanating from the brand owner;
  • it suggests an economic link between the advertiser and the brand owner;
  • internet users would be unable to determine whether or not the advertiser is linked to the brand owner (because the advert is vague as to the origin of the goods/services) – or they are only able to do so with difficulty; or
  • it relates to counterfeit or other imitation products. 

The onus is on the advertiser to show that its advert does not breach these conditions.
These conditions are generally likely to be reasonably straightforward to comply with – in particular in cases involving easily distinguishable competing brands or genuine reseller or aggregation websites.   However, the courts have held that although the majority of internet users appreciate the difference between paid-for adverts and natural search results, a significant proportion do not.„„Further, a significant proportion do not appreciate that the adverts appear because the advertisers have paid for them to be triggered by the keyword used in the  search term.  As a result of these findings, simply omitting any reference to the brand owner from the advert is by no means always a certain way of avoiding infringement. 

advertising flowersFurther, trade mark law suits concerning keyword advertising can be very fact specific.  For example, in a recent high profile UK case it was held that an advert that made no mention of the brand owner's trade mark still amounted to infringement.  In that case, M&S had purchased the keyword 'Interflora' using Google's AdWords programme.   Its advert read as follows:

M&S Flowers Online
Beautiful Fresh Flowers & Plants
Order by 5pm for Next Day Delivery.

Interflora sued for infringement of its INTERFLORA trade mark.  The court ultimately found in favour of Interflora (read our detailed analysis of the case). A key factor in its decision was the fact that a significant proportion of reasonably well-informed and observant internet users would not have been aware, based on general knowledge, that M&S's flower delivery service was not part of the Interflora network.  Indeed, it was shown that M&S had particular success by using the ‘Interflora’ keyword compared with its use of other company names such as 'd f s'.  The most plausible explanation was that consumers were more likely to believe that there was a connection between M&S and Interflora.  This case demonstrated the importance of the surrounding facts to the ultimate decision – had Interflora not operated a flower delivery network at all, or not operated one with commercial relationships with other large retailers such as Tesco, the result may have been different.

The search engines themselves also have rules as to what is permitted.  These vary across jurisdictions and are subject to change with developments in case law.  Google, for example allows advertisers to purchase other parties' trade marks as keywords in the EU and EFTA.  It goes a step further in the UK and Ireland, allowing (in certain circumstances) advertisers to use other parties' trade marks in the ad text itself.  Although such rules can be helpful as an initial 'filter', the above Interflora example shows that adverts that are accepted by a search engine are not necessarily in compliance with the law.

The impact of a law suit for trade mark infringement arising out of keyword use can be very significant.  In addition to high legal costs and business disruption, a court Order in favour of the brand owner can currently also require the advertiser to employ negative matching against certain of the brand owner's trade marks.  This could have the effect of preventing the advertiser's sponsored link from appearing even if it has not purchased a competitor's brand as a keyword.  For example, if M&S were to buy the generic keyword "flowers", it could be required to block any sponsored links which would otherwise appear if – through no fault of its own – someone were to search for "Interflora flowers".  In view of the perceived importance of a sophisticated keyword strategy for directing traffic, such a requirement has the potential to be very damaging.

analysing the textWhilst the case law to date has set out a reasonably clear framework as to what is, or is not, acceptable, it has also highlighted the importance of carefully analysing the text appearing in keyword adverts.  The impact of falling foul of trade mark law in this context can have far reaching consequences with potential to significantly hamper efforts to effectively guide and manage the online behaviour of target consumers.

If you have any questions on this article please contact us.

Randeep Grewal

Randeep Grewal explores the issues of keyword advertising between trade mark rivals.

"Whilst the case law to date has set out a reasonably clear framework as to what is, or is not, acceptable, it has also highlighted the importance of carefully analysing the text appearing in keyword adverts."