By: Edmund J. Gegan
Congratulations on your new client! He is the leading publisher of Lawyer Joke Books in the world, and is well known for his trademarked titles “Hee-Haws in the Law”, “More Hee-Haws in the Law” and “Yet More Hee-Haws in the Law”, and you have duly registered his trademark “Hee-Haws in the Law” in the United States, Canada, the European Union, China and several other jurisdictions. Customers and potential customers know your client’s catchy trademark well enough that they search for his books on Google’s search engine, and other search engines, using variations of his trademarked book titles.
More and more of your client’s sales have been coming from his increased dependence on advertising on the Internet, especially through search engines such as Google. His competitors in the lawyer joke book industry, however, are also committing to Internet advertising, and three of them have taken out “sponsored link” advertisements through Google’s AdWords program, using variations on his trademark “Hee-Haws in the Law”, as “keywords” to trigger their “sponsored links”, and some of them even using the trademarked phrase in the text of the sponsored link itself. Your client believes this is diverting some of his potential customers who he believes were initially searching for his products (since they typed in “Hee-Haws in the Law” on Google’s search engine), but now may click on a competitor’s sponsored link advertisement, and buy their products instead.
Competitor A has taken out a sponsored link advertisement, triggered by your client’s well-known trademark, and their advertisement actually uses the trademark in the text of the sponsored link itself, making it look as if they are selling your client’s Joke Book.
Competitor B has taken out a sponsored link advertisement, also triggered by your client’s well-known trademark, and says in the text of the sponsored link “Our Jokes are even funnier – than Hee-Haws in the Law” – We’re cheaper too!”.
Competitor C is your client’s chief competitor in the market, though still with half of his market share. Their sponsored link, though triggered by your client’s trademark, does not mention your client or his mark, it clearly identifies who they are, and uses their own, lesser well-known trademark “Poking Fun at Hired Guns”. Your client says he called Competitor C’s CEO to complain, who admitted to him that when Competitor C initially placed the sponsored link, Google’s Keyword Tool suggested that he use your client’s trademark “Hee-Haws in the Law” as an additional Keyword to increase the number of clicks on his sponsored link. Competitor C’s CEO is delighted with the extra number of clicks – and sales, especially since these customers were likely going to buy the Hee-Haw product instead, since they were searching on that term, and he further refuses to take the sponsored links down.
Your client comes to you for advice. What can he do about these advertisements? If any of these kinds of advertisements are permitted, what kinds of uses can he make of his competitor’s trademarks? An increasing portion of his sales come from sales outside of the United States (where, apparently, people love to poke fun at American lawyers). Does International Law permit these advertisements? Does Google?
A. Current State Of The Law Using Trademarks To Advertise On Search Engines:
The question of whether the use of a trademark as a “keyword” to trigger online advertising with search engines like Google has been a hotly contested issue over the last several years, with widely differing results from Court to Court, and now across international boundaries.
In the United States, until last year there was a clear split amongst the Circuit Courts regarding whether selection of a trademark as a keyword was even a “trademark use” of a trademark at all. This is a threshold issue because a use of a trademark must be considered a “trademark use” to even raise the question of whether there has been trademark infringement.[1]
In 2006, the United States Court of Appeals for the Second Circuit found that when software was installed on a personal computer which triggered “pop-up ads” whenever a trademark was typed by the computer user into their PC, that it did not constitute a “trademark use” because the storage of the trademark as data in software residing on a computer was analogous to an “individual’s private thoughts about a trademark”.[2] Following that decision, a number of courts extended that reasoning to find that the selection of a trademark as a keyword to trigger sponsored links through Google’s AdWords program also did not constitute a “trademark use”.[3]
In April, 2009, the Second Circuit clarified its position in the case Rescuecom Corporation v. Google, Inc., finding that the Google’s act of letting an advertiser choose a trademark as a keyword to trigger a sponsored link did in fact constitute a “trademark use” both by Google as the search engine and by the advertiser.[4] The Rescuecom decision resolved the split amongst the Circuit Courts and effectively led to a determination of how United States trademark law would treat the use of trademarks as keywords to trigger online advertisements.
Mere use of a trademark as a keyword to trigger online advertisements is not enough, however, to establish liability for trademark infringement. Under United States law and most other jurisdictions, a trademark owner must also show that such use occurred “in commerce” and creates a substantial likelihood of consumer confusion, which must be determined as a question of fact on a case by case basis. Only one “trademark as keyword” case has reached the trial stage in the United States.[5] In GEICO’s case against Google in the United States District Court for the Eastern District of Virginia, the main part of GEICO’s case was dismissed after the conclusion of GEICO’s case because it had submitted insufficient evidence on the issue whether consumers would likely be confused by Google’s act of permitting GEICO’s competitors to use GEICO’s name and trademark as a keyword to trigger their sponsored link advertisements. The remaining part of GEICO’s case, whether competitors’ use of the GEICO name and trademark in the actual text of the sponsored link advertisement settled before it went to trial (the parties had agreed to a bifurcated trial of the issues).
Over the last several years in the European Union, Google had been seeing less success in defending its trademark policies. Several European Courts found Google guilty of infringing a variety of trademarks when they were used as keywords in Google’s AdWords programs. Google appealed all of these decisions, and the European appellate courts, called a “cour de cassation”, jointly referred questions of law to the European Court of Justice in Luxembourg, the EU’s highest Court on matters of law common to the 27 member states.
On March 23, 2010, the European Court of Justice (“ECJ”) ruled that when Google’s AdWords program allows an advertiser to select another company’s trademark as a keyword to trigger their own sponsored link, that transaction does constitute a “trademark use” by the advertiser, but does not constitute a trademark use by Google. Therefore, while the advertiser may be at risk of being found to have infringed upon the trademark owner’s rights, Google is effectively insulated from liability.[6]
The ECJ further found that if Google does not take an active role in the actual crafting of the sponsored link text, and if their participation in publishing the sponsored link is “merely technical, automatic and passive” (terms which certainly seem to apply to the manner in which AdWords generally works today), that Google cannot be held liable for misuse of a trademark in triggering or displaying a sponsored link, unless “having obtained knowledge of the unlawful nature of those data or of that advertiser’s activities, it failed to act expeditiously to remove or to disable access to the data concerned.” As the cases before the ECJ dealt with advertisers who were allegedly selling counterfeit goods, the implication of this language is that if Google either knows the advertiser is selling counterfeit goods, or comes to know that fact, it must “act expeditiously” to remove the sponsored link. Google has gone on record that it already complies with this portion of the ECJ ruling, stating: “We work collaboratively with brand owners to better identify and deal with counterfeiters.”[7]
The bottom line then is that when an advertiser uses another company’s trademark to trigger its own sponsored links (assuming it is done in a way that otherwise violates trademark law in that jurisdiction – e.g. creating a substantial likelihood of consumer confusion), both the advertiser and Google may face liability in the United States (the issue of the extent of Google’s liability as direct infringer or contributory infringer has not yet been addressed), but in the EU, only the advertiser faces liability for trademark infringement and Google is protected as long as it “acts expeditiously” once it comes to be aware of an advertisers’ illegal use of such trademark (at least with respect to the sale of counterfeit goods).
B. Safe Harbor Uses Of Trademarks: Classic Fair Use and Nominative Fair Use:
There are two sets of circumstances where a trademark may be used appropriately to advertise or sell products not associated with that trademark. Those exceptions are known in the United States under the labels “Classic Fair Use” and “Nominative Fair Use”. Despite the unfortunate similarity in their names, these legal doctrines are very different from each other.
Classic Fair Use addresses the use of another’s trademark to describe your own goods and services, and not in reference to the trademark owner. This may be done when the trademark is use solely in its “descriptive sense”. For example, you may use terms describing your good’s or services’ geographic origin, or the name of the person offering the goods or services, or words which simply describe the goods and services themselves. In these situations, you are only using a trademarked term in its “descriptive” sense. Therefore if you operate a drycleaners within the “Montgomery Mall” (which we will assume is a trademarked term), you may name and describe your business as the Montgomery Mall Dry Cleaners, or simply include in your advertising that your business is located in the “Montgomery Mall”, as that is a descriptive use of the trademark, which you are accurately using to describe the geographic origin of your goods and services.
Also, under the Classic Fair Use doctrine, trademarks can be used as ordinary English words in their dictionary meaning, so an Apple pie retailer can use the word “Apple” though it has been trademarked by the computer and electronic device manufacturer Apple, Inc.
More battles are fought on the ground of the proper application of the Nominative Fair Use doctrine. Under this doctrine, one may use another’s trademark to refer to that trademark owner and its goods and services, even if doing so also advertises your own goods and services. So, for example, a mechanic’s shop which specializes in repairing or supplying replacement parts for Volkswagens, may use the trademarked term “Volkswagen” when advertising their own services.[8] Likewise, retailers of used trademarked products may use the trademark to describe what they sell (i.e. “Collectible Beanie Babies and Cabbage Patch Dolls for sale”). Competitors may also use the trademarked term to compare their products and services to the trademark owner’s. (i.e. “Our perfume smells just like Chanel No.5”)[9].
To qualify as a proper nominative fair use of a trademark (at least under U.S. law), the use must meet a three part test: 1) The product or service being referred to must not be readily identifiable without use of the trademark (i.e. you don’t have to say “the basketball team from Chicago” when referring to the “Chicago Bulls”); 2) Only so much of the trademark may be used as is reasonably necessary to identify the product or service ( i.e. Coke may refer to Pepsi by saying “Coke tastes better than Pepsi”, but likely may not use Pepsi’s distinctive logo or design or trademarked catchphrases.); and 3) The user must do nothing that would, in conjunction with the use of the mark, suggest sponsorship or endorsement by the trademark holder.[10]
An excellent comparison of when a trademark use is a “proper” nominative fair use and when it is “improper” may be made between the cases Playboy Enterprises, Inc. v. Welles, 279 F.3d 796 (9th Cir. 2002) and Brother Records, Inc. v. Jardine, 318 F.3d 900 (9th Cir. 2003). Terry Welles was a female model who, among her accomplishments, was featured in Playboy magazine as a Playboy Playmate of the Year. Both the terms “Playboy” and “Playmate” are registered trademarks of Playboy Enterprises, Inc. Ms. Welles created a website advertising herself as a professional model and spokesperson, and among her past accomplishments, she listed herself as having appeared in Playboy magazine as the 1981 Playboy Playmate of the Year, using those terms in metatags and banner advertisements. Ms. Welles also used the term PMOY as an abbreviation for Playmate of the Year, which is another Playboy trademark. Playboy Enterprises, Inc. sued alleging trademark infringement.
The Court held that Ms. Welles’ use of the terms Playboy and Playmate of the Year were protected as nominative fair uses of those trademarked terms. She was accurately identifying her past accomplishments, which she could not have done without using the marks, she did not use the marks more than was reasonably necessary, and did not suggest any sponsorship or endorsement of her current services by Playboy Enterprises, Inc. However, the Court did hold that Ms. Welles’ use of the abbreviation PMOY went beyond the protections afforded by the Nominative Fair Use doctrine as it was not a necessary term for her to use to describe her past accomplishments.
Consider, by contrast, the case of Alan Jardine, a founding member of the well-known band The Beach Boys. After leaving the Beach Boys, Jardine decided to return to playing music, and toured the country, calling his new group, among other things, “Beach Boys Family and Friends”. Brother Records, the management company who owned the trademark rights to the name of the original band “The Beach Brothers”, sued Jardine for trademark infringement. Jardine raised the defenses of both classic fair use and nominative fair use. The Court of Appeals held that Jardine was not protected by the classic fair use defense because he and his group were certainly not a group of boys engaging in, presumably, surfing activities, and therefore “beach boys” was not a descriptive term as applied to him and his band. Jardine was also unsuccessful on his nominative fair use defense. In advertising his band, he displayed the words “Beach Boys” more prominently that the words “family and friends”, suggesting sponsorship by The Beach Boys. In addition, there were instances of actual confusion amongst both event organizers booking the band and the people attending the concerts as to who was performing.
The lesson for advertisers on search engines, including through Google’s AdWords program, is that advertisers should expect to be permitted to use the trademarks of others on the Internet to the same extent that they are able to do so in the brick and mortar world. Particularly with respect to Google’s AdWords program, advertisers should legally be able to use the trademarks of others to trigger advertisements which either relate to the descriptive sense of the trademark (Classic Fair Use) or in making a nominative fair use of the trademark (i.e. as a reseller of trademarked goods, or to engage in comparative advertising). The question may then become, how much comparison is required for it to be a “comparative” ad?[11]
C. Google’s Trademark Policies Across International Boundaries:
Google’s Trademark Policies have evolved over time, often drawing distinctions between what policies would hold in which countries. Prior to April 2004, Google’s overall policy was to not permit advertisers to use the trademarks of others either as a keyword or in the text of the sponsored link advertisement. Upon receipt of a complaint by the trademark owner, Google typically blocked the sponsored link in question. In April 2004, just months before it went public, Google took its first step at relaxing that policy, by allowing advertisers to use others’ trademarks as keywords only, but not within the text of the sponsored link advertisement. This policy change initially applied only to the United States and Canada, but very soon afterwards Google expanded that relaxed policy to the United Kingdom and Ireland.
In May, 2009, Google expanded their USA/Canada/UK/Ireland Trademark Policy to 190 other countries, all at once.[12] That expanded list did not include all of the other 27 members of the European Union, China, Taiwan, both Koreas, New Zealand and Australia.
Soon thereafter, Google also announced that for the first time (but only in the United States) it would allow certain classes of advertisers to use trademarked terms within the text of their sponsored links advertisements, as well as using those trademarked terms as keyword triggers.[13] Those special classes of advertisers include: those using the trademark in a purely descriptive or generic way (as protected under United States law under the Classic Fair Use doctrine); resellers of trademarked goods and services; retailers of replacement parts or compatible parts corresponding to trademarked goods; and informational websites which provide non-competitive information about the goods or services associated with the trademark.[14] All of the rest of these classes typically fall within the protections afforded under United States trademark law, under the Nominative Fair Use doctrine. However, notably absent from this list are other typically nominative uses such as parody and criticism, and comparative advertising. No comment from Google yet as to when or if those other trademark uses, also protected under the Nominative Fair Use doctrine, may be included amongst these preferred classes of advertisers.
Google has not made public any contemplated change in their International Trademark Policy after their win before the European Court of Justice (whose ruling will control in all 27 members of the EU). Google may wait for those cases to be remanded to the European Courts for final decisions, but do not be surprised if Google announces relatively soon that its USA/Canada/UK/Ireland/190 other nations, relaxed Trademark Policy will now be expanded to include the EU member states.
D. Advice For Our Hypothetical Lawyer Joke Book Publisher:
What advice may we give to your new client with his successful Lawyer Joke Book “Hee-Haws in the Law” as he addresses the various competitors who have begun to use his well-known trademark in advertising through Google’s AdWords program? How might our advice be different for the many nations in which your client operates?
Competitor A has not only used the “Hee-Haws in the Law” trademark as a keyword trigger, but also in the text of the sponsored link itself. It is, in your client’s opinion, confusing to consumers and Competitor A may even be trying to sell counterfeit copies of your client’s own book. Under United States law, and likely most every other jurisdiction as well, Competitor A is violating your client’s trademark rights. Their use of your client’s trademark as a keyword constitutes a “trademark use” (under both USA law and EU law), and is substantially likely to cause confusion in the minds of consumers as to the origin of Competitor A’s product and the affiliation, sponsorship or relationship with our client. In the EU, Google would likely be insulated from liability, unless Competitor A was engaging in illegal activity such as selling counterfeit goods (which could be very likely given how their sponsored link reads), and Google either knew about it, or does not act “expeditiously” after our client notifies them. But the resolution here may be very simple indeed. Google’s own Trademark Policy prohibits the use of another’s trademark in the text of the sponsored link, though it can be allowed in the United States, with certain exceptions, none of which seem to apply to Competitor A. An email to our client’s Google AdWords account representative should result in this advertisement being promptly blocked, without further legal action.
Competitor B has taken out a sponsored link triggered by our client’s trademark, and also is using that mark in the text of the advertisement itself, to engage in comparative advertising. They claim in the sponsored link that their jokes are “funnier” (likely protected as either an expression of opinion or as mere sales “puffery”) and that their joke book is cheaper. Whether their joke book is cheaper or not is a matter of fact and raises questions under unfair competition principles (bait and switch tactics, false advertising, etc.) but as far as trademark law is concerned, this seems to be an example of straightforward comparative advertising which is protected under United States law and likely most other jurisdictions. However, our client’s hopes are not yet dashed! Google’s Trademark Policies prohibit the use of a trademark in the text of the sponsored link in all jurisdictions other than the United States. Even within the United States, Google’s Trademark Policy allows certain classes of nominative fair uses of a trademark in the text of the sponsored link advertisement; but at least for now, “comparative advertising” is not among those certain preferred classes. Therefore, even though Competitor B’s use of our client’s trademark is protected under the most jurisdictions’ law as an example of comparative advertising under the Nominative Fair Use doctrine, Google’s Trademark Policies may protect our client in any case. Again, an email to our client’s Google AdWords account representative may result in Competitor B’s advertisement being blocked, even though our client may not have had the legal right to force Competitor B, or Google for that matter, to take it down.
Competitor C is an example of what is by far the most common real world example of sponsored links which use another’s trademark as a keyword trigger. Although the sponsored link uses your client’s trademark as a keyword trigger, the text of the sponsored link itself does not use the trademark, nor does it make any reference to your client at all. It clearly identifies who Competitor C is and uses their own trademarked phrase to advertise their own competing goods. Under United States law, this example clearly constitutes “trademark use” by both Competitor C and by Google. Under EU law, this example is “trademark use” only by Competitor C, but not by Google. Based upon Google’s Trademark Policies, Google will likely refuse to block this advertisement in the United States, Canada, the United Kingdom, Ireland, and 190 other countries, but will likely agree to block the advertisement within the EU, China, Taiwan, both Koreas, New Zealand and Australia (although Google’s policy with respect to the EU may change soon). Whether our client has any legal rights to force the sponsored link down and seek damages depends in most jurisdictions on whether the sponsored link’s appearance in response to a user’s search for our client’s trademark, creates a substantial likelihood of confusing consumers who engage in such a search. As GEICO found out, proving a likelihood of consumer confusion can be a difficult matter!
However, once again there may be a ray of hope we can share with your client. Your client had informed you that he spoke with Competitor C’s CEO and found out that he only got the idea to use your client’s trademark as a keyword trigger because the trademark was suggested to him by Google’s own Keyword Tool when he was placing the sponsored link through the AdWords program. Google’s current policy with respect to its Keyword Tool is that they will consider requests by trademark owners to block or remove their trademarks from the Keyword Tool, even though such trademarks may still be chosen as keywords by advertisers on their own initiative.[15] However, if we can assist our client in preventing any other competitors from receiving “suggestions” from Google’s Keyword Tool to use the “Hee-Haws in the Law” trademark as a keyword, then our client may yet be pleased.
Properly guiding clients through the quickly changing international maze created by different laws in different jurisdictions, and the many differences, and relatively frequent changes in Google’s own Trademark Policies requires the practitioner to tread very carefully. Before leaping to any conclusions. Some time should be spent not only understanding the latest changes in this fast changing area of law, but also understanding the most recent changes to the various policies of search engines’ advertising programs, such as Google’s AdWords program, as those Trademark Policies may provide protections unavailable under the law.
1 ) Lemley, Mark A. and Dogan, Stacey L., Grounding Trademark Law Through Trademark Use, Iowa Law Review, Vol 92, 2007.
2 ) 1-800 Contacts, Inc. v. WhenU.com, Inc., et al., 414 F.3d 400, 409 (2
nd Cir. 2005)
3 ) E.g.,Fragrancenet.com, Inc. v. Fragrancex.com, Inc., et al., 493 F.Supp.2d 545 (E.D.N.Y. 2007); Rescuecom Corp. v. Google, Inc., 456 F.Supp.2d 393 (N.D.N.Y. 2006), rev’d 562 F.3d 123 (2
nd Cir. 2009); Merck & Co., Inc., et al. v. Mediplan Health Consulting, Inc., 431 F.Supp.2d 425 (S.D.N.Y. 2006)
4 ) Rescuecom Corporation v. Google, Inc. 562 F.3d 123 (2
nd Cir. 2009)
5 ) Government Employees Insurance Company (GEICO) v. Google, Inc., 2005 LEXIS 18642 (E.D.Va. 2005)
6 ) http://preview.tinyurl.com/ydfwx5p
7 ) http://googleblog.blogspot.com/2010/03/european-court-of-justice-rules-in.html
8 ) Volkswagenwerk Aktiengeselschaft v. Church, 411 F.2d 350 (9
th Cir. 1969)
9 ) Smith v. Chanel, Inc., 402 F.2d 562 (9
th Cir. 1968)
10 ) New Kids on the Block v. News America Pub., Inc., 971 F.2d 302 (9
th Cir. 1992)
11 ) See e.g., Saunders, Kurt M., Confusion is the Key: A Trademark Law Analysis of Keyword Banner Advertising. Fordham Law Review, Vol 71, No. 101, pp. 101-132, 2002; for an argument that all sponsored link advertisements for competing goods, triggered by trademark/keywords, should be considered “comparative” advertising.
12 ) A full list of those 190 countries appears online at:
https://adwords.google.com/support/aw/bin/answer.py?hl=en&answer=144298
13 ) Google’s announcement appears online at:
http://adwords.blogspot.com/2009/05/update-to-us-ad-text-trademark-policy.html
14 ) Google’s explanation appears online at:
https://adwords.google.com/support/aw/bin/answer.py?hl=en&answer=145626
15 ) Your humble author has been unable to locate any documentation of this policy on the Internet.
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January 5, 2011 9:51 am | 
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