Bidding On Trademarks in Search Advertising Continues to Heat Up

Here’s a hot topic: competitors or scammers bidding on your company’s trademark in search results to be at the top of the results in the sponsored links section. Is this illegal? The answer may surprise you: it’s not. And as long as traditional search engines are making billions in search ad revenue you can guarantee they will continue to fight (or settle in many cases) with any company that sues them for allowing other third-party advertisers to use that company’s trademarked term(s) for the competitors benefit.

This isn’t a new issue — it has been going on for years. Most recently, a close friend of mine and the CEO of Malwarebytes wrote about his company facing this very problem. Unfortunately, the competitors are doing more than just using his company’s trademarks, but are also using deceptive practices to lure users into downloading the competitors product by thinking they are downloading Malwarebytes’ Anti-Malware.

So what is a company supposed to do to protect itself from competitors bidding up its trademark and sitting at the top of the results in the sponsored links section?

When it comes to search, if your company is truly concerned about competitors using your trademarks one option is to bid up the keywords so you stay at the top of the sponsored links in addition to keeping your position in the natural results. This of course can be become very costly very fast. Leading us to the question, at what point would it be best to spend some of that money on improving your SEO (search engine optimization)? Which in my opinion is definitely a good alternative method for a company to consider investing its resources because it has better long-term effectiveness especially when compared directly against an advertisement.

According to intellectual property attorney Britton Payne of Foley & Lardner LLP the answer to this question is multifaceted.  I discussed the topic further with Mr. Payne, who focuses on issues like these in the class he teaches at Fordham Law School, “Copyright, Trademark and Emerging Technologies.”  He acknowledged that while it is ultimately up to the company on what it spends on Internet advertising, when it comes to search, he said that, “people have become familiar with how search results work, between natural and sponsored results, and that model has become standardized across the different search engines. As a result, it is better understood what practices cause confusion, and what practices are just healthy competition.”

An interesting point, especially with the recent studies that have been surfacing showing how people are now more aware of where advertisements typically are placed on web pages and have been consciously ignoring them while surfing the web.

When it comes to social sites, Mr. Payne said that of the people he has spoken with who deal with ad buying, most aren’t as concerned with competitors using their trademarks when purchasing keywords on social sites due to the number of different factors affecting who gets shown a particular advertisement. Of course, this is all provided the ads are not deceptive or misleading to the consumer.

We all know that newer technologies have search functions, and these “new search” environments create new circumstances for trademark owners to address.  For example, in September, TheMarySue.com brought attention to the issue of purchasing trademarks on Twitter when DC Comics bought the keyword “Marvel” on Twitter. So when you searched Twitter for “Marvel” the DC Comics twitter account would show up at the top of the search results. This now appears to be resolved (read: Marvel out-bid or came to an agreement with DC Comics for the keyword on Twitter), as a quick search on Twitter for Marvel currently returns tweets from the official Marvel twitter account at the top of the results. While many would argue this could be considered the equivalent of Coca Cola buying the keyword Pepsi on Twitter and would most likely not cause any confusion with the customer given how well established both brands are and how most people are aware how advertising works on the Internet, it definitely makes clear the possibility that a competitor or scammer could use similar tactics to steal or worse, defraud customers.

So what if a competitor is using your company’s trademark deceptively? If it is deceptive, then it is a problem. As you are probably aware there are many steps that the owner of the trademark can take to address deceptive use of it on the Internet, starting with writing a letter to the company infringing your mark yourself or hiring a lawyer to write a scary one for you (which will hopefully scare them enough to stop).  However, Mr. Payne notes that in a traditional search environment (at least in the United States), the search engine provider is not likely to have any liability; meaning you will have to go directly after the competitor infringing your mark.

He went on to tell me that “the traditional search engine case law has provided a vocabulary and a logical framework for addressing keyword purchases in new technologies, but we can’t really anticipate how that will all play out until someone is making a lot of money off of new search, and someone else sues about it.” Which basically means that as new technology becomes available and more data is continually gathered on (potential) customers, companies will constantly be looking for new ways to “one-up” each other using the latest sites, apps, and gadgets.

But is that a bad thing?  Not necessarily.

As someone who advocates the adoption and use of new technology, I think it’s great that companies are getting excited about it too.  Obviously not every new product/service will be a major hit but no company wants to take that chance and be left behind while its competitors are gaining customers.  Nonetheless, as the competition for customer dollars continues to increase I think this all boils down to a win for the consumer.