Controversy of Bidding on Competitor Names

- August 29, 2007

The law states that in order to charge another with trademark infringement, the infringer has to have used the trademark in a way that has caused consumer confusion about the identity of the advertiser and has to have been used “in commerce”.  When a trademark is used as a keyword to trigger an internet advertisement, the question that arises is whether this is a use “in commerce”.

Google will allow companies to bid on their competitors’ trademarked terms as long as the trademarked names do not appear in the text of the ads.  Yahoo does not allow competitors’ to place ads on trademarked names.

Many large, brand name companies have sued Google and other engines for allowing bidding on branded keywords and have lost.  Among these major companies are GEICO, American Blinds, and AXA. 

Different countries are split in their rulings.  France has twice ruled that it is not okay to use trademarked keywords in Google’s paid keywords list.  However, the United States District court for the Eastern District of Virginia, ruled just the opposite in the case of GEICO.  The court ruled that GEICO did not have sufficient evidence that the use of the keyword had constituted infringement. 

As a result of these split decisions, there has not been a final ruling when it comes to keyword infringement.  Businesses that bid on competitors keywords may be at risk of potential liability for trademark infringement.  For the foreseeable future, the ability to use a competitors’ trademarked name as a keyword, may depend on the jurisdiction in which the marketer is located.

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