In an earlier article that appeared in Ad Age, "The Case for Conquest Advertising – Why Competitive Keyword Bidding Is Fair," we reviewed and analyzed the Ninth Circuit's decision to uphold the right to bid on keywords without invoking trademark infringement.1 At the time, the legal consensus was that such practices are generally permissible, so long as they do not cause consumer confusion.
Update
Recently, the Supreme Court of the United States declined to hear
Lerner & Rowe, P.C.'s appeal of the Ninth Circuit's
decision concerning its trademark infringement suit against its
competitor, Accident Law Group. The underlying case centered on
Accident Law Group's use of "Lerner & Rowe" as a
keyword to boost their visibility in Google search results and
Google ads. The Ninth Circuit's dismissal reasoned that there
was insufficient evidence of consumer confusion.
In its petition to the U.S. Supreme Court, Lerner & Rowe argued that the Ninth Circuit erred in its analysis of factors determining a likelihood of confusion, further insisting that the unauthorized use of its trademark(s) by a competitor firm "manipulates search engine results and confuses potential clients."
In the opinion authored by Judge Ana de Alba, the Ninth Circuit upheld an Arizona federal court's ruling, in part due to the "generally sophisticated nature of online shoppers." The three-judge panel comprising two Ninth Circuit judges and a district court judge sitting by designation found that the defendant's marketing strategy of paying Google to promote links to its website when users searched for terms related to the plaintiff's firm is a "common" strategy known as conquesting, and that it did not violate federal trademark laws.
In her concurring opinion, Judge Roopali Desai of the Ninth Circuit suggested that purchasing a competitor's trademark as a keyword does not necessarily constitute "use in commerce" under the Lanham Act (a well-established prerequisite for trademark infringement claims). Judge Desai reasoned that, "trademark law is designed to protect parties against infringing uses of their marks ... bidding on and purchasing keyword search terms may not constitute such use." Judge Desai's concurrence indicates a shifting focus in trademark law toward the aspect of "trademark use" as highlighted in two recent Supreme Court rulings.2 Judge Desai's perspective appears to be in alignment with a growing judicial trend that recognizes modern consumers are more discerning and less likely to be misled or confused by these types of advertising practices.
The Second Circuit similarly upheld a ruling in favor of Warby Parker, which had purchased "1-800 Contacts" as a keyword.3 The Second Circuit found no evidence supporting a likelihood of consumer confusion, and therefore reinforced the opinion that such competitive keyword bidding is not inherently a violation of trademark laws.
The decisions from both the Ninth and Second circuits reason that online consumers are more "sophisticated" today and are not likely to be confused about a mismatching of search terms and advertisements.
Analysis
While the federal court system generally is upholding the legality
of competitive keyword bidding, there are remaining ethical and
judicial concerns about these issues, including a concern that a
general adoption of the Ninth Circuit (Judge Desai's)
perspective would render a substantial amount of search-term
related lawsuits ripe for early dismissal. As such, plaintiffs who
are able to demonstrate that their competitor's advertisement
includes their trademark or that the advertisement infringes on
their company's trade dress would still be able to claim
violations of trademark law; however, some of those activities,
under the Ninth Circuit's recent decision fall outside of
trademark law and may further weaken trademark protections.
Ultimately, the Supreme Court's refusal to hear the Lerner & Rowe case further strengthens the current legal consensus that bidding on competitors' trademarks is permissible under federal trademark law so long as there is no actual or significant consumer confusion.
Footnotes
1. See Lerner & Rowe PC v. Brown Engstrand & Shely LLC, 9th Cir., No. 23-16060.
2. See Abitron v. Hetronic, 600 U.S. 412 (2023), and Jack Daniel's Properties v. VIP Products, 599 U.S. __ (2023).
3. See 1-800 Contacts Inc. v. JAND Inc., 2d Cir., No. 22-01634.
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