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Vol. 22 No. 9 — October 2005

Can Google or other search engines sell keywords registered as trademarks? For example, can Coca-Cola buy the keyword "Pepsi-Cola" so that every time a searcher enters the term in a search engine, advertisements for Coca-Cola appear?

The practice is quite permissible, according to an important case recently settled in the U.S. This ruling is particularly important because several cases have ruled against Google and other search engines in France on this issue, and several lawsuits in the U.S. and other countries (including Israel) are pending. 

Background Basics

Google operates a phenomenally successful program called AdWords that allows companies to purchase keywords for advertising purposes. When an Internet user searches on that keyword, it triggers both the traditional Google search results (organic listings) and advertisements (sponsored links).

In the English-language version of Google, the organic listings appear on the left, and the sponsored links appear either in a shaded box above the organic listings or on the right side of the page and separated by a vertical bar. Advertisers may purchase the use of keyword triggers such as "shoes" or trademarked words such as "Nike." 

If a trademark owner objects to Goo­gle's use of its trademark, Google has one complaint policy for the U.S. and Canada and another for those in the rest of the world (http://www.google.com/tm_complaint_adwords.html#1).

If a trademark owner outside the U.S. or Canada objects to a company using its trademarked terms in the actual content of the advertisement or in the keywords that trigger an advertisement, Google will investigate and require the advertiser to remove the term from the content of the ad or keyword list. It will also prevent the advertiser from using the trademarked term in the future. For example, suppose British Airways (BA) complains that Japan Airlines (JAL) purchased the use of the "British Airways" keyword to trigger JAL ads. Upon BA's presentation of certain proof as set forth in Google's trademark policy, Goo­gle will prevent Japan Airlines from continuing to use the trademarked term to trigger JAL-sponsored links.

Google's policy in the U.S. and Canada is different. If Microsoft complains that Apple is using the word "Microsoft" in the heading or text of its sponsored link advertisement, Google will require Apple to remove the word. But if Microsoft objects to Apple's purchase of the word "Micro­soft" as a keyword trigger, Google will not take any action. It was exactly this issue that the court addressed in Government Employees Insurance Company v. Google, Inc. and Overture Services, Inc., which was decided by the U.S. District Court for the Eastern District of Virginia in August.

GEICO's Claim

GEICO, a U.S. car insurance firm, positions itself as a low-cost insurance pro­vider. About 40 percent of its business is Internet-driven.

In its lawsuit, GEICO claimed that Google infringed upon its trademarks and engaged in unfair competition when it sold the GEICO trademark as a keyword to a competitor. This caused the competitor's sponsored links to appear next to the organic listings that include links to GEICO itself. The company claimed that the sponsored links were likely to confuse consumers into thinking that the source of those links was GEICO. It also claimed that the links were misleading, because they implied an association between GEICO and those other companies that appeared in the sponsored links. 

No Trademark Infringement for Use of Keyword Triggers

According to the U.S. Trademark Act, to be liable for trademark infringement, a defendant must use the trademark "in commerce" and "in connection with the sale, offering for sale, distribution, or advertising of goods and services." Google had argued previously in this same case that it only used GEICO's trademark in its computer coding and that such an invisible process could not constitute infringement. In a 2004 ruling, the court discovered that Google had indeed used GEICO's marks "in commerce." Therefore, the issue at hand was whether Google's use of a trademarked word as a keyword trigger was likely to confuse consumers as to the source of the sponsored links.

In order to succeed on a trademark infringement claim, GEICO needed to prove that Google's use of its trademark was "likely to confuse an ‘ordinary consumer' as to the source or sponsorship of the goods." The court pointed out that GEICO did not need to prove actual confusion and that the sophistication of the consuming public could be a relevant factor.

Consumer Confusion

To make its point, GEICO presented survey data, which is the typical method of proving confusion. The court opinion analyzed the data at length and concluded that it did not prove that consumers were confused about whether GEICO was the sponsor of competitors' advertisements. An important observation that the court also made was that "initial interest confusion" is a more difficult claim to make on the Internet.

In the Internet context, the term "initial interest confusion" describes the distraction or diversion of potential customers from the Web site they were seeking to another site, based on the belief that the second site is associated with the one originally sought. The crux of this concept is that the users will be satisfied with the second site or be sufficiently distracted so that they will never arrive at or return to the site they initially wanted.

In the physical world, it may be time-consuming or expensive to retrace your steps if a billboard that confused you by using another party's trademark sent you to a store other than the one you were originally seeking. But in the Internet world, all you need to do is click the Back button.

On a less important point, however, the court did conclude that GEICO's survey results supported the argument that consumers were confused when the heading or text of advertisements included GEICO's trademarks. As a result, Google could not dismiss this claim at this stage. This should have less relevance for Goo­gle since the company claims that it removes trademarked terms from advertisements (both in North America and worldwide) that use the terms without the owners' permission.

Important Case, Unresolved Issues

The court left several liability issues open, and, reportedly, the parties have recently settled this case under terms of confidentiality. While trademark infringement cases such as this are heavily dependent on their individual facts, this holding is important for Google because it gives the company a meaningful victory after several recent losses in the keyword cases.

For example, in March 2005 in Goo­gle France v. Societe Viaticum & Societe Luteiciel, the Paris Appeals Court faulted Google's AdWords program in that it failed to perform preliminary checks on whether its keywords infringed the trademarks of third parties. The court also found that Google suggested keywords that violated third-party trademarks to potential advertisers.

The victory in GEICO could give Goo­gle much more flexibility in how it responds to claims of keyword trigger trademark infringement. This holding also may influence other pending cases, both in the U.S. (American Blind and Wallpaper Factory, Inc. v. Google) and in Israel.

We should also note what the GEICO case did not address. GEICO only sued Goo­gle; it did not sue the advertisers who purchased its trademark. Therefore, the case did not address the liability of advertisers that purchase the trademarked keywords to trigger sponsored links. That case will have to wait for another day.