The opportunities and risks of keyword advertising

Matt Sammon looks into the legality of acquiring competitors' brand names as AdWords and the impact of the practice on small businesses. 


Matt Sammon looks into the legality of acquiring competitors’ brand names as AdWords and the impact of the practice on small businesses. 

SEO forms part of most businesses’ marketing strategy these days. Companies large and small spend vast amounts of time and money on getting their website to the top of the Google search results. Since 2000, we have had a sure fire way to have your website at the top of Google search results: AdWords.

Purchasing an AdWord ensures your chosen link appears in the sponsored listings section of the search results, effectively promoting your product or service outside the natural results. This change has allowed users not only to use the service for searches relating directly to their own brands, but also in relation to any other keywords they have paid for, including others’ brands.

The policy of allowing businesses to purchase competitors’ brands as AdWords offers both opportunities and risks to businesses looking to increase their visibility on Google. This is particularly relevant to small businesses with smaller marketing functions that might not have access to in-house legal expertise.

Businesses started buying competitors’ brand names as soon as they were given the opportunity to in 2008, but Google and the purchasers of the keywords were soon accused in a number of EU countries of trademark infringement.

As always with legal developments, to understand the legal position, it’s important to understand how the courts have interpreted the law in the judgments they have handed down on the matter. The long and short of it is that Google itself was generally found not to be liable for the infringement, with liability instead focusing on the purchasers of the AdWords themselves, particularly when the advert might give the impression that the company purchasing the AdWord and their competitor are linked in some way.

Interflora v Marks & Spencer

Of the cases that were heard, lnterflora v Marks & Spencer Plc (2013) has had the largest impact on the current legal position in the UK. Marks & Spencer began paying for the floral division of its business to appear in the sponsored listings whenever the term ‘Interflora’ and other similar terms were searched for. In response, Interflora sued Marks & Spencer for trademark infringement, alleging that by directing consumers to its own website Marks & Spencer was creating confusion – which is a key criteria for trademark infringement – among consumers and the appearance that they were part of the Interflora network.

The Court had to consider whether a reasonably well informed and reasonably observant internet user would be confused over the origin of the goods or services advertised. It decided that while some internet users were aware of Google AdWords and how it worked, and would therefore not be confused, a reasonably well-informed and reasonably observant internet user might not necessarily be aware of it and might get confused over the origin of goods on offer.

This means that buying a competitor’s trademarked name as a Google AdWord can amount to trademark infringement. Trade mark owners have welcomed the power to stop competitors purchasing keywords that could cause confusion among consumers, increasing their brand’s protection and making a trademark registration increasingly valuable.

However, by no means will buying a competitor’s brand as an AdWord always amount to trademark infringement. The courts generally recognise that keyword advertising promotes competition and are likely to lean towards protecting competition principles, not trademark rights, where the question of confusion is disputable.

The Interflora decision, like many other legal decisions, was very dependent on the facts of the specific case and any trademark owner looking to sue a competitor for purchasing a trademarked name as an AdWord will need to be able to demonstrate confusion among internet users.

Confusion could refer to the impression that the two companies are economically linked, for example in a supplier/manufacturer and seller role. But, the threshold for this could potentially be quite high, given the Court’s opinion that, generally, AdWords promote competition. It is also possible that the law in this area will be modified in the future given that the concept of a ‘reasonably well-informed and reasonably observant internet user’ will change as people become more familiar with and knowledgeable about the internet. Also, only when further cases are heard will it become clearer as to how the courts will interpret specific situations.

Two sides to AdWords

For a small business, AdWords are a double-edged sword. While they offer the opportunity to significantly increase the traffic that comes to your website, potentially increasing revenues, small businesses will have to be vigilant as to who else is using keywords that relate to their goods or services, and may need to take action to stop traffic being diverted from their site if another company has purchased one of their brand assets as a keyword.

Companies will only be able to prevent this happening if they can demonstrate trademark infringement. For this, they will need to have already registered their brand assets as trademarks.

Small business owners may also find themselves on the other side of the fence, having to defend their use of keywords that could potentially be infringing another business’s trademark. Before purchasing an AdWord you should always consider whether the keywords you have selected are likely to infringe an existing trade mark by causing confusion over the origin of the goods or services. If they might, thought should be given to whether the keywords should be purchased at all, and whether there is anything that can be included either on the sponsored link or on the website to reduce the likelihood of confusion. For example, you might include a disclaimer stating that you are not associated with the other company and that you operate independently from them.

Keep monitoring this area though, as the law will continue to develop as more cases are heard and the courts provide more guidance on what is considered to be confusing as to the origin of the goods and what the different factual circumstances will indicate.

Matt Sammon is head of the UK trade mark practice at Marks & Clerk.The author is grateful to Connor Thorogood, trainee trade mark attorney at Marks & Clerk, for his assistance with drafting this article.

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