In 2008, US paid search advertisement revenue is expected to reach $15.52 billion, according to JP Morgan. This represents a 31.9% increase over 2007. Despite this tremendous growth, uncertainty in recent court developments may discourage search engine marketers (SEMs) from purchasing keywords that are trademarked by others for fear of being found liable for trademark infringement.
Currently, the United States District Courts are split as to whether or not keyword advertising constitutes trademark infringement. In fact, the courts are evenly split as to whether the SEM or the search engine should be sued. New York has held that the search engine’s sale of a trademark as a keyword is not trademark infringement, whereas California and New Jersey have held that it is.
Both Yahoo and Google have adopted trademark procedures. Google allows SEMs to bid on keywords which are US trademarks of other companies. However, inside the US and Canada, Google will not allow trademark terms to appear in ad text. Yahoo also allows SEMs to purchase keywords which are the trademarks of others, but only if certain requirements are met.
However, not all use of another’s mark is infringement. If the SEM is using another’s trademark in the context of comparison advertising, there is ordinarily no infringement because the mark identifies the trademark owner, not the SEM, as the source of the product. Thus, SEMs may use the generic key term “computer” and then use the trademark Apple in comparative advertising to get higher placement in the search results. However, false or misleading statements may result in liability.
Reasonable use of another’s trademark to describe aspects of the SEM’s own goods or services will also not subject the SEM to liability. For example, the SEM is not liable for falsely trying to convince the online searcher they are Apple when it describes its product as an “apple-red computer.”
In light of this uncertainty, the most prudent course is to refrain from using another’s trademark as a keyword, but to use trademarks in permissible comparative advertising in order to get higher rankings in search results.
