Keyword Advertising Email Alert


The Court of Appeals for the Tenth Circuit recently shed light on an increasingly common Internet business practice. In 1-800 Contacts, Inc. v., Inc., a panel of the court held that the use of a competitor's trademark to trigger a paid advertisement is unlikely to constitute trademark infringement, provided that the text of the advertisement does not contain the competitor's mark. This decision establishes that, in most circumstances, a company may engage in the practice of keyword advertising by using another company's trademark for the purpose of boosting its own website traffic.

This case involves two competing contact lens retailers. The plaintiff, 1-800 Contacts, owns the federally registered trademark 1800CONTACTS. 1-800 Contacts monitors third party use of the 1800CONTACTS trademark by searching for its mark via the Internet search engine Google. In 2005, 1-800 Contacts noticed that paid ads for defendant started appearing among the search results. Significantly, never incorporated 1800CONTACTS into the actual text of its sponsored links. advertises through AdWords, Google's keyword advertising program. A company participating in the AdWords program pays Google to display its advertisement as a sponsored link on a page of search results. In this case, bid on a number of terms, or keywords, including nine variations of the mark 1800CONTACTS. When an Internet user typed one of these variations into a Google search, a paid advertisement for appeared as a sponsored link in the search results.

After several failed attempts to stop from using keywords that resembled its 1800CONTACTS mark, 1-800 Contacts filed a lawsuit. Its primary claim was that infringed on its trademark rights by purchasing search terms similar to 1800CONTACTS, thus creating "initial interest confusion." Such confusion results where a consumer who is looking specifically for one company's product gets diverted to another company's product and becomes confused as to the source of these goods.

The Tenth Circuit focused on empirical evidence presented by the parties. In particular, the AdWords program keeps track of how often a sponsored link is generated and the number of times an Internet user actually clicks on the link. Here, the AdWords data provided a "click-through rate" of 1.5 percent for advertisements. In other words, Internet users clicked on sponsored links only 1.5 percent of the time the links appeared as a result of searching for variations of 1800CONTACTS. The Court found this rate too low to demonstrate that consumers were being lured away from 1-800 Contacts' website.

In addition, the advertisements were presented in such a way that Internet users were not likely to be confused as to the source of the advertised goods. Google displays paid advertisements in a shaded box labeled "Sponsored Links," apart from the organic search results. Relying heavily on the appearance of such advertisements is consistent with recent keyword advertising decisions, including the Ninth Circuit's landmark case Network Automation, Inc. v. Advanced Systems Concepts, Inc. The Tenth Circuit found that this evidence showed a lack of potential and actual confusion among relevant Internet users.

The Tenth Circuit's recent decision potentially has broad implications. The case establishes that the practice of keyword advertising involving a competitor's trademark typically will not infringe on the trademark owner's rights where the competitor's mark is not used in the sponsored link.

Written by:

Published In:


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© McNees Wallace & Nurick LLC | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »

All the intelligence you need, in one easy email:

Great! Your first step to building an email digest of JD Supra authors and topics. Log in with LinkedIn so we can start sending your digest...

Sign up for your custom alerts now, using LinkedIn ›

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.