Google’s Lucrative Adwords Program May Violate Trademark Rights

Trademark owners take note: whether or not you participate in Google’s Adwords program to advertise your business, your competitors may be using your trademark as a keyword in promoting their competing business.  Google not only allows this potentially infringing practice, it encourages it!  The company actively and openly sells competitors’ trademarks to advertisers seeking to divert potential customers to the advertisers’ websites.

It remains to be seen, however, how long the courts will permit this practice to continue.  On April 3, 2009, a federal appeals court sitting in New York decided to allow a case to go forward in which a computer-repair company called Rescuecom sued Google for trademark infringement.  The case is Rescuecom Corp. v. Google, Inc., Case No. 06-4881 (2d Cir.).

The complaint involves two of Google’s programs used in Internet advertising: AdWords and Keyword Suggestion Tool.  With AdWords, advertisers purchase keywords relevant to their business.  When a purchased keyword is used in a Google search, the advertiser’s ad and link appear on the search results page, either in the right margin or in a horizontal band immediately above the relevance-based (i.e., non-sponsored) search results.  The Keyword Suggestion Tool recommends keywords to advertisers.  Among its recommendations might be the trademark owned by the advertiser’s competitor.

According to Rescuecom, certain of its competitors took the advice of Google’s Keyword Suggestion Tool and purchased the Rescuecom trademark as a keyword for use in the AdWords program.  The result, it claims, is that a Google search for “Rescuecom” would result in its competitors’ advertisements appearing on the results page in a manner that might cause the searcher to mistakenly believe the competitor’s product or service was sponsored by, endorsed by, or otherwise affiliated with Rescuecom.

The trial court had thrown out the case, accepting Google’s argument that inclusion of a trademark in an internal computer directory did not constitute a “use in commerce” within the meaning of Section 45 of the Lanham Act.  The Court of Appeals for the Second Circuit, however, vacated the trial court’s ruling and ordered that the case be permitted to proceed, finding that the practice of displaying, offering for sale, and selling Rescuecom’s trademark to its competitors qualifies as a “use in commerce” within the meaning of the trademark statute.

The Court was careful to point out, however, that it had “no idea” whether Google violated the Lanham Act.  (As I often advise my clients, proving trademark infringement requires more than merely use of another’s trademark in commerce; the Act requires unauthorized use in a manner “likely to cause confusion…as to the origin, sponsorship, or approval” of goods or services. See 15 U.S.C. 1125(a)).  What the court did hold is that Rescuecom should be permitted an opportunity to prove its allegations in court.

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