Keywords, Context And Consumer Sophistication In Internet Advertising

Can a company use its competitor’s trademark as a “keyword” in advertising it purchases on popular search engines like “Google” and “Bing”? The answer is evolving with consumers’ – and the courts’ – sophistication in Internet use and practices and, according to at least one recent appellate decision, depends on the context in which the advertising is portrayed.

So held the Ninth Circuit Court of Appeals earlier this year in Network Automation, Inc. v. Advanced Systems Concepts, Inc. 638 F.3d 1137 (9th Cir. 2011). The case involved two competitors in the job scheduling and management software business. One competitor, Network Automation, purchased the Google AdWords service, in which advertisers pay Google to have their advertisements appear as “Sponsored Links” or “Sponsored Advertisements” in a column next to the search results when Internet users search for particular “keywords.” Network Automation chose its competitor’s trademark as one of its keywords. The competitor, Advanced Systems Concepts, Inc., objected, and litigation followed.

Arguably breaking from its own precedent, the Ninth Circuit reversed the entry of a preliminary injunction that had required Network Automation to stop using Advanced System’s mark as a keyword and permitted Network Automation to continue that use in its “Google” advertising. The court did so even though the advertisement did not clearly identify Network Automation as source of the advertisement, which had doomed similar advertisements in some earlier cases. The Court stressed how Google’s partitioned search results pages that clearly delineate the sponsored listings from the actual search engine results reduced the possibility of confusion.

Perhaps equally important to the Court’s decision was its own evolving perception of consumers’ growing sophistication in Internet use. A 1999 Ninth Circuit case had concluded that Internet users exercise a “low degree of care” in shopping of the Internet. By 2011, the Ninth Circuit concluded, consumers have become accustomed to seeing “Sponsored Links” appear when they use search engines and understand those links may not be affiliated with the company for which they were searching. The Ninth Circuit’s Network Automation case reflects the courts’ ongoing efforts to make the law reflect the ever-changing realities “on the ground” – or rather, in cyberspace. Use of another’s trademark in advertising will continue to be subject to scrutiny but through an ever more sophisticated lens.

As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice. For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.

Join Our Mailing List

Stay up to date with the latest insights, events, and more

Check all areas of law you are interested in receiving e-newsletters and alerts about:(Required)
This field is for validation purposes and should be left unchanged.

Our Practices



Our Industries