Google Ads is a powerful way to drive business to your company's website, no doubt. By bidding on keywords and crafting relevant ad content, your business can improve its advertisement's chance of showing up at the top of a google search, and above the organic search results. And Google's Dynamic Keyword Insertion tool can take your ad a step further. DKI will allow Google to insert a keyword from your ad campaign directly into the headline of the ad. Cool huh? If the searcher's query matches one of your keywords, bam, that keyword will headline the ad.
Assume one of your competitors has a neat company name, and assume it has some trademark protection, maybe under the common law, or maybe the competitor registered it with the USPTO (though registering doesn't automatically mean a court will give it the same level of protection). And you want customers to find you if they search for your competitor. Seems fair.
Can you use the competitor's exact trademark as a keyword? Can you use the exact trademark in your ad content? What if DKI grabs your keyword, and drops it in the headline of your ad because a searcher's query matched it?
Well, you can bet in this litigation commoditized world, if your competitor finds out, you will get a cease and desist letter, and then if you don't stop, a lawsuit.
But do you have to stop? Its all in the business risk. Defending a trademark infringment claim (governed by the federal Lanham Act) will also mean defending an unfair trade practice claim under your state's law (most state's have little FTC Acts which allow businesses to sue for damages, attorney's fees and punitive damages.)
The issue will come down to whether your Ad creates a likelihood of confusion with your competitor's trademark. Will the user that searched for XYZ Company but saw your Ad first be confused into thinking your website or business is XYZ's. Not just any searcher, but the test is the "ordinary consumer" googler. The more your website and XYZ's differ, for example, cuts against confusion. There are a lot of other factors, like the strength or distinctiveness of the trademark, the similarity of the two marks and the companies goods and services, and intent. Evidence of actual confusion (usually from customer surveys) is very helpful to prove infringement.
Most cases involve businesses suing Google for allowing this practice, but Google also allows a company to lodge its trademarks to try to prevent this from happening. But some cases are between competitors.
GEICO sued Google in 2005 for this practice. And Google won. Insurance companies were using GEICO as a keyword to trigger some ads that also contained GEICO. The court said that using just the GEICO trademark as a keyword, even if it triggers an ad that doesn't use the trademark GEICO, is not likely to cause confusion. But using GEICO as a keyword to trigger an ad that does include GEICO in the ad is likely to cause confusion and result in infringement.
These cases are difficult for companies to win, but they do exist. In December 2018, the Eastern District of North Carolina held there was no infringement in a Google Adwords case. Check that case out here. The plaintiff has appealed, but is also facing a $249,000 fee application by the prevailing defendant company. One commentator takes a harsh view of Google Adwords trademark cases including that case.
Be smart. If you are risk averse, then stay away from using a competitors trademarks. if you like risk and competition, take the chance, and call us for advice before you do.