A very recent North Carolina federal appeals court case means your business has less risk if it uses a competitor’s trademark in its Google or Bing Ads. For a primer on this topic click here, which is our prior blog post that discussed the relevant law and the same federal district court decision from North Carolina that addressed the issue. Google Ads drive consumers to your own website; and what better way to accomplish that then to snatch consumers who are searching for a competitor and bring them to your own website?
The Fourth Circuit Court of Appeals (in an unpublished decision so its use in other cases is limited) just affirmed that federal judge’s decision. The ruling is important because it holds that when a business uses a competitor’s trademark in a Google Ad, there is no likelihood of confusion if the ad’s hyperlinks take the consumer to the advertiser’s website (presuming that website doesn’t have any infringing characteristics).
What Was the Case About?
In the North Carolina case, which you can read here, a company called Avance Care P.A. hired a marketing agency to manage its Google Ad Word campaign. A competitor, Passport Health, noticed that Avance’s Google Ads used Passport Health’s trademark and so Passport sued for trademark infringement. They settled that case quickly, but later Passport noticed that Avance’s Bing Ads did the same thing. Passport sued again for trademark infringement. Passport made other legal claims against Avance, but the trademark infringement claims were the riskiest for Avance because of the substantial damages Passport could recover under federal law if it won the case, and the fact that the winning party could recover its attorneys’ fees.
What Did the Court Find?
The district court judge, and now the appellate court, said that there was no likelihood of confusion, which is a necessary part of a trademark infringement claim. Federal law, called the Lanham Act, exists to protect consumers from being confused by a company’s advertisements. For example, the Lanham Act generally would keep me from opening a pizza delivery business using the Dominoes logo in my advertisements, because Dominoes’ trademark (logo) distinguishes it from its competitors.
Importantly, the plaintiff in the North Carolina case, Passport Health, was relying on a presumption of likelihood of confusion because Avance used Passport’s exact trademark in its Bing Ads. Passport had no evidence that Avance’s Google Ads ever actually confused any consumer. And how could a consumer be confused? If you clicked the Bing Ad, you were directed to Avance’s website, not Passport’s. So if a consumer did an internet search for Passport Health, but Avance’s ad came up (as a top search result) and the consumer clicked it, she would very quickly realize she landed on the wrong website and would revise her search to get to Passport Health’s website . However, if Avance’s website also used Passport’s trademark in its website content, or contained other legally protected marks owned by Passport (or which were identical to Passport’s), the outcome likely would have been different. In that case, the confusion would be apparent, and the consumer could end up purchasing goods or services from the wrong company, all because of the confusing advertising – and illegal trademark infringement.
Should My Business Start Using Competitors’ Trademarks in its Google or Bing Ads?
No, we’re not saying you should, because you almost certainly will get sued or at least receive a cease and desist letter. But, if you don’t mind the risk of expensive trademark litigation, go ahead. If you use a marketing agency to handle your Ad Words campaigns, you should make sure your agreement with the agency requires it to defend and indemnify your business if a competitor sues you because the agency used its trademark in creating your Google or Bing Ads. You should also check your insurance policies to determine if you have coverage for trademark infringement claims and know how much your deductible is. Knowing these things will help you balance the risk of an aggressive Google or Bing Ad Campaign that uses competitor’s trademarks.
