Keyword Ads Unlikey To Confuse

According to a California court, a company may be able to use a competitor’s trademark in keyword advertising – both as a trigger for the ad and within the text of the ad itself—without infringing the competitor’s trademark.

In the case, a Norman Industrial used the name of its competitor “Escondido Metal Supply” as a keyword trigger for its online ads. When shoppers search for “Escondido Metal Supply”, Norman Industrial’s ad appears as a sponsored link. The body of the ad also says that the products are “related to” Escondido Metal Supply.

To prove a case of trademark infringement, Escondido Metal had to show that customers are likely to be confused by the improper use of its mark.

Part of that analysis is whether any customers were actually confused. Proving this can be a little tricky. Even though 600 out of 4,000 people who searched using the mark ultimately clicked on Norman Industrial’s ad, that alone didn’t show they were actually confused by the ad’s use of the mark. It’s possible they saw the difference and preferred Norman Industrial’s products. Escondido Metal needed proof that consumers thought they were buying Escondido Metal products.

The court also found that Internet users are becoming more sophisticated in their buying habits as “online commerce becomes commonplace”. And so, they are less likely to carelessly mix-up the source of goods they buy online.

Plus, the positioning of sponsored ads, clearly set off from natural search results, weighs against a likelihood of customer confusion.