Trademarks in PPC: A new development?

Bidding on Competitor Keywords

Since the changes to Google Trademark policy it appeared that bidding on trademarks in Google AdWords and other PPC engines was now OK under certain circumstances. Personally I don’t see that this has changed, but a recent case has seen a judge in the U.S. award damages for infringement of a trademark in Google Adwords to the tune of $292,235.20.

Is this a warning to advertisers or a special case?

Harry J. Binder v. Disability Group Inc

The case in question was between two legal firms, one of which purchased adverts on keywords under trademarks owned by the other. They also used the trademark in advert copy.

This is a common occurrence and one which seems to be sanctioned by Google in specific circumstances.  However, the judge made no reference to the Google AdWords trademark policy in their ruling and based the award on the rule of law, in particular ‘Infringement of Registered Trademark’ which they found the Disability Group to be in breach of. They considered the use of the trademark was utilised “in commerce in connection with the sale or advertising of Defendant’s services”.

In essence this now gives a case for trademark infringement, but first some consideration needs to be given to actual ownership of the trademarks and “likelihood of confusion” – the latter being perhaps the most important part.

Ownership of the trademark

It was found – following some boring, protracted legal discussion – that Binder (the plaintiff) did indeed own the trademark “Binder and Binder” that had been used by the competing law firm (Disability Group Inc, the defendant). A small confusion arose around the use of ‘&’ rather than ‘and’ but it was felt that this is similar enough in nature for the trademark to stand.

Likelihood of confusion

Much disucssion around this topic was had and it seems the most important part of the case, especially from a PPC advertiser’s point of view.  Was the use of this trademark confusion enough to mislead people who viewed and clicked on the advert?

Compelling evidence was given, including a survey of customers who had clicked on these adverts and subsequently became customers of the Disability Group.

The likelihood of confusion, in legal terms, is based on the eight “Sleekcraft factors”:

  1. the similarity of the marks
  2. the strength of the plaintiff’s mark
  3. the proximity or relatedness of the goods or services
  4. the defendant’s intent in selecting the mark
  5. evidence of actual confusion
  6. the marketing channels used
  7. the likelihood of expansion into other markets
  8. the degree of care likely to be exercised by purchasers of the defendant’s product

Overall they found a “high likelihood of confusion” as the trademark was used directly in advertising and the two companies offer identical services (clients for social security disability cases).

Evidence of confusion

One of the more interesting parts of the case (if you got this far) was the evidence given for client confusion regarding the trademark use.  This compelling evidence is based on a survey:

  • 16 of 17 individuals polled believed that when they clicked on the Disability Group advert following their search they were being taken to the Binder and Binder website
  • 15 of 17 believed that even when on the Disability Group website that they were in fact contacting Binder and Binder

Following a test call from Binder and Binder the Disability Group additionally made claims that they did in fact work alongside Binder and Binder, further confusing clients and compunding the evidence of confusion.

In summary the judge found overwhelming evidence of potential confusion.

Show me the money

The financial award made by the was initially $146,117.60.  Some stats for you now on how they got there:

  • The conversion rate from visitor to enquiry was 6.37%
  • 188 forms were completed on the website after a click on the advert containing the trademark infringement
  • 40 forms were completed on a second site following a click on the adverts
  • They converted 18.78% of enquiry forms into cases
  • 43 cases were considered to have been lost in total
  • The average value of a case was $3,576.93
  • The judge removed a 5% “incremental costs” charge against this to derive the profit

Clearly this does not get to the full amount of the award; this came about through a doubling of the award due to the clear “willfulness” of the trademark infringement.  As the Disability Group had fully intended to use the trademark to gain new customers it was felt the award should be doubled.

This doubling in the award came through evidence of the PPC consultant who created an enticing report called “Top Scoring Words” in which they identified the trademark as a high traffic term that they could use. Ron Miller of the Disability Group was found to directly request that the trademark term was used in Google AdWords.

In summary

It seems clear to me that this was an exceptional case in which the main purpose of using the trademark in Google AdWords was to confuse clients and win business directly through the use of a protected trademark.  This is clearly not what Google intended with their expansion of trademark policy.

The moral of the story is to always consider the purpose of using a trademark in your adverts – the most important thing here is to ensure you are not (either intentionality or by accident) confusing clients with your adverts.

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