Stanford Center for Internet and Society

Keywording (aka keying) is the practice of registering with search engine words, terms, acronyms etc. that are protected by trademarks owned by someone else. The registration triggers the advertisement of the registrant and places it on the results page when users enter the keyword into the search box and run their search. Trademark holders are not happy when competitors bid on words or names in which they have exclusive rights. Commercial competitors that operate under names used as keywords sometimes argue that this practice amounts to unfair competition. (A while ago I posted this paper which explains some of these legal issues in more detail).

The legal landscape in the U.S. on the question of trademark infringement liability for keywording is painfully incontinent. Generally speaking, courts outside the Second Circuit's jurisdiction often consider such practice as "trademark use", and hence, potentially infringing. Those courts find a trademark-relevant use performed by the advertiser even when the keyword/mark is completely invisible on the results page and even when users who see the ad or click on it (thereby normally directed to the advertiser's website) are not exposed to the mark at any point. Courts within the Second Circuit tend to dismiss infringement in such situations, since they consider a practice that never exposes the user to the protected mark as one that cannot infringe on it.

Courts in Europe are equally divided on this question. An official press release from today informs about a long-awaited decision by the German highest court (BGH). (I rely here on the press release - the decision has not been published yet). This decision comes to resolve the confusing and fussy caselaw, a result of massive litigation in lower courts over the past few years. The most interesting question relates to a defendant that offers "erotic articles" (not the stuff one can read, I suppose). The defendant advertises in Google using the keyword "bananabay". Plaintiff is also in the business of erotic articles of the same type, which it offers over the Internet. Plaintiff is the markholder of "bananabay".

So, the keyword registered by the advertiser is identical to the protected mark, and the ad concerns the same products or services offered by the markholder that are covered by the mark. The advertiser apparently did not use the word "bananabay" in any other way. Does this satisfy the requirement of "trademark use"?

Well, the BGH decided not to decide and referred the question to the European Court of Justice. A French high court did the same, and the issue will probably be resolved at that level. A conclusive ECJ decision should have important implications for advertisers, search engines and markholders.

I tend to think that in jurisdictions where showing likelihood of confusion is not always required for establishing trademark infringement (e.g., according to the European Trademark Directive of 1989 in the case of identical marks for identical goods/services), markholders have a fairly strong case. In jurisdictions where likelihood of confusion is regarded the sine qua non of trademark infringement (as reflected in U.S. federal law), advertisers wanting to keyword marks generally should be free to do. This, as long as the mark remains imperceptible to consumers who evaluate their adword and other business offers in general.