The Debate Over ‘Competitive Keyword Advertising’ … All for Naught?
“Competitive keyword advertising” – or, purchasing online ads triggered by a keyword search for a competitor’s trademark – has long been a source of legal controversy and angst among trademark owners, who gripe that this practice hijacks potential customers. For example, why should an ad for Amazon’s Kindle Fire display with search results for Apple’s iPad? While the practice has been dogged by legal challenges, recent court decisions confirm that it does not constitute trademark infringement, and new research shows both little evidence of consumer harm as well as evidence that competitive keyword advertising may actually benefit trademark owners.
In 1-800 Contacts, Inc. v. Lens.com, Inc., the latest in a string of keyword advertising suits, the Court of Appeals for the Tenth Circuit held that Lens.com’s advertising – it had reserved the mark 1800CONTACTS as a keyword – was unlikely to cause initial-interest confusion among consumers seeking 1-800 Contacts’ lenses, and thus there was no trademark infringement under the Lanham Act. In a recent blog post, Santa Clara University School of Law Professor Eric Goldman argues that, while keyword advertising litigation may not have been dead when 1-800 Contacts brought its lawsuit in 2007, the past six years have proven that “keyword advertising lawsuits are not easy to win and are economically irrational.”
Despite this seemingly discouraging view, new studies suggest that the “death” of keyword advertising litigation may not be as dire a situation as trademark owners believe.
In three independent consumer surveys, Professors David Franklyn and David Hyman found little evidence of consumer confusion resulting from competitive keyword advertising. While brand owners tend to believe (of course) that consumers who use their brands as search keywords are seeking only their brands, significant numbers of searchers actually use trademarks to search for the branded product along with similar competing products from other companies.
Another study suggests a potential benefit for trademark owners. In the wake of Google’s 2010 liberalization of its European trademark policy to allow competitive keyword advertising, Professors Stefan Bechtold and Catherine Tucker analyzed how searchers’ behavior changed. Based on a data set of 5.38 million website visits, they ultimately found that the policy change was a “non-event for searchers … [which] alone raises serious doubts about trademark owners’ concerns.” Further, the researchers report, among those consumers who searched the trademark exactly (only 20% of the data set), there was a 9.2% decrease in the number of visits to the trademark owners’ site. However, those who searched the mark alongside other words (80% of queries) were more likely to reach the owners’ site in 14.7% of all browsing sessions. So, for the large majority of search queries, Google’s policy change sent more users to the trademark owners’ website – users who, the study adds, spent more time on the site once they got there.
Maybe, as Goldman suggests, competitive keyword advertising is a “win-win-win” situation after all: more traffic for trademark owners, more competitive options for consumer searchers, and, we dare not forget, more money for Google.