Online Advertising and Use of Others’ Marks (Intended for a non-legal audience)

1. What constitutes online advertising?

“Online advertising” is advertising that promotes an advertiser’s goods or services on the Internet. This term encompasses many types of advertisements.

2. What are some examples of online advertising?

New types of online advertising are created all the time. Below are some current examples.

• Display-Based Ads (e.g., banner ads, pop-up ads, pop-under ads). Advertisers pay for these ads to appear on others’ websites. The ads may appear across a portion of the screen or in a new window that opens over or under the window of the website visited by a user. They may also appear in response to keywords, as with search-based ads (described below), although originally advertisers purchased banner ad space to have the right for their ad to appear on a random, rotating basis.
• Search-Based Ads. Search-based ads are advertisements that appear in response to a keyword trigger. The most familiar example of search-based ads may be the advertisements that appear on the pages displaying the results of a search engine query. Advertisers pay search engines to display advertisements (sometimes called “sponsored links”) along the margins of pages displaying the organic results of a user’s search. The search engine displays these advertisements when a user enters a search query using terms that the advertiser has selected as “keywords” (see below) to trigger display of the advertisement.
• Blogs. Blogs may serve as advertisements when they promote an advertiser’s goods and services. The Federal Trade Commission’s (FTC’s) endorsement guide (Code of Federal Regulations, Title 16, Part 255) provides important guidance, such as cautioning bloggers who receive cash or in-kind payment for reviewing goods or services to disclose that material connection.
• Social Media (e.g., Facebook, Twitter, Second Life). Media that encourage networking for personal, professional, or other reasons provide a venue for advertisements.
  Advertisers may use social media to run sponsorships or otherwise generate interest in their branded goods and services. Many social media sites have specific marketing rules. For example, some restrict advertisements that are directed to children or that promote certain categories of products. When using social media for promotion of goods and services, it is important to follow the social media marketing rules governing the site in question, as well as the FTC endorsement guide. For example, the FTC endorsement guide cautions celebrities and “social media influencers” using social media to disclose their relationships with advertisers before promoting the advertisers’ goods or services in social media or other venues outside the traditional advertising context.

3. What are keywords?

“Keywords” are terms that a user uses to compose a search query that is entered into a search engine. The results generated depend on the keywords used in the search query.

4. What is keyword advertising?

“Keyword advertising” is another name for the type of online advertising in which advertisers pay search engines to generate an advertisement in response to a search query that contains certain keywords the advertiser has selected.

5. What are metatags?

“Metatags” are words in the hypertext markup language (HTML) of a website. They are not visible on screen when a user views the website in standard format. However, search engines may use the content of a website’s metatags to determine how well that website matches the search query that the user typed into the search engine. Note, however, that what search engines use to rank websites’ responsiveness to a search query changes periodically.

6. When do I need permission to use someone else’s trademark in online advertising?

You should obtain permission to use someone else’s trademark when the advertising states or implies that the owner of the mark has approved the association of your product or service with its product or service or the association of your business with the business that uses the mark.

7. Can I use someone else’s trademark in online advertising without the trademark owner’s permission?

In certain circumstances, yes. Following are examples of fair use.

• Nominative Use. Nominative use of a mark occurs when one person uses another’s mark to refer to the mark owner or its products or services. In the United States and certain other countries, if you are using the mark in truthful, comparative advertising or in a way that truthfully identifies the products or services in a manner that does not mislead or confuse consumers as to the mark owner’s affiliation with, sponsorship of, or endorsement of your products or services and that does not use more of the mark than necessary, generally you may use the mark in online advertising without the mark owner’s permission. Nominative use of another’s mark often occurs in comparative advertising, but it may also occur when a distributor or retailer indicates what goods it offers for sale. In this context, that genuine (authorized) products are the subject of the advertising is important to establish.
• Descriptive Use/Non-trademark Use. Classic fair use occurs when someone uses a term that someone else claims as a mark in a descriptive sense rather than as a trademark. In the United States, it is permissible to use a descriptive term in good faith in its primary, descriptive sense rather than as a trademark. If a word is used in a non-trademark way and it does not cause confusion, such use is permissible.

8. Does it matter if the use is in the visible text as opposed to the “invisible” text?

It may. The current trend finds U.S. and European courts holding that the use of someone else’s trademark in “invisible” text, such as metatags or search engine keywords, to trigger sponsored advertisements is permitted if no confusion is likely to result. However, there are limits to this, and there are cases in which use of another’s mark in metatags was prohibited. (See questions below dealing with keywords and metatags.)

9. Is using a trademark as a keyword a “use in commerce”?

Yes, in the United States. There is no longer a split among the U.S. federal courts of appeals as to whether such use is a “use in commerce.”

Yes, in Europe. Use of marks in keywords and AdWords by a competitor constitutes use with a view to financial gain and therefore constitutes “use in the course of trade.”

10. Are third parties allowed to use my trademark as a keyword they select to trigger their advertisement?

This is an emerging area of law, so there is a high level of unpredictability as there is a lot of litigation on this issue. Some cases have been resolved through settlement, but other cases remain unresolved, which makes it difficult to predict outcomes with great certainty. However, some courts have found that merely displaying an advertisement in response to a keyword composed of another’s trademark, without more, does not alone constitute infringement.

In Canada, there has not been a case that has dealt substantially with use of someone else’s mark as a keyword.

In Europe, the state of the law is unsettled. In principle, a trademark owner may prevent a competitor from advertising by using the owner’s mark as a keyword when the goods and services offered are identical to those for which the mark is registered and when such use is liable to have an adverse effect on one of the uses of the mark, such as the origin-indicating function or the investment function. Where the advertisement displayed on the basis of a keyword identical to another’s mark puts forward an alternative to the goods or services offered by the mark owner, the Court of Justice of the European Union (CJEU) has found that such use is fair competition.

That being said, earlier cases decided by certain national courts found that keyword advertising created a likelihood of confusion. For example, in France, Yahoo! and Google have been held liable for sales of trademarks as keywords, and a competitor purchasing a company’s trademark as a keyword was held liable for infringing the trademark.

On the other hand, German courts do not consider use of someone’s mark as a keyword to constitute trademark infringement where the triggered sponsored links do not refer to the mark or its owner and are clearly separated from the general search results.

In the United States, this issue remains unresolved and on the cutting edge of developing trademark law.

It is important to note the distinction between use of a trademark as a keyword and use of a trademark in the advertisement that is triggered in response to the keyword. (See below.)

11. Are third parties allowed to use my trademark in search-based advertisements that appear in response to keywords?

The answer to this question is fact specific. It depends a great deal on how the trademark is used in the text of the advertisement. If the trademark is used to indicate that the advertiser is selling your brand of goods or if the trademark is used in such a way as to compare your goods to the advertiser’s competitive goods, some courts may consider those uses permissible. However, if your trademark is used in a way that is likely to cause confusion, cause mistake, or otherwise deceive (i.e., by the selling of counterfeit goods), or is used to create the misleading impression of affiliation, sponsorship, or endorsement between you and the advertiser, most courts would prohibit such use.

12. Are third parties allowed to use my trademark in metatags?

The answer to this question is, again, necessarily fact specific. How a particular court would rule on this question could change as search engines and their searching mechanisms evolve over time. In the United States, there are cases in which use of another’s mark in metatags was prohibited. On the other hand, there are some fair uses that others could make of your trademark. For example, if the mark is used to index the website according to topic, to identify the brands of products actually sold through the site, and/or to indicate the legitimate subject matter of a website, such uses may be considered fair uses that do not violate your trademark rights.

Several metatag cases in Canada have been resolved in favor of the user (rather than the trademark owner) but have left open the possibility that different facts could give rise to likelihood of confusion, unfair competition, or passing off, which would warrant a finding in favor of the trademark owner. In one decision, the court applied traditional principles of passing off and trademark causes of action, but, in the absence of continuing use of metatags that were identical, rather than merely similar, to the plaintiff’s trademarks, it did not find any liability on the facts. Liability was found for those of the defendant’s prior metatags that were identical to the plaintiff’s marks. In another decision, the court found that the unauthorized use of terms that were identical or similar to the plaintiff’s domain name constituted passing off. In Europe, decisions vary from country to country.

In Germany, use of a competitor’s trademark in metatags generally has been considered to violate the owner’s rights. In Denmark, Belgium, and Austria, use of someone else’s trademarks in metatags has been held to constitute infringement. In Holland, claims against others for their use of the plaintiff’s trademarks in metatags have been dismissed.

In France, the issue is decided on a case-by-case basis. Some courts have dismissed claims against others for their use of the plaintiff’s trademarks in metatags, whereas other courts have found that use of the plaintiff’s trademark in the source code of the competitor constituted trademark infringement.

13. What should I do if I discover someone is using my trademark in online advertising without my permission?

Consulting an experienced local trademark practitioner is recommended. However, enforcement of one’s trademark rights does not always require litigation. Sometimes, communicating with the service provider will lead to more practical, efficient, less-expensive solutions.

As a courtesy, Google investigates matters raised by trademark owners in various situations as part of its AdWords and AdSense policies, though only with respect to ads served on or by Google. The trademark owner does not, however, need to be a Google AdWords advertiser in order to file a complaint.

In many regions, Google will investigate ad text only and will not disable keywords in response to trademark complaints. More complete investigations extending to the use of trademarks in ad text, in keywords, or in both are undertaken in certain countries.

In a similar vein, Facebook, MySpace, Twitter, and other social networking services permit trademark owners to report infringements through notification procedures.

Additional Resources

Overview of Advertising Law Presentation

Please give us your feedback on whether this fact sheet was helpful or if you have suggestions for other fact sheet topics.