The Internet provides a vast frontier for commerce. Unfortunately, due its nature, the Internet is ripe for unscrupulous third parties to divert sales from brand owners by tricking consumers into believing their products and services are associated with a well-known brand. Companies should be diligent in policing their brands online.
How Pay-Per-Click Advertising Works
One of the ways diversion happens is through pay-per-click advertising or “PPC” as it is known in the industry. A PPC campaign is set up through Google or another search engine to bid on certain keywords matching an Internet search query. In the first step, the user selects the keywords and typically sets a maximum amount or cumulative budget for each keyword. Next, the user prepares a short advertisement to be shown by the search engine in the paid sponsors or links section of the search results when the keyword is searched. Search engines have varied the manner in which these advertisements are displayed, so they are no longer limited to the top or right portions of the screen. If all goes according to plan, the user’s advertisement will redirect the searcher to another webpage where services and products are offered for sale. These products and services may have nothing to do with the brand names used as keywords.
Trademark Infringement in PPC Advertising Significantly Harms Brands
Because PPC campaigns are largely unpoliced on the Internet, they are particularly effective at diverting sales from brand owners as they efficiently locate people interested in the brand and display advertisements to them high in the search engine listings. This can lead to millions of dollars annually in diverted sales. This is a huge problem for companies. And the problem is not limited to companies engaging in e-commerce. All companies that sell products or services under a brand name are at risk, even if they only have brick-and-mortar retail outlets.
In addition to diverted sales, brand owners face significant harm to their goodwill where the diverted products and services are inferior to their brand name equivalent. This is because the consumer is confused as to the source of the products and services and attributes their inferior quality to the brand owner. Worse, the brand owner is frequently unaware this has happened, and as a consequence, cannot take steps to correct the confusion.
What should Brand Owners do to Protect Themselves?
A good first step is to register all brands and other trademarks. A trademark acts a source identifier and can be a word, phrase, logo, tagline, or other identifier. Obtaining a federal registration provides the brand owner with significant rights, including nationwide priority, which is very important for combatting infringement on the Internet.
Next, the company should police its brands by monitoring the search engines to see what comes up either in the sponsored links as a result of PPC advertising or in the organics when searching the trademarks as keywords. Infringing use of the trademarks in these advertisements should be addressed.
In certain circumstances, trademark owners can request that Google and other search engine companies prohibit use of the owner’s trademarks in their keyword suggestion tool or in PPC advertisements. While litigation is ongoing and the question of whether search engine companies can be liable for PPC advertising infringement is not settled, it’s best to build a record of repeatedly requesting the search engine companies to cease use of trademarks in their PPC advertising programs. This puts the search engine companies on notice, which may be helpful later if litigation ensues.
Finally, if all of these steps do not address the infringement, it may be time to hire an attorney to file suit to stop the infringement. See our website for additional information regarding steps to protect trademarks and reduce trademark infringement.