By Trey Holloway
It is difficult to overstate Google’s influence. Since it emerged victorious in the search engine wars of the early internet, Google has grown to staggering proportions, serving an average of 63,000 web searches per second, or over 5 BILLION each day. With this incredible volume of searches, Google has arguably become the most effective advertising platform on the planet.
Enter Google AdWords. Basically, Google AdWords allow companies to increase their visibility by bidding on keywords or phrases to promote their own links when those words or phrases are searched. Unlike “organic” results, which are ranked on the results page solely according to their relevance to the search, AdWords results multiply a “relevance score” by the amount the purchaser is willing to pay per click and assigns the highest resulting score to the top spot. It’s a clever system which keeps results relevant to the search while allowing advertisers to boost their position by increasing their bids.
Obviously, this presents no trademark issue if you own a hamburger stand and bid on the word “hamburger,” but what if you bid on “McDonald’s” hoping to use the Golden Arches’ notoriety for your own benefit? In the 10th Circuit, at least, purchasing a trademarked term through AdWords poses no problem, because the consumer does not see the mark. The real issue, according to the court, is the likelihood that consumers will be misled by the ad and end up buying from the alleged infringer. This can be a tough hurdle for the mark holder’s case. In 1-800 Contacts, Inc. v. Lens .com, Inc., 722 F.3d 1229, 1238 (10th Cir. 2013), the court reasoned that the highest possible rate of consumers fooled was the number of clicked ads divided by the total number of ads displayed. This number is known in the industry as the “Click-Through Rate” or CTR. Relying on legal authorities concerning consumer surveys, the court concluded that a CTR below 10% was “evidence which will indicate that confusion is not likely.” While the survey/CTR analogy may sound good at first, it presents a nearly impossible challenge for plaintiffs. The average CTR for search ads is ~2%, meaning a particular link would have to perform over five times better than average before it would stop being considered evidence in favor of the defendant.
Mark holders face even more obstacles if their products are unlikely to be bought on impulse. In Gen. Steel Domestic Sales, LLC v. Chumley, No. 10-CV-01398-PAB-KLM, 2013 WL 1900562, (D. Colo. May 7, 2013), aff'd, 627 F. App'x 682 (10th Cir. 2015), the court ruled in favor of the defendant even after finding that the defendant’s intent was to mislead consumers, reasoning that the expensive steel buildings sold by the plaintiff and the defendant were “not the type of purchase that would be made without a thorough consideration of the available options.”
While courts consider other factors in determining the likelihood of confusion, they often cite evidence of actual confusion as the strongest indicator. Under current precedent, convincing a court to enforce a mark against an AdWords ad is an uphill battle. There is good news for mark holders, however. Google prohibits use of another entity’s trademarks in the text of an ad and provides an official complaint form at https://services.google.com/inquiry/aw_tmcomplaint. Hopefully, courts will come to realize that sponsored results like AdWords are in desperate need of increased trademark enforcement, but in the meantime, filing a complaint is probably a mark holder’s best bet.