eBrandz Blog

Legal implications of bidding on your competitor’s trademarks

Microsoft has just unveiled a new update regarding its trademark policy. So now, it is possible to poach off trademarks of a competitor by bidding on them as key terms on Yahoo as well as Bing, just the way you have always been permitted to on Google. If you can bid on trademarks in AdWords and adCenter, does it really mean you can escape any legal action?

This is where the trap lies. A recent court decision might prompt you to reconsider your strategy. Just to elaborate, a California district court in late January came up with a ruling that can have significant implications particularly for paid search advertisers. In the hearing of a matter involving Harry J. Binder and Disability Group Inc., the judges penalized an overly enthusiastic PPC marketer (in this case, the Disability Group) with the fine of $292K, plus recovery of legal fees.

The ruling relied in large part on the fact that the group was buying the trademarked keywords of their competitor in Google AdWords. In this context, I shall take a look at the two relevant trademark related developments and underline their ramifications for search marketers.

Risks involved in advertising on trademarks

In the first place, I shall be debating, in a general way, whether or not it makes sense for market players to carry on advertising on their competitors’ trademarks on an ad network. When they do so, marketers also need to keep in mind certain risks associated with practice of advertising on trademarks.

Should you or shouldn’t you opt to advertise on your immediate competitors keywords? The debate has been going on for quite some time in the industry, since the law is still bit unclear on this. A section of experts argue that if you as a brand owner don’t like someone else poaching on your own trademarks, you shouldn’t also poach on theirs.

Though the practice of advertising on competitors’ trademarks is there, it demands a serious rethinking, in light of recent developments and court judgments. Some may argue that it’s just a case of assessing the perceptible business risks of any trademark lawsuit (bad publicity, legal fees, fines etc) against the monetary gains to be made. The argument may not fit into the business ethical, but it’s still a valid one.
As I’ve briefly touched upon the Binder v Disability Group case, the courts have ruled that both personal as well as corporate liability were involved. So this is no more about business risk alone; this is also about your personal liability, as the ruling suggests. You as a business owner cannot simply rely on an argument that it’s OK with Google and Microsoft. This argument is not at all raised, and even the courts were well of Google’s policy. But Binder weren’t suing the search engine giant; they had gone to court against their competitor. You also cannot hide behind the ‘many others around are doing the same thing’ defense.