On March 8, 2011, in Network Automation, Inc. v. Advanced Sys. Concepts, Inc., 2011 WL 815806 (9th Cir. Mar. 8, 2011), the Ninth Circuit provided some insight as to whether using a competitor’s trademark as a search engine keyword constitutes trademark infringement.

The dispute surrounds a common practice utilized by various search engines such as Google and Bing.  For example, you might search using the term “GMC” and the returned results would bring up a “sponsored link” for Ford as a result of Ford having purchased the trademark “GMC” as a keyword.  In such circumstances, General Motors, the owner of the “GMC” trademark may claim that this practice constitutes an unfair attempt to capitalize on their hard-earned brand equity by confusing and diverting web users to rival websites.

In the Network Automation case, the Court held that the following eight factors (known as the “Sleekcraft Factors”) serve as guidance in determining whether consumers are likely to be confused by such practices:

  1. strength of the mark;
  2. proximity of the goods;
  3. similarity of the marks;
  4. evidence of actual confusion;
  5. marketing channels used;
  6. type of goods and the degree of care likely to be exercised by the purchaser;
  7. defendant’s intent in selecting the mark; and
  8. likelihood of expansion of the product lines.

In addition, the Court held that other factors, such as the actual appearance of the search results page, should also be considered when considering the possibility of consumer confusion (e.g. where sponsored links are separated from normal search results). 

The Network Automation case shows a continuing trend of courts recognizing that internet users are becoming increasing more sophisticated and are therefore less likely to be confused by the use of “sponsored links” by competitors.  As a result of this case, it is clear, at least in the Ninth Circuit, that competitors may buy each other’s trademarks as search engine keywords, as long as the actual ads that appear on the results page are not confusing.

If you would like more information about protecting your company’s trademarks please contact our Business Law Group partner, David A. Closson at [email protected].