By Alex Newman, IP Partner at Irwin Mitchell

Combining keyword insertion with sponsorship of competitors’ brands as keywords – whether deliberate or not - can be a huge mistake for advertisers and their agencies. Get it wrong and you could face trade mark infringement claims.

Some businesses deliberately use their competitors’ trade marks as keywords in Google Ads as part of their digital marketing strategy.

Whether you think that’s right or wrong, keyword sponsorship of competitor brands happens, and it will continue to happen. This is because an EU court decided a few years ago (in a dispute between Marks & Spencer and Interflora) that it wasn’t necessarily trade mark infringement.

The Background

That decision raised a lot of eyebrows. By the time a simplified summary had done the rounds, there was a widespread understanding of the ruling within the marketing industry.

The standard belief is that it’s ok (i.e. lawful) to use a competitor brand as a keyword. You just have to make sure that keyword isn’t included in the text of the matched advert.

The thinking is that if someone searches for Brand X, but sees an advert that’s clearly for Brand Y, they’ll easily tell that it’s not a Brand X advert.

It’s not actually quite as simple as that (and wasn’t as simple as that in the M&S v Interflora case), but it seems to have been widely adopted as a general rule of thumb.

The Keyword Insertion Curveball

Some businesses use their competitors’ trade marks as keywords inadvertently. For example, they might approve a long list of keywords which have been thrown up by search query reports without realising that the list includes competitor brands. Or they might have made a decision to stop sponsoring their competitors’ brands, but missed some when updating their keyword groups.

Again, that’s not unlawful in itself.

Keyword Insertion (also known as Dynamic Keyword Insertion or DKI) throws a curveball into the mix.

Keyword Insertion is designed to make adverts seem more relevant by replacing part of the original copy with the user’s search term. The natural assumption is that the internet user is more likely to click through the advertisement if it includes the search term they selected.

The problem is that if a business has used its competitor’s trade mark as a keyword - whether deliberately or inadvertently. Keyword Insertion will insert the competitor’s trade mark into ad copy (unless you’ve set it up very carefully). This makes it very likely to fall foul of the test for trade mark infringement established in the M&S v Interflora Case.

This isn’t a theoretical risk. It happens all the time.

And it doesn’t matter that neither the advertiser nor the agency intended for the competitor trade mark to appear in the advert. “I didn’t mean to” or “I didn’t know that would happen” aren’t defences to trade mark infringement.

The Risks

Brand owners can easily find out if searching for their brand returns a competitor’s advert with their own brand terms in the copy.  Once they do, they’ll probably contact their lawyers about a trademark infringement the same day.

Then the advertiser will get an urgent cease and desist letter demanding payment of damages and costs. They’ll probably blame their agency, who’ll work to change the Keyword Insertion settings and stop the adverts.

But by then the damage has already been done, causing problems for both advertisers and agencies such as:

• Continued demands from the brand owner
• Embarrassment or reputational damage to both advertiser and agency
• Cost for advertisers to instruct their own lawyers
• Potential indemnity demands from the advertiser to their agency to cover legal costs and damages
• Damage to the client/agency relationship.

Both advertisers and agencies can avoid all this if they understand the risks before setting and then managing the keyword and keyword insertion strategy.

For more information about this, or about other intellectual property issues relevant to your business, contact our intellectual property team.