Academic journal article Texas Law Review

Trademarks as Search-Engine Keywords: Who, What, When?

Academic journal article Texas Law Review

Trademarks as Search-Engine Keywords: Who, What, When?

Article excerpt

I. Introduction

Most Internet searches result in unpaid (organic or algorithmic) results, along with paid ads. The specific ads that appear are dictated by the user's search terms ("keywords"). A search for "hotel in Miami" will return ads from individual hotels, travel websites (e.g., Orbitz and Expedia), and consolidators. A search for a product or service will return ads for that product, as well as complementary and competing products and services. The advertisers pay the search engine when their ad is clicked, even if no sale ever results.1

In 2004, Google began offering trademarks for use as keywords on an unrestricted basis, followed in due course by other search engines. Once that happened, any entity (including sellers of competing products) could have their ads appear in response to a search for the trademarked product. So, an Internet search for "Mercedes" predictably returns ads for Mercedes dealers and auto repair shops, but it may also return ads for Mercedes' competitors, such as BMW and Infiniti. Trademark owners responded by filing more than 100 lawsuits in the United States and Europe, making the dispute the hottest controversy in the history of trademark law.2

In a previous article, we studied consumers' goals and expectations when using trademarks as search terms, and assessed whether there was a likelihood of confusion (which is the touchstone for trademark infringe- ment) resulting from those purchases.3 In this Article, we report on the entities that are purchasing trademarks for use as keywords, and consider the economic significance of the reported patterns.

Past litigation over the use of trademarks as keywords has focused almost entirely on the purchase of trademarks for use as keywords by entities that were competitors of the trademark owner.4 By definition, all of these "uses" of the trademark were without the permission of the trademark owner.5 This fact pattern in the litigated cases has given the impression that competitors account for a large portion of trademark-keyword purchases and use. We find, however, that competitors account for a relatively small percentage of keyword purchases. We also find a high degree of fluctuation in the number of paid ads and the domain names to which those ads are linked. We conclude that the risk of widespread abuse is low.

We also find that many trademark owners purchase their own marks as keywords-presumably in an attempt to ensure that their ads appear as prominently as possible. Trademark owners are apparently unwilling to rely solely on Google's algorithmic search to ensure prominent placement on the search-results page. Trademark owners may also be purchasing their own trademarks for defensive reasons-to keep competitors from doing so entirely, or raising their competitors' costs if they persist.

Search engines obviously profit when trademarks are purchased as keywords, whether those purchases are by competitors or are defensive purchases by trademark owners. Given the low incidence of purchases of keywords by competitors and the likelihood that famous brand owners are likely to appear prominently in algorithmic-search results, our results raise questions about the cost-effectiveness of defensive keyword purchases by trademark owners.

Part II provides some background on search engines, keyword searches, and the litigation over the use of trademarks as keywords. Part III presents details on our methodology. Part IV presents our results. Part V discusses our findings. Part VI concludes.

II. Background on the Issues

A. Overview

Google began selling ads based on users' search term (i.e., keywords) in 2000.6 In 2002, the system (known as AdWords) took its current form (i.e., payment-per-click).7 In 2004, Google significantly loosened its policy on the purchase of trademarks as keywords.8

We describe the Adwords program in detail in an earlier article but provide a brief summary here.9 Advertisers place bids, seeking to have their ads displayed when particular keywords are used as search terms. …

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