Trade mark infringement and dynamic advertising

Being dynamic is often considered an asset. Algorithms may, however, be too dynamic and cause legal problems, as the case discussed below shows. 

Google offers an advertising service called Dynamic Search Ads. As in the case of ‘traditional’ Google Ads, the ad appears above or on the right-hand side of the search results. However, instead of using a text from the advertiser, Google’s proprietary algorithm automatically generates the text, including the headline and landing page, from the advertiser’s website content.

Google describes these types of ads as follows--

When someone searches on Google with terms closely related to the titles and frequently used phrases on your website, Google Ads will use these titles and phrases to select a landing page from your website and generate a clear, relevant headline for your ad.

The generated text may also include the user’s search term. This type of dynamic advertising does not require the advertiser to select a keyword for the ad to show up.

But what happens if the automated ad contains the registered trade mark of a third party? Does it amount to trade mark infringement? The Austrian Supreme Court explored the question, considering whether a company placing the Dynamic Search Ad can be sued for trade mark infringement (case 4 Ob 134/22 t).

Background

The plaintiff owns Austrian trade mark AIRBUTLER and a corresponding International Registration designating the EU. Both are registered, inter alia, for apparatus for ventilating purposes in Class 11.

The defendant is a German company that produces electric dehumidifiers, construction dryers and blowers as well as air purifiers. It used Google’s Dynamic Search Ads. When searching for “AIRBUTLER” on google.at and google.de, the following ad showed up containing the defendant’s website and phone number: 

A rough translation would be:

According to the Supreme Court’s decision, the use of Google’s Dynamic Search Ads entailed a high likelihood that the term “AIRBUTLER” will be displayed in the ad. It is possible to exclude search terms manually in advance from appearing in the ad. This, however, would require the advertiser to anticipate potential search terms.

The plaintiff sued the defendant for trade mark infringement. The first instance court denied the claim, reasoning that the defendant had not actively used the trade mark and did not have a realistic chance to prevent the sign from being shown in the ad. The appeal court reversed this decision. The defendant appealed to the Supreme Court.

The Supreme Court’s decision

The Supreme Court confirmed that the use of “AIRBUTLER” in the ad shown above constitutes trade mark infringement.

The Court applied by analogy the case law on keyword advertising. The advertising generated through the use of a trademark as a keyword does not encroach on the rights of the trade mark owner only if a reasonably informed and observant internet user can easily recognize that the goods or services advertised do not come from the trade mark owner or an economically linked undertaking.

That was not the situation here. Considering the use of the plaintiff’s trade mark in the ad displayed above, the Court held that it created the impression for an average internet user that the ad comes from the trade mark owner or an economically-linked company.

The defendant was held liable although it did not specify the ad’s wording. An advertiser’s obligation not to use a trade mark in an infringing manner is not diminished because it employs third-party technology that creates an ad based on an algorithm unknown to the advertiser. The Court held that a trade mark owner does not need to tolerate such use because it originates exclusively from the sphere of the defendant and its contractual partner (Google).

Hence, the defendant, as a party to the advertising contract with Google, is liable for infringement in connection with the contents of the ad, even if he neither specifies them in detail nor provides any guidelines regarding the content. According to the Court, the risk of infringement is inherent in “automated” ads and is thus foreseeable.

As such, the Court ruled that the defendant is liable for trade mark infringement.

Comment

In order to minimise the risk of trade mark infringement, advertisers should use so called negative keywords. These are keywords chosen by the advertiser, which, when entered as a search term by an internet user, will not trigger the dynamic ad from being displayed. Had the defendant selected “AIRBUTLER” as a negative keyword, the ad shown above would not have been displayed when an internet user searched for this term.

What Google does not seem to offer at the moment is ‘blacklisting’ a third-party trade mark so that the Dynamic Search Ad is displayed but without the blacklisted trade mark in its text. For such ads, a ‘traditional’ Google Ads campaign seems advisable.

Picture is by Alexas Fotos and is used under licensing terms of Pexels.