Ninth Circuit Reaffirms Leniency Towards ‘Keyword Conquesting’

Keyword bidding is a common practice in the digital world. The process consists of search engines or e-commerce platforms selling keywords to business owners in a bidding process and the highest bidder for a specific keyword then getting their ad promoted by the seller. Often, these ads appear at the top of search results when internet users search the sponsored keyword.

Conquesting is a strategy in which a business owner bids on keywords that relate to its competitor. Whenever an internet user searches for the keyword relating to a competitor, its own advertisement pops up in a privileged position. The case below examines whether conquesting a competitor’s trademark constitutes trademark infringement—the U.S. Court of Appeals for the Ninth Circuit said in October 2024 that it is not. 

Lerner & Rowe PC v. Brown Engstrand & Shely LLC

The plaintiff, Lerner & Rowe PC, is a personal injury law firm based in Arizona, and owned a registered trademark on the name “Lerner & Rowe”. The defendant, Brown, Engstrand & Shely, LLC, doing business as The Accident Law Group or ALG, is also a personal injury law firm based in Arizona, smaller in size than the Plaintiff.

ALG has long purchased the term “Lerner & Rowe” as a Google Ads keyword to promote its business in a way that whenever someone searched for “Lerner & Rowe”, ALG’s advertisements would appear near the top of Google’s search results list.

In September 2021, Lerner & Rowe sued ALG for, among other claims, trademark infringement and unfair competition. ALG moved the district court for summary judgment against all claims, which the district court granted. Lerner & Rowe appealed the district’s ruling before the Ninth Circuit.

The Ninth Circuit followed the legal framework established by its decision in Network Automation, Inc. v. Advanced Sys. Concepts, Inc. in 2011 in assessing the trademark infringement issue, and narrowed the dispute down to the likelihood of confusion element only.

The Ninth Circuit primarily analyzed four factors that are considered to be more relevant in determining the likelihood of confusion in the keyword advertising context, including: (1) the strength of the mark; (2) the evidence of actual confusion; (3) the type of goods and customers’ degree of care; and (4) the labeling and appearance of the advertisements and the surrounding context on the screen displaying the results page. The Ninth Circuit mainly focused its attention on the last three factors.

In respect of actual confusion, Lerner & Rowe’s primary evidence was a record of 236 phone calls placed to ALG by callers who were referring to the name of Lerner & Rowe in finding ALG’s phone number. The Ninth Circuit discounted this evidence as de minimis, considering that the number of actually confused consumers was low relative to the number of consumers who saw ALG’s advertisements; in other words, the actual confusion rate was substantially low.

The Ninth Circuit weighed the goods and consumers factor in favor of ALG as well and concluded that relevant consumers were not likely to be confused by the Google search results, considering the ubiquitous nature of Google Search and sophistication of internet shoppers, especially those shopping for legal services using a precise trademark of a service provider as a keyword on Google Search.

Further, the Ninth Circuit found that ALG’s advertisements were not confusing enough to lure consumers away and were sufficiently labelled by the bolded “Ad” designation, making confusion less likely among prudent consumers.

Ultimately, the Ninth Circuit, in a majority decision, affirmed the district court’s summary judgment, holding that ALG’s use of the “Lerner & Rowe” mark was not likely to cause consumer confusion.

Concurring Opinion

It is worth noting that the Ninth Circuit followed the analytical framework of the Network case, presuming that bidding on another’s trademark for keyword search is a “use in commerce” under the Lanham Act. Were ALG’s use of the trademark not qualifying use under the Lanham Act in the first place, there would be no point in moving to discuss the likelihood of confusion as the majority did in the present case.

Whether using another’s trademark in this way is Lanham Act use or not appears to have been settled in the Network case and was not addressed in the majority decision.

However, the concurring opinion considered that ALG’s use of the trademark-in-suit was not “use in commerce” in the first place and urged the court to reconsider Network’s holding en banc.

The major argument of the concurring opinion was that Network Automation should be distinguished from Rescuecom Corp. v. Google, Inc., which Network primarily relied on, because Rescuecom Corp was about selling of advertising keywords whereas Network was about purchasing of advertising keywords. Unlike sellers such as Google, who necessarily displayed Rescuecom’s trademark in the sale of services, purchasers of keywords like ALG in this case did not display Lerner & Rowe’s trademark and bidding on a keyword did not necessarily involve a “use” of the keyword.

The concurring opinion also distinguished Network Automation from Brookfield Communications Inc. v. West Coast Entertainment Corp., which was about use of another’s trademark as metatags, arguing that unlike metatags which involved a defendant’s affixing of its competitor’s mark into its website and “internally” displaying the mark, keyword bidding did not require a defendant to display or affix a mark, whether internally or externally, in the advertising of its services.

The concurring opinion argued that because purchasing keywords was different from selling keywords or using metatags, Network Automation’s holding that purchasing advertising keywords was use in commerce was unsupported by law and should be revisited. Otherwise, Network Automation, if followed, would drag the present case too far away from the plain text and purpose of the Lanham Act and the traditional Sleekcraft framework of analyzing likelihood of confusion.

Comments

Although the majority decision was not as aggressive as desired by the concurring opinion, the fact that the majority dismissed likelihood of confusion in the keyword conquesting context on summary judgment illustrates the court’s leniency towards the practice of keyword bidding.

On one hand, it is generally accepted that conquesting a competitor’s trademark as a keyword is unfair to the competitor; on the other hand, there seems to be no effective way to curb keyword conquestors from doing so under U.S. law. Keyword conquesting seems to be walking a thin line between unethical and illegal domains.

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Author: bakhtiarzein
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