You have just negotiated a settlement between your client and a trademark infringer. The bad guy has admitted infringement,
and you are drafting a settlement agreement when a dispute arises. The bad guy refuses to agree not to purchase AdWords
containing your client’s trademark to advertise his products through various search engines, arguing that the purchase of
AdWords containing your client’s trademark does not constitute infringement. You are skeptical, believing that the infringer is
attempting to engage in further nefarious behavior. Your client wants to know: can a trademark owner prevent others from
purchasing AdWords or “Sponsored links” containing his trademark?
To find your answer, it is important to first understand a few principles of U.S. trademark law. The legislative intent of the
Lanham Act, 15 USC §1051 et seq, is to give trademark owners broad latitude to protect their trademarks from would-be
infringers. A fundamental objective guiding this intent is to protect American consumers from fraud. Consumers readily identify
particular brands with quality, based on a reputation built through a history of consistency, integrity and honesty. Consumers
place their trust, and thus, their purchasing power, in certain brands. Simply put: the more famous the brand, the more likely it is
that consumers will buy it. Consumers rely on the advertising and marketing of each brand to identify authentic goods from
counterfeits. Accordingly, the touchstone of whether infringement has occurred is the determination of whether a consumer is
“likely to be confused” between the trademarked product or service and the alleged infringing product or service, based on the
infringer’s illicit use of a trademark or service mark, or of a confusingly similar mark, in commerce.1 Federal courts nationwide
employ a multi-factor test to determine whether a likelihood of confusion exists, which generally include some iteration of the
following: (1) the strength of the trademark; (2) the proximity of the trademarked products and the infringing products in the
marketplace; (3) the similarity of the infringing mark to the registered trademark; (4) evidence of actual consumer confusion; (5)
the marketing channels used; (6) the type of goods and the degree of care likely to be exercised by consumers when purchasing
the goods; (7) the alleged infringer’s intent in selecting the mark; and (8) the likelihood of expansion of either the trademark
owner’s product line or the alleged infringer’s product line.2
Internet Advertising With AdWords
With the advent of the internet age, brand owners increasingly employ digital means to advertise and market their products and
services. Internet search engines have developed a method of digital advertising by permitting the purchase of AdWords. An
AdWord is a keyword contained within a “Sponsored link,” a website link to a business owner’s website, offered for purchase.
When purchasing an AdWord, an advertiser may specify the application of the keyword as a “broad match” (the advertiser’s
Sponsored link will result anytime a consumer searches for “the keyword, its plural forms, its synonyms, or phrases similar to the
word.”3); as a “phrase match”(the advertiser’s Sponsored link “will appear when a user searches for a particular phrase”4); as an
