A competitor is using my trade mark on Google AdWords. Is that legal?

There are quite a few marketing departments that, after spending months developing a social media strategy (or even hiring an SEO consultant), search for their company name on Google only to find that the top result is an advert from a competitor. It would look something like this:

At that point, someone in the department might get the idea of constantly clicking on a competitor’s advert to use up their Google Ads budget, whilst another might consider starting a price war by bidding on your own brand in Google’s auction system. Suddenly, someone remembers that, fortunately, the company had chosen to register its own brand, and so the question arises:

Is our competitors’ use of our trade mark legal?

To put it very simply, for those who don’t know how it works, Google Ads is a service made available to advertisers, allowing them to display adverts in the search results when other users search on Google.  In other words, a shoe brand could bid (in Google’s real-time auction system) on terms such as «shoes» or «cheap shoes» so that its website appears as an advert when users search for these terms. It could also bid on the terms (brand names) «Adidas» or «Nike», as Google does not prohibit this sort of practice. So, if someone were to search for «Adidas shoes» on Google, the advert for our imaginary shoe brand might appear as the top result. Now, let’s get to the heart of the matter:

Is that legal or not?

Well, it depends. It doesn’t depend, as the song says, on how you look at it, but on whether the advert may undermine some of the brand’s functions, as in such a case the proprietor of the registered trade mark may exercise their rights under Article 34 of the Trade Marks Act to prevent its use by third parties.

For distinguish between adverts that do undermine one of the brand’s functions and those that do notSo, let’s summarise and summarise the position of both the CJEU and the Supreme Court on this matter.

We could say that the main purpose of a brand is to be used in advertising, Consequently, any use that prevents the trade mark proprietor from using the mark in advertising (and therefore, indirectly, on search engines such as Google) would constitute an infringement. On this point, the courts have ruled that use in AdWords cannot undermine such use; therefore, unless there is an impairment of the other functions of a trade mark – which we shall examine below – or an act of unfair competition is committed, such use shall be lawful. The case law is clear: bidding on a competitor’s name in Google Ads is not illegal in itself. 

Even though it is legal to do so, the brand’s other functions must still be protected; furthermore, the advert must comply with the General Advertising Act and must not engage in any conduct prohibited under the Unfair Competition Act. To give just a few examples, the advert:

• It must not dilute or trivialise the brand,
• One must not parasitically exploit another person’s reputation or even put that reputation at risk,
• You must not disparage a rival brand,
• You must make it clear that this is a payment transaction,
• and a long list of other offences.

Whilst it would be impossible to cover all possible infringements in a single article, we will analyse the most contentious one in Google Ads advertisements:

The advertisement must not mislead the public as to the commercial origin of the goods or services.

An advert would be in breach of the rules if, due to the way it was produced, it could cause confusion amongst the average consumer as to its commercial origin. To put it plainly, if a consumer searches for «Adidas», and there is a risk that they might mistake the competitors’ advert for one from Adidas, this would constitute a breach.

Clearly, this must be assessed on a case-by-case basis; there are certain factors that increase the likelihood of confusion, such as, for example, the advert’s URL containing our trade mark, or a competitor’s advert using only our trade mark and not their own, or there being a likelihood of confusion between the trade marks, etc. This would be an example of a clearly infringing advert:

Unlike the previous example, this advert creates a high risk of confusion regarding the business’s origin, as it is likely that the Google user will not realise that the advert’s web address is https://www.aurissadvocats.com, with two “s’s, so please do not contact us but another firm instead.

In conclusion: In itself, it is not illegal to buy a competitor’s name on Google Ads. However, as with many things in law, what matters is not so much the act itself as how it is carried out. If you need help assessing whether your Google Ads campaign (or that of your competitor) might be unlawful, please do not hesitate to contact us by sending an email to lucas@aurisadvocats.com or by calling the office on +34 937426040.