Is the use of anyone else's trademark as a keyword in contextual advertising on the Internet a violation?

The Internet has rapidly burst into our lives, and very few people can imagine how we have lived without it before. It is through the Internet that we learn the latest news, keep an eye on the lives of celebrities, listen to music and watch movies, become acquainted, communicate, fall in love, buy shares of large companies and baby diapers. Even to send a person to the final journey honorably, we go to the World Wide Web.

In connection with the rapid development of the digital technologies, the ways of promoting products and services among consumers are also changing. Fifteen or twenty years ago, the most famous ways of buying the products remotely were perhaps the Shop on the Couch or ordering the products through the catalogs that were distributed through mailboxes. But the majority of the consumers still went shopping to stores and markets.

Once the Internet appeared in our lives, many people refused from going shopping to the stores and they make orders at the websites: air tickets and bicycles, clothes and seedlings, animators for children holidays and the food from a supermarket, they seek for translators, teachers, loaders, and lawyers.

Due to the fact that the trade “moved” to the Internet, its main engine – advertising – followed it as well.

The main kinds of the Internet advertising are: search advertising, contextual advertising, media advertising, and geotargeting.

Singers, football players, actors, bloggers are engaged in the Internet advertising placing promotional video clips or photos on their pages in the social networks.

Moreover, the said list of the ways of the Internet advertising is not exhaustive. However, one way or another, but all of these ways of advertising are based on the analysis of the needs of buyers.

Advertisements usually correspond to a theme (context) of the webpage, where the advertisement is displayed, and/or they correspond to the interests of the user, whom the advertisement is displayed to, the theme of such advertisement, which is determined according to a totality of keywords/combinations of words during the visits of the website and the search queries.

The advertiser carries out independently preparing and editing an advertising campaign, including composing/changing the advertisements, including selecting the keywords according to which a search system will display the advertisement.

While carrying out the preparation of the advertising campaign, the advertisers often resort to the dishonest ways of struggle using the word elements of someone else's trademarks, including the trademarks of their competitors, as a keyword to display their advertisement.

It looks something like in the example that I am going to give using one of the cases[1] run by our company:

LLC ADL being a right holder of the trademarks according to certificates of the Russian Federation No. 277433 with the word designation “GRANFLOW” and No. 277474 with the word designation “GRANTOR” established that while inputting the keyword “GRANTOR” in a search bar at the website Yandex , the first link displayed by the search system was the link to the advertisement offering to purchase the GRANTOR Control Cabinets at the website of LLC GC MFMC, and while inputting the keyword “GRANFLOW” in the search bar at the website Yandex, the first link displayed by the search system was the link to the advertisement offering to purchase the GRANFLOW Pumping Units also at the website of LLC GC MFMC.

At the same time, LLC ADL and LLC GC MFMC are the direct competitors, the right holder's products were not sold at the website mfmc.ru, where the above advertisements led to, LLC GC MFMC sold its own products.

LLC ADL, considering the actions of LLC GC MFMC to be illegal as they were connected with the use without a permission of the right holder of the word designations “GRANTOR” and “GRANFLOW” in the texts of the advertisements for advertising the products being homogeneous with the products, for which the legal protection to the trademarks had been granted, filed a statement of claim to the Arbitration Court indication as the grounds for the claims lodged the fact that LLC GC MFMC was using the word designations “GRANFLOW” and “GRANTOR” that were similar to the plaintiff’s trademarks in the Internet advertising through the service “Yandex. Direct” for advertising the engineering equipment – the OMEGA Control Cabinets and the ALPHA Pumping Units, which LLC GC MFMC manufactured and marked with its own designations.

The Arbitration Court of the City of Moscow refused to satisfy the claims proceeding from the fact that LLC GC MFMC had not used the plaintiff's trademark by implication of Article 1484 of the Civil Code of the Russian Federation (hereinafter referred to as the C.C.R.F.), since the use of the combination of words being similar to the registered word trademark as a keyword for the search on the Internet could not be equated to the use of the trademark. The keywords cannot be referred to the ways of using the trademark, taking into account the lack of an individualizing ability.

The right holder disagreed with the decision made and filed an appeal petition, in which it asked to cancel the decision of the court, to adopt a new judicial act on satisfying the claims lodged.

According to the Resolution of the Ninth Arbitration Court of Appeal of 20.09.2017, the Decision of the Arbitration Court of the City of Moscow of 13.07.2017 in case number A40-55417/17 was canceled, the damage in the amount of 550,000 (Five hundred and fifty thousand) roubles was collected from LLC GC MFMC in favor of LLC ADL for a violation of the exclusive rights to the trademarks.

The Court of Appeal established a cause and effect relationship between the defendant’s actions for composing the disputable advertisements, selecting the keywords to display those advertisements, launching the advertising campaigns on the Internet directed to the promotion of its products through the use of the plaintiff’s trademarks and the violation of the rights of LLC ADL to the trademarks expressed in the illegal use of the word designations being confusingly similar to the trademarks owned by the plaintiff in respect of the products being the homogeneous products, for which the legal protection of the trademarks had been granted.

The Intellectual Property Court shared the findings of the Court of Appeal and upheld the Resolution.

However, in this case, the fact that the disputable designations had been used by the competitor not only as a keyword, but also, as it can be seen, directly in the advertisements was in favour of the right holder. And such presumption and impudence to some extent on the part of LLC GC MFMC led to the fact that suppressing their unfair activities was a success.

However, there are more cautious advertisers, who do not place someone else's trademarks directly in their advertisements, but they use them in the formation of the advertising campaigns only as the keywords.

As the judicial practice shows, many rights holders have tried to struggle against this, but the courts in such cases adhere consistently to the position that the keywords used on the Internet, being a technical parameter, serve to the search for the information by the users and they cannot serve as a means of individualization of the products and services, and therefore, there is not the violation of the exclusive rights of the plaintiff to the trademarks in this case.

In addition, the courts, while refusing to satisfy the claims lodged, conclude that the keywords are not a part of the very advertisement, they are not included in its content and they are not demonstrated to the users. In this regard, the users do not have the information on the fact according to what keywords the advertisement shown to them by the search system is placed, and they also cannot correlate the certain advertisement with the particular keywords.

As it follows from the judicial acts, this finding of the courts is based on the rules of displaying the advertisements through the search services, by analyzing which, the courts conclude that the keyword does not have the individualizing ability even in respect of the particular advertisement as it is impossible to identify the particular advertisement among all the rest on the basis of the keyword.

The similar legal approach was reflected in the Resolutions of the Intellectual Property Court of 25.04.2019 in case No. A40-167611/2018, of 26.09.2018 in case No. A40-200682/2017, of 26.11.2013 in case No. A40-164436/2012.

In my opinion, this legal position is rather disputable, because it entails abusing by the dishonest sellers, while advertising the products and services.

Using someone else's trademarks, especially the trademarks of their competitors as the keywords in contextual advertising, the advertisers get unreasonable advantages, because many consumers, while inputting the keywords into the search bar and getting the search results, visit the first few links that are at the beginning of the search page.

In the majority of the cases, these first links have nothing to do with the right holders. Among them, there are also the links to the websites, which lack both the products and the services of the right holder, but on the contrary, only the products of the competitors are placed, therefore, the consumer, who is initially aimed at the particular product, can buy a different product. The highest probability of such choice of the consumers refers to short-term products or cheap products, as the degree of the buyers’ attentiveness decreases, and the probability of confusing increases accordingly.

However, it should be noted that currently, in connection with the adoption of Resolution of the Plenum of the Supreme Court of the Russian Federation of 23.04.2019 No. 10 “On the Application of Part Four of the Civil Code of the Russian Federation” (hereinafter referred to as Resolution No. 10), in my opinion, a positive trend in this issue has emerged.

Thus, it is stated in Paragraph 172 of Resolution No. 10 that the use by the advertiser, while placing contextual advertising on the Internet as a criterion for displaying the advertisement, of the keywords (the combinations of words) that are identical or confusingly similar to the means of individualization belonging to another person, taken into account the purpose of such use, may be deemed an unfair competition act (Article 14.6 of the Federal Law “On Defense of Competition,” Article 10.bisof the Paris Convention).

At the same time, as it is known, the Federal Antimonopoly Service of Russia prepared Letter of the FAS Russia of 21.10.2019 No. AK/91352/19 “On the Use of the Means of Individualization as the Keywords,” in which the Antimonopoly Body published its recommendations and sent for the use in the work for the purposes of the uniformity of the consideration by the territorial Antimonopoly Bodies of the statements on the unfair competition connected with the use as the keywords of the word designations being identical or confusingly similar to the means of individualization belonging to another economic entity, while placing the Internet advertising by the persons, who are not the right holders of those means of individualization, and of the possibility of qualifying those actions according to Part 1 of Article 14.6 of the Law on Defense of Competition.

In my opinion, the criteria established by the Antimonopoly Body in this Letter establish the unachievable standards for proving in this category of the disputes.

However, by the time of the preparation of this article, the practice of the application of these positions has not been developed. As they say, time will tell.