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Unauthorized Use of Trademark in Keyword Advertising Might Violate Fair Trade Act
Whether using another's registered trademark in keyword advertising constitutes trademark infringement remains a controversial issue around the world. Neither the Trademark Act nor the Fair Trade Act in Taiwan explicitly addresses keyword advertising.
As keyword advertising can be a useful tool in promoting goods or services, it is very actively used. Some enterprises, which do not have any connection with a particular trademark, may try to use the trademark in their keyword advertising so as to mislead consumers into believing that they are the trademark owner, licensee or are somehow affiliated with the trademark.
The most controversial situations in Taiwan often include the followings:
1. Whether the trademark owner is entitled to prohibit others' use of the trademarks in keyword advertising;
2. Whether parallel importers and/or sellers may use the trademark for keyword advertising; and
3. Whether those enterprises, who provide maintenance services for TVs or other products, may use the trademark for keyword advertising to promote their services.
In the two civil cases in 2010 and 2011 respectively, the Intellectual Property Court (IP Court) determined that because (i) the keyword advertising did not use the trademarked terms for marketing purposes, and (ii) users who entered the search terms would not become confused, the keyword advertising does not constitute a use of the trademark, and therefore would not be deemed trademark infringement.
In the 2011 case, the franchisee was using the trademark in keyword advertising to promote its restaurant services, though the franchisor (the trademark owner) had explicitly prohibited such keyword use. The IP Court indicated that such advertising not only did not constitute trademark use but also would not present any confusion or misleading representation to consumers.
Notwithstanding this IP Court decision, the Fair Trade Commission decided on a case in 2009 that a business enterprise's use of keyword advertising may adversely affect the economic interests of other enterprises if it purchases keyword advertisements that make use of other enterprises' trademarks, names, or other business symbols in order to increase the number of visitors to its own website, and to redirect potential customers to its website. The Commission held that such use of keyword advertising is in violation of Article 24 of the Fair Trade Act.
On appeal, the Executive Yuan upheld the Commission's interpretation of Article 24 in its decision in 2010.
A further issue is that if the keyword advertising is found to be illegal, whether the seller or operator of the keyword advertising (such as Yahoo! Taiwan, eBay or Google) should be also liable.
In order to avoid any risk of being held liable, Yahoo! Taiwan had internally set guidelines for its keyword advertising, by which the service operator will reject applications for or remove keyword advertising that may cause any confusion.
The IP Court held in 2013 in the case of a local trademark owner accusing Google of its sale of the registered trademark as the keyword advertising to a third party that any unauthorized use of the trademark in keyword advertising might violate the Fair Trade Act if the website operator does not have any connection with a particular trademark but tried to use the trademark in keyword advertising so as to increase the number of visitors to its own website, and to redirect potential customers to its website.