Notice anything usual in the next paragraph?
You're the marketing guy who drives sales for your company via paid search plus 100% ethical SEO. You do direct marketing like no one else. You're working hard, doing great. Then one afternoon, the phone rings. It's the big boss. "We're in deep deep trouble -- we just got a trademark alert from some aggressive trial lawyers from our online retail partners. Put our PPC marketing on hold now, just do it! We may need some of the best lawyers in America to get out of jail free on this one."
You might have picked up on a couple, but those 8 sentences include 15 trademarks.*
Likewise, online advertisers occasionally don't notice third-party trademarks when developing term lists and copy for paid search campaigns. In the case of reputable retailers and search agencies, the misuse is often accidental, but the legal consequences can be large.
Trademark law is based on the likelihood of confusion for the consumer. I can invent a beverage and name it "George's Amazing Cola," but I can't legally call it "Coke" or "Coca-Cola". The Coca Cola Corporation holds the trademark on their name, and plastering "Coke" on my drink would clearly confuse consumers. Intellectual property law also protects visual appearances ("trade dress"), so I can't legally swirl "George's Amazing Cola" in Coke's distinctive red-and-white font.
A company can use another company's mark in their advertising as long as it doesn't create a likehood for confusion -- say, in a comparison. I can advertise that "George's Amazing Cola has half the sugar as Coca-Cola" (assuming that fact is true) without infringing on Coke's marks.
George's Amazing Cola of course wouldn't run a print ad or TV ad saying: "Coke, but less expensive". This is obviously confusing, and no legitimate agency would make that mistake. The number of different print ads and TV ads created is small, the number of eyeballs reviewing each is large; it would be hard to claim that print ad was a mistake.
However paid search managers may generate tens of thousands, perhaps millions of keywords for the search engines, each with its own ad text. Often this is done en masse and without a lawyer, or any human looking at the text before it goes live.
Suppose for example the guy I hired to do PPC thinks an ad for George's Amazing Cola should come up any time someone searches for "Coke" or "Pepsi." Having the ad show up isn't a problem. However, if my PPC guy uses dynamic keyword insertion by custom and posts these keywords the same as he always does: "Get [KEYWORD] Here!", I might be in trouble, big trouble. According to one lawyer we spoke with, the courts can interpret each impression as a trademark violation, carrying a $75,000 fine...per impression!
It's not all that hard to avoid trademarks we see everyday, but there are over 800,000 active trademarks in the US, and many of them are not so obvious.
Suppose you make shirts for active wear, and your PPC manager decides to run all kinds of appropriate adjectives along with "shirt(s)". She decides any of the following 12 adjectives in front of shirt would make sense: "Cool, hot, slick, super, comfort, red, blue, green, grey, nylon, rayon, cotton". The two different versions of shirt, singular and plural, create: 24 different keyword advertisements...6 of which are trademark violations. Do you know which 6? Do you have any mechanism for figuring out which 6? Most folks don't..
If a smart, well-meaning human can step in the mire this easily, imagine how much worse it is when machines are in control? Keywords are generated -- sometimes without tremendous care -- out of search logs (site search and user search strings from the engines), which could very well contain brands you don't carry, not to mention other trademarks that no one other than the owner would know were protected. Couple this with the best practice of dynamic KW insertion in the ad text and you have a recipe for disaster.
A Modest Proposal: Ask-Before-Attack
Through an industry trade association, like the NRF or the IAB, establish a mutal "Ask-Before-Attack" collective contract. Advertisers signing the contract would agree that if they had a trademark dispute with any other member of the collective, they would raise that dispute first by calling the other member, marketer to marketer. No immediate lawsuits. If the other member complies and stops using the mark in a reasonable time frame, the mark owner must consider the issue settled. No lawsuits for past damages, regardless of how long the mark had been misused. If the other member disagrees, because they believe their use does not infringe, and they continue to use the mark, then the mark owner can bring in their lawyers and seek redress through conventional legal means.
I'm not a lawyer, and perhaps such an agreement would dangerously dilute marks.
However, PPC Advertising is still a new and VERY different medium. It is not clear that the courts, much less the mark owners recognize just how easy it is, given the volume of ads created and the absence of close scrutiny, for honest folks to get into a world of trouble.
* The trademarks "The Marketing Guy Who Drives Sales", "Paid Search Plus", "100% Ethical SEO", "Direct Marketing Like No One Else", "Working Hard, Doing Great", "Big Boss", "Deep Deep Trouble", "Trademark Alert", "Aggressive Trial Lawyers", "Online Retail Partners", "PPC", "Marketing On Hold", "Just Do It", "The Best Lawyers In America", "Get Out Of Jail Free" are each the property of their respective owners.