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Search Keywords Meet Trademark Law
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By Perry Binder

Many small businesses recognize the value and need to advertise online.

One of the most popular methods is to bid on keywords for "sponsored Ads" with major search engines such as Google, MSN, and Yahoo. (Click here to see how Google conducts its sponsored ad program.)

However, what's to stop a competitor from using your trade name to divert advertising traffic to its site? Not much, if you look at recent legal trends. For example, if a new company, The XYZ Soft Drink Company, bids on the keywords "Coke" or "Pepsi," that company's ad will be placed on a search engine's page along with Coca Cola- and Pepsi-sponsored ads for anyone conducting a search on those key terms.

In the old days of trademark law, we called that "creating confusing in the mind of the public." Today, we call that a big question mark.

The state of Utah just passed a law setting up a trademark registry to restrict rival advertisers from the above mentioned activity. However, it is unclear if this law will be enforced. In addition, a couple of courts have ruled that the mere bidding on such keywords is not a trademark violation, though one court just indicated that you may be going too far if you put the rival's trade name in the actual sponsored ad copy (rather than just using it as a keyword).

Confused? Join the club with many small business owners who are still trying to get a handle on how to advertise in the 21st century. Just remember, the law always lags several years behind innovation. It will take a federal law or further clarification from the courts to give you a better understanding of your legal rights when advertising on search engines.

Perry Binder is an Assistant Professor of Legal studies at The Robinson College of Business of Georgia State University.

Perry Binder is a legal studies professor at Georgia State University’s Robinson College of Business.
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