Much Ado About Something -- An Empirical Analysis of Trademarks as Keywords

Disgruntled trademark owners have filed more than one hundred lawsuits in the United States and Europe, claiming that their trademarks should not be sold by search engines for use as keywords. Despite the volume of litigation, there has been little independent empirical work on consumer goals and expectations when they use trademarks as search terms; on whether consumers are actually confused by search results; and on which entities are buying trademarks as keywords. Instead, judges have relied heavily on their own intuitions, based on little more than armchair empiricism, to resolve such matters. We report on the results of a two-part study, including three online consumer surveys, and a coding study of the results when 2,500 trademarks were run through three search engines. Consumer goals and expectations turn out to be quite heterogeneous: a majority of consumers use brand names to search primarily for the branded goods, but most consumers are open to purchasing competing products. We find little evidence of consumer confusion regarding the source of goods, but only a small minority of consumers correctly and consistently distinguished paid ads from unpaid search results. We also find that the aggregate risk of consumer confusion is low, because most of the ads triggered by the use of trademarks as keywords are for authorized sellers or the trademark owners themselves. However, a sizeable percentage of survey respondents thought it was unfair and inappropriate for one company to purchase another company’s trademark as a keyword, independent of confusion as to source. Although we do find evidence of confusion, the types of confusion we document do not map neatly onto the categories recognized by U.S. trademark law. Our findings suggest that the development of the doctrine in this area has not been well served by the reliance of judges on casual empiricism in resolving these disputes. Much remains to be done to ensure that trademark doctrine “fits” the on-line context, and that it is applied in ways that are empirically grounded