The courts are becoming more sophisticated in their application of trademark law to Internet. Today, the Federal 9th Circuit Court of Appeals issued a ruling in a keywords ad case. The defendant in the case bought a competitor's brand name as a keyword for ads on Google and Bing. A search for the competing brand would bring up a sponsored ad for the defendant. The competitor sued claiming that the use of its brand as a keyword was a violation of its trademark rights.
In Network Automation, Inc. v. Advance Systems Concepts, Inc.,court found that it was not since the search engine results showed the defendant's ad and name as a sponsored result. The court found that consumers are not likely to be confused by the sponsored ads since they can discern the difference between the companies' brand, plus the defendant's ad is obviously not the brand of the competitor.
This is a shift from earlier similar cases in which the same court held that the use of a competing brand could be considered trademark infringement if used as a keyword. The court's reasoning in this case was that the Internet was changing, the consumers are more sophisticated now than in the past, and the court's must be flexible in applying the law to Internet cases.
The full case opinion is here.