Buying Another's Trademark in Google's AdWords Deemed Infringement

One day in a previous business life I did a Google search on the name of our company, and the first listing (albeit paid) pointed to my chief competitor. That competitor purchased our company name as a “keyword” in Google’s AdWords program, so that their ad might be displayed on the search results.  At the time, I thought, “there ‘oughtta’ be a law against that!"  Now, thanks to the United States District Court for the Central District of California, perhaps there is.

In Harry J. Binder, et al. (you probably know them as Binder & Binder) v. Disability Group Inc., et al., Case No. CV 07-2760-GHK (Ssx) under the Lanham Act for purchasing advertising on Google AdWords that infringed a trademark, the law firm name “Binder & Binder.” (In case you are wondering, the courts have excused Google as the facilitator in several instances.)

In Part II of the decision, what needs to be proven for successful prosecution of such a claim is fully delineated, carefully reviewing the factors outlined in AMF Incorporated v. Sleekcraft Boats, 599 F. 2d 341.

The plaintiff has the burden of proof by a preponderance of the evidence that it is the rightful owner of a registered trademark that the defendant used in any reproduction, counterfeit, copy or colorable imitation of a mark without the plaintiff’s consent, in commerce, in connection with the sale, offering for sale, distribution or advertising of any services, and where such use is likely to cause confusion, or to cause a mistake or to deceive.

Of particular interest to valuation analysts is the lost profits calculation. The court looked at the average revenue per California case for the plaintiffs during a one year period (a shocking $3,576.93; parents might be ill-advised to encourage their children to get into Disability Claims law), the number of clicks, the number of clicks that turn into submissions, and the number of submissions that turn into cases. (The court specifically rejected statistical analyses based on the defendant’s experience.) The court accepted plaintiff expert David Hanson, CPA’s estimate of incremental costs that would be incurred to handle those additional cases. Click-to-submission ratios were used to figure all of the redirected traffic results, and $146,117.60 was the lost profits total.

Though the court agreed there was likely to be lasting negativity in the marketplace that plaintiff would have to spend to overcome, the lack of specific, quantifiable evidence (and the limited time frame) mitigated against any corrective advertising damages. However, the court used its discretion as permitted in the Lanham Act to double the damages, resulting in an award of $292,235.20 (plus reasonable attorneys’ fees).

Note, relief was made possible, first and foremost, because the trademark was registered. (IP managers take heed when your advisors insist you protect your strategic intellectual properties.) It's not difficult to check if an organization is in the same situation as Binder & Binder, and now the violated have teeth behind their cease-and-desist requests.