Important search engine trademark usage change

Back in mid-July, the U.S. Tenth Circuit Court reached a very important decision that may lead to sweeping changes for your website and how you approach SEO.

Allow me to interpret what transpired in layman terms (you may wish to consult an attorney near you). This specific case involved two companies completely segregated from the hospitality industry — Inc. and 1-800-CONTACTS. The latter sued the former because had purchased keywords on Google Adwords that were similar to 1-800-CONTACTS’s trademark and thus cited as misleading to consumers.

However, the quantitative evidence did not support 1-800-CONTACTS’s claim; the number of customers potentially confused and misdirected by’s use of similar sponsored links was found to be insignificant. Moreover, because the competitor’s namesake was not used in the actual links, only in the pay-for keywords, it did not constitute trademark infringement. Hence, the court sided with the defendants:

Due to this ruling, the official line in the sand (for the United States, at least) now stands that companies can purchase the use of competitor’s trademarks for keywords, but as long as those trademarks do not appear in the actual sponsored links that consumers see in search result pages, it is unlikely any laws will be violated. Read that sentence again and understand the implications, because they are vast, and the hotel industry is certainly not immune.

As an example, let’s use two budget New York City hotels, both located across the street from one another in the Times Square area. To prevent any confusion, I’ll name them Circles Hotel Times Square (CHTS) and Magnificent Midtown Manhattan (MMM). This latest court ruling means MMM has the right to use “Circles Hotel,” “Circles Times Square,” “Circles Hotel Times Square” and any other permutations in its Google Adwords campaign so long as the inscribed hyperlinks do not contain the actual CHTS name. Moreover, CHTS — and all other competitors, for that matter — can partake in the same “gray zone” practices as MMM, making for a very treacherous keywords bidding environment.

In the end, you might interpret this as a slight hiccup with a few more dollars thrown at the search engines for prime sponsored link property each month. Think about it: if every hotel starts engaging in this practice with equal vigor — that is, everyone strategically using competitors’ trademarks in their keyword campaigns — then essentially it levers no advantage to any particular party. That’s game theory, but this “leveling of the playing field” will only be attained if everyone engages in this practice. In the meantime, while others might be just catching on, you have a window where this might work to your advantage.

Thinking broadly, such controversial tactics raise the question about how important sponsored links truly are in the grand scheme of things relative to other schools of thought such as traditional marketing and, of course, a strict reliance on positive word of mouth.

Chime in with your thoughts on how this might affect the industry.