Vivien Chan & Co - China
Over the past decade, advertising and sales have moved onto online platforms, transforming search engines into essential platforms for business promotion. Keyword advertising services such as Google Adwords and Baidu Promotion allow an advertiser to bid for certain keywords linked to its advertisement or website.
Keyword advertising can prove challenging for trademark owners. Competitors can use a registered mark as a keyword, which means that their website is prioritised in search engine results, thereby diverting internet traffic from trademark owner’s own site.
Keyword advertising and trademark infringement
Keyword ads takes multiple forms. In some cases, the keyword is incorporated into a heading or an advertiser’s promotion materials to make it easy to find in a keyword search. However, in others, the trademark is entered into a search engine and results may show an ad that is unrelated to the keyword, with the keyword not even appearing in the search engine results.
Findings of trademark infringement where the keyword appears in search results In the case of ‘汤姆叔叔’ (TANG MU SHU SHU (2012)), the trademark was used in the headline of the promotional link together with the advertiser’s name and the services provided. The Chongqing Higher People’s Court found that there was trademark use. Further, courts across China are making this finding in similar cases.
However, in cases where the keyword does not appear in the search results, the courts have had difficulty using existing trademark law to find liability. The Trademark Law stipulates that:
To establish trademark infringement, brand owners must prove that the mark has been “used as a trademark” by the defendant. According to Article 48 of the Trademark Law, “trademark use” includes where the mark is used on goods, packaging or container of goods, transaction documents, advertising, exhibition and other business activities for the purpose of identifying the origin of trade.
In the case of ‘慧鱼’ (HUI YU (2013)), the Beijing Higher People’s Court ruled that linking the keyword to a website unrelated to it does not constitute trademark use. According to the court, if the keyword is not clearly presented to internet users (ie, it is used in internal system operations only), the mark is not considered to be a commercial sign that the public would recognise. Thus, it does not serve the purpose of identifying the origin of the goods and cannot constitute trademark use.
Unfair competition – good faith and business ethics
Although keyword advertising in a case where the keyword does not appear in the search results is not generally recognised as an infringement of trademark rights, trademark owners may still seek redress by filing an unfair competition claim. In the case of ‘万得’ (WAN DE (2015)), the Zhejiang Higher People’s Court held that although the keyword did not cause confusion as to the origin of trade:
the advertiser’s obvious intention to ride on reputation and goodwill of the trademark owner’s mark and business had breached the good faith principle, and use of the mark had damaged the trademark owner’s prior right and legitimate business interest, thereby constituting unfair competition.
The Supreme People’s Court provided guidance in the case of ‘美闻比萨’ (MEI WEN PI SA (2014)), stating that:
in keyword advertising cases which are not covered by the specific unfair competition conducts under the relevant specific provisions of the Unfair Competition Law, the general principle of good faith and business ethics may apply.
The Beijing IP Court further specified in the ‘大悦城’ case (2015) that in order to establish unfair competition under Article 2, the keyword must have either unfairly taken advantage of a trademark owner’s interests or disrupted its business operations:
While brand owners may have redress under the Unfair Competition Law, it is worth noting that in establishing unfair competition, the plaintiff needs to provide much more evidence of fame and use in China, compared with straightforward trademark infringement cases.
Joint liability of search engines
In theory, trademark owners can hold the search engine liable in order to avoid the possibility of further infringement on the platform and claim damages. However, in the cases of ‘陈茂篷’ (CHEN MAO PENG (2006)) and ‘武汉回归’ (WU HAN HUI GUI (2007)), the courts confirmed that search engines were unable to edit or control the information entered into their systems and could not be responsible for review on possible infringement. These judgments are consistent with the internationally recognised safe harbour principle for network service providers.
Pursuant to Article 36 of the Tort Law, a network service provider can be held jointly and severally liable if it fails to take necessary measures in a timely manner to delete, block or disconnect the infringing information upon notification of the rights holder, or if it is aware of the infringement but fails to take necessary action.
In the cases of ‘沃力森’ (WO LI SEN) (2010)) and ‘美丽漂漂’ (MEI LI PIAO PIAO (2011)), it was ruled that:
the standard of care of search engines would be that of a reasonable person, but the standard of care should be higher if the keyword is contrary to legal requirements (e.g. where the keyword is obscene or reactionary in nature) or is a well-known trademark with high reputation.
In such circumstances, it is the responsibility of the search engine operator to examine and take necessary action when the keyword is entered into the system. The standard of what constitutes ‘well-known’ is high. In the ‘捷顺’ (JIE SHUN (2012)) case, the Shenzhen Intermediate People’s Court held that although the trademark was known within a certain geographical area and industry, this did not constitute a well-known mark with a high reputation.
Advertising tools evolve constantly to attract consumer attention, and some businesses take advantage of such tools to divert business from competitors. Trademark owners need to ensure that they keep track of and update their trademark rights and evidence of fame, so that they have sufficient evidence to initiate relevant actions.