New Case Law on the Use of Third-Party Trademarks in Keyword Advertising
BY G. BREUER
On December 19, 2024, the Supreme Court of Justice of Argentina overturned a Federal Court of Appeals decision in the case “Organización Veraz S.A. v. Open Discovery S.A.”. The Federal Court had previously ordered Open Discovery S.A. to cease using the VERAZ renowned trademark as a keyword in Google’s sponsored keyword link service (AdWords), considering it a trademark infringement and an act of unfair competition.
Facts: Open Discovery S.A., a company providing credit reports, contracted Google Inc.’s AdWords keyword-sponsored link system to advertise its services. In doing so, it used renowned registered trademarks owned by the plaintiff, such as “VERAZ” and “ORGANIZACIÓN VERAZ,” as keywords.
In its ruling, the Federal Court concluded that Open Discovery S.A. had used the plaintiff’s trademark as a keyword solely to unfairly capitalize on its reputation and goodwill, thereby committing trademark infringement and engaging in unfair competition.
However, in its recent decision, the Supreme Court of Justice of Argentina overturned the ruling, stating:
“A trademark, like any other property, is protected under Article 17 of the National Constitution. Nevertheless, the rights of the trademark owner, as recognized in the relevant legal provisions, are broad but do not authorize the owner to prevent any use of the mark by a third party. This is because the right of the trademark owner to prohibit third-party use and the exclusivity granted by trademark ownership is tied to the necessity of preserving its distinctive power.”
“Trademark protection under our legal system is not absolute and does not extend to situations where the use of the mark does not harm the owner’s interests because it identifies another product that cannot be confused with those the mark aims to distinguish.”
“Since trademark protection is not absolute, the use of a well-known trademark as a keyword in sponsored link advertising solely to offer alternative products or services should not necessarily be considered a violation of the exclusive rights granted under federal law. It may constitute a lawful practice, provided that the advertisement does not diminish the trademark’s distinctive character by creating a likelihood of confusion among consumers regarding the goods or services identified by the mark, or suggest a connection between the advertiser’s goods or services and those of the trademark owner that could harm their interests.”
Regarding its characterization as an act of unfair competition, the Court noted:
“The mere use of another’s trademark as a keyword cannot be deemed unlawful simply because it involves leveraging another’s reputation or diverting clientele. For such a practice to be considered trademark infringement or unfair competition, it is not sufficient to invoke the exploitation of another’s goodwill. This exploitation must also be improper or illegitimate, occurring when, as per the aforementioned provisions, it causes consumer confusion regarding the goods or services identified by the mark, or when consumers perceive a connection between the advertiser’s offerings and the trademark owner’s goods or services.“
In conclusion, for the use of a third party’s well-known trademark as a “keyword” in sponsored links to constitute a violation of trademark rights or an act of unfair competition, it is necessary to demonstrate that such use is likely to confuse the average consumer.
This well-founded decision aligns with longstanding case law in the United States and the European Union.
If you have any questions, inquiries, or comments, feel free to write to pbm@gbreuer.com.ar