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Subversive Ad Technique Gets Green-Lit By Court

(CN) - A software company can continue to advertise on search engines using keywords that include the name of a rival company's product, the 9th Circuit ruled Tuesday.

The federal appeals panel in Pasadena vacated a preliminary injunction that blocked Network Automation from using the advertising technique, which a District Court found was likely to infringe on the rival's copyright and cause consumer confusion.

Network Automation sells scheduling and management software under the brand name, AutoMate, while the competitor, Advanced Systems Concepts, has a product called ActiveBatch.

In 2009, Network Automation advertised its product by purchasing several keywords, including "ActiveBatch," from the popular Internet search engines Google and Bing. When consumers Google "ActiveBatch," the search-results page will carry a sponsored link to Network Automation's website, according to the ruling.

Advanced Systems demanded that Network Automation cease and desist from using its name as an advertising keyword, claiming that the use infringed on its copyright. After Network Automation refused, Advanced Systems sued the company in District Court.

A federal judge in Los Angeles ruled that consumers would likely be confused because the marks were so similar and the products nearly identical. The court issued a preliminary injunction against Network Automation's use of the ActiveBatch keyword.

The three-judge appeals panel disagreed, however, finding that Advanced Systems had failed to show that "sophisticated" Internet consumers would be confused by the advertising strategy.

"Mindful that the sine qua non of trademark infringement is consumer confusion ... we conclude that Systems' showing of a likelihood of confusion was insufficient to support injunctive relief," Judge Kim Wardlaw wrote for the court.

"A sophisticated consumer of business software exercising a high degree of care is more likely to understand the mechanics of Internet search engines and the nature of sponsored links, whereas an un-savvy consumer exercising less care is more likely to be confused," the ruling continues.

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