Trademark Enforcement and Internet Search Advertising: A Regulatory Risk for Brand Owners

Abstract

For well over a century, U.S. trademark law has afforded brand owners certain rights, remedies and obligations. As the Department of Commerce has noted, owners of trademarks have both a legal right and an affirmative obligation to protect their trademarks from unauthorized third-party use. Diligent enforcement practices not only protect trademark assets, but also protect the public from mistaking businesses’ affiliations with their competitors.

With increasing regularity, lawmakers, courts, and regulators have revisited the Lanham Act to address novel instances of unauthorized online trademark use. In August 2016, following a decade of trademark litigation in connection with its competitors’ Internet search advertising practices, online contact lens seller 1-800 Contacts, Inc. (1-800) was targeted by the Federal Trade Commission (FTC) for entering into allegedly anti-competitive trademark settlement agreements. This article outlines the basic mechanics of Internet search advertising, explores the trademark litigation of 1-800, details the FTC’s recent enforcement action against the e-retailer, and considers some of the effects that these legal developments may have on trademark owners, advertisers, and affiliate marketers.

Keywords: intellectual property, IP, trademark, Lanham Act, search advertising, AdWords, marketing, Federal Trade Commission, FTC, 1800 Contacts, Lens.com, Antitrust, Competition Law

JEL Classification: K00, K10, K12, K20, K30, K39, L40, L41, M30, M37, O34