Can businesses bid on your brand name? Where you stand legally

May 19th, 2014

It’s frustrating when you spot another company using your brand name in their Pay Per Click activity (also known as sponsored ads). The presence of another business advertising your brand name will steal a share of the traffic away from you. With more and more people making hotel reservations online, it becomes critical for brand owners to be aware of, and protect, their share of the online marketplace.

“Brand-jacking” is the practice of online travel agents (“OTA”s) and competitors using a hotel’s brand name in online advertising in order to divert web traffic away to their own sites (rather than the hotel’s original website) and push up the cost per click (“CPC”) for the use of that brand name as a keyword.

Background to sponsored ads

When compiling the sponsored advert (or, Pay Per Click advert) a variety of keywords can be selected for the adverts to appear at the top of the search results page.   Google uses AdRank to determine the order in which the sponsored ads appear. AdRank is mainly based on the CPC bid (which is capped at a maximum as determined by the advertiser) and the Quality Score (based on the relevance of the site to which the sponsored ad refers, partly assessed on the click through rate). Each time a search is made, the relevant keywords go through an auction process, and the CPC paid by the advertiser.


Legal position

Use of a brand owner’s trade mark as a keyword and/or within sponsored ads

Firstly, it is to be remembered that a search engine provider, e.g. Google, does not infringe a brand owner’s rights by selling a keyword containing that brand owner’s trade mark, so long as the search engine provider remains passive in simply offering keywords for sale. The simple fact that a third party has a brand name as a keyword is not itself actionable, instead, the question of infringement will depend on how the brand name is used within the text of the sponsored ad itself.

If a third party uses a brand name as a keyword, it must be made clear that such third party and the brand are not associated in the associated ad-text for competing goods or services. Recent case law suggests that it is sensible not to mention someone else’s brand name within the ad-text whatsoever. However, it is important to note that even if the brand name is not specifically mentioned in the ad-text, a consumer may still think that by searching for X and seeing an advert for Y, that X and Y are somehow commercially connected, which may be enough to constitute trade mark infringement.

Comparative Advertising

Another issue that concerns brand owners is when third parties (usually OTAs, see below) mention a potential saving in the advert, often expressed as a % discount or a room rate.

The Comparative Advertising Directive provides that any price comparisons that are made in comparative advertisements must be objective and must compare material, relevant, verifiable and representative features of goods or services. It may, therefore, be possible to attack a sponsored ad on this basis.

The Courts have ruled that comparative advertising which uses a sample of goods to claim that the advertiser’s general price level is lower than his competitors might be misleading where:

  • a range of savings is advertised against a collective group of competitors instead of matching the difference to each individual competitor;
  • the advertising does not identify the details of the comparison made or inform the persons to whom it is addressed of where they can verify the claims; and/or
  • the advertising does not reveal that the comparison only relates to a sample and not all of the advertiser’s products.

In the UK, it is possible to complain to the Advertising Standards Authority (ASA) in relation to misleading price comparisons.

Google Adword policy

Rather than taking formal legal action, it may be possible to use the Google Adword policy (which relates to use of keywords) to complain about use of your brand name within a sponsored ad. However, it is required that the brand name has been formally registered as a trade mark. Further, it is necessary to lodge a formal complaint to Google and request that the terms be restricted in Google ad campaigns.

Google will investigate when it receives a complaint regarding the use of a trade mark in ad text by a third party. However, there is a “reseller” or “informational site” exception (for ad campaigns targeting the US, Canada UK and/or Ireland) which allows third parties to use a trade mark in the text of a sponsored ad if the ad’s landing page is primarily dedicated to selling (or clearly facilitating the sale of) the goods or services corresponding to a trademark term, or providing information regarding about such goods or services.

Other providers, such as Microsoft (who operates Bing and Yahoo!), have their own policies. Whichever provider is relevant, it is highly likely that they receive many complaints of this type and so dealing direct with the third party may prove more successful, particularly in the event they are an OTA (see below).

OTA use

Often hotel owners will find that the entities bidding on their name are not strictly competitors, but rather OTAs, to whom they are commissioning to sell rooms in their hotel. Obviously, this strikes a difficult balance as, whilst the hotel owner will want the OTA to be successful, they will not want too much web traffic to be diverted away from the main hotel website.

It is worth mentioning that, according to a US study (How Does the Use of Trademarks by Third Party Sellers Affect Online Search by Chiou and Tucker, 2011), when OTAs reference specific brand names in their ad copy whilst the hotel may see a decrease in web traffic to its own sponsored ad, overall and simultaneously there is a more significant increase in the clicks on the hotel’s own listing within the search results itself.  Occupancy Marketing also conducted a recent study which identified similar findings.

Where possible, the simplest way to deal with this issue is in the OTA agreement itself or via a separate intellectual property licence. In such document, the terms of use of the brand name can be set out and controlled by the brand owner.

It is important to carefully review the scope of any prohibited or permitted use. Prohibited actions normally include bidding on keywords, using the brand name within the text of the sponsored ad, using the brand name within a domain name or using the brand name as part of social media user names, i.e. Facebook or Twitter.


This is a tricky area of law which is still developing, as are the nuances of the brand-owner / OTA / competitor relationship. New products such as Google’s Hotel Finder will only complicate this area further. It is important therefore to try and remain pragmatic and try to negotiate direct with the third party using your brand name as a keyword. As discussed above, a brand owner will have more options available if the brand name is formally registered as a trade mark. Action taken will also depend on the brand owner’s marketing strategy itself as to how much it wishes to restrict use of its brand name by others.

If you would like any advice or further information, please contact your Account Manager or D Young & Co LLP

Verity Ellis, D Young & Co LLP

D Young & Co is a leading intellectual property law firm, setting the standard for legal expertise and technical knowledge in IP. From SMEs to global businesses, whatever your brand, D Young & Co will help you get the best protection for it. D Young & Co’s specialist teams provide guidance on using IP rights efficiently and effectively to businesses from Europe, America, Asia and around the world.

Occupancy Marketing provide Internet Marketing programmes which increase direct revenue to over 300 hotel client websites in the UK, Europe, Africa, Middle East and Asia.

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