Jury Maintains Legality of Pay-Per-Click Bids on Trademarks

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In the case of The College Network Inc. v. Moore Educational Publishing Inc., jurors rejected the argument that pay-per-click bidding on registered trademarks constitutes infringement. The College Network alleged that the defendant, doing business as iStudySmart.com, was infringing upon their registered trademark by placing pay-per-click bids on the words "college" and "network". iStudySmart, represented by Cindy Olson Bourland of Merica and Bourland P.C. law firm, argued that the defendant's pay-per-click bidding does not constitute "use in commerce" under the Lanham Act; and therefore could not be construed as an infringement. Bourland cited an online demonstration by Troy Perkins, owner of Totus Internet Visibility Agency, as instrumental expert testimony. "Mr. Perkins was able to show the jury online evidence that the plaintiff was using the same pay-per-click practices against my client," said Bourland.

Jurors ruled in favor of my client partly because of the internet demonstration of expert witness Troy Perkins

In Civil Action case No. A-07-Ca-615-LY of The College Network Inc. v. Moore Educational Publishing Inc., jurors rejected the argument that pay-per-click bidding on registered trademarks constitutes infringement. The College Network alleged that the defendant, doing business as iStudySmart.com, was infringing upon their registered trademark by placing pay-per-click bids on the words "college" and "network".

Arguing before the United States District Court, Western District in Austin, The College Network sought $150,000 in lost profits, claiming the defendant's pay-per-click advertising practices gave them an undue advantage and lured away customers.

"Bidding on a competitor's registered trademark has become common practice in the search engine marketing (SEM) industry," said Troy Perkins, founder of Totus Internet Visibility Agency, San Antonio TX. Providing testimony as an objective, expert witness, Perkins gave an online demonstration to show the jury how keyword bidding enables companies to gain first page ranking with companies of like products.

iStudySmart, represented by Cindy Olson Bourland of Merica and Bourland P.C. law firm, denied the infringement allegations. Bourland argued that the defendant's pay-per-click bidding does not constitute "use in commerce" under the Lanham Act; and therefore could not be construed as an infringement. Additionally, Bourland challenged the validity of the plaintiffs' trademark pointing to the generic nature of their corporate name, "The College Network".

After lengthy deliberations, the jury concluded that "The College Network" is a valid trademark, but the defendant did not infringe upon it with their keyword bids.

"Jurors ruled in favor of my client partly because of the internet demonstration of expert witness Troy Perkins," said Bourland. "He was able to show the jury online evidence that the plaintiff was using the same pay-per-click practices against my client. This exposed The College Network as a larger company intimidating a smaller competitor in order to reduce competition on the first page of search results."

"There have been several similar rulings upholding the right for advertisers to bid against their competitors as part of their strategic internet advertising, including Geico v. Google," said Perkins. "The real winner in these cases is the consumer because fewer restrictions in SEM mean more competitors on the first page of search results. This makes certain that companies will have to compete based on the quality and price of their products."

In spite of the growing number of SEM lawsuits, no law has been established to settle the issue. "One of the obstacles in drafting a law to regulate search engine marketing is that the term "use in commerce" originated in 1946, said Cindy Bourland of Merica and Bourland law firm in Austin Texas. "Therefore determining how it applies to internet advertising practices is a difficult issue to resolve, especially in a way that will satisfy all stakeholders."

Proponents of restricting pay-per-click advertising argue that bidding on trademarks enables advertisers to freeload on the branding and marketing investments of their competitors by making a relatively small investment in search engine marketing. Advertisers and search engines who oppose restrictions argue that placing a pay-per-click bid on a registered trademark is not "use in commerce". They assert that the bid is invisible to the consumer who can clearly identify the company they are actually doing business with.

Headquartered in San Antonio, Texas, Totus Internet Visibility Agency provides internet marketing services which optimize website traffic and online sales. Services include but are not limited to search engine optimization (SEO), search engine marketing (SEM), social media optimization (SMO), internet marketing strategy developments, and search engine friendly eCommerce website solutions.

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