Some businesses choose to advertise on competitor names while others don’t. Is it worth it & what is the risk?

Google allows AdWords customers to advertise on trademarked terms in the U.S. & research indicates that U.S. courts have so far agreed that it is not illegal to advertise on competitor names, as long as the message is not misleading. However, the rapid adoption of the Internet as a tool to find products and services has resulted in trademark law getting challenged and changed on a regular basis, so there is still uncertainty in this area.

I would like to start out by making it very clear that I am not a lawyer. However, per Jeffrey A. Babener, who is an attorney with Babener & Associates, “Generally, a seller or imitator may use a competitor’s trademark when advertising the seller’s product so long as the competitor’s trademark is used in a truthful way, such that its use is not likely to create confusion in the consumers’ mind as to the source of the product being sold”

“Over the years, many different legal theories have been used by competitors in an attempt to stop the use of their name or product … Actions have been brought for disparagement, trade libel, defamation, trademark infringement, unfair competition and misappropriation of a name. The successful cases have, for the most part, involved false advertising and unfair competition through the misrepresentation of one’s product, causing consumer confusion… A seller may be held liable for unfair competition under federal and state laws where the seller misrepresents either the seller’s, or the competitor’s products. ”

Some U.S. courts have upheld that advertising on a competitor’s name is legal.  For example, In J.G. Wentworth SSC Ltd v. Settlement Funding LLC, 2007 WL 30115 (E.D. Pa. Jan. 4, 2007), the court granted summary judgment to the advertisers based on the lack of evidence of consumer confusion. There are other examples as well.

Businesses can partially protect themselves by trademarking their name so competitors cannot use their name in ad copy, but again, this process does not prevent competitors from using trademarked terms to advertise on. Advertisers can click here to review AdWords Trademark policy detail and access their Trademark Complaint Form.

Interestingly, when it comes to advertising on a competitor name, large companies basically have the ability to bully smaller companies into submission, and here is why. If Business A is upset about Business B’s decision to advertise on Business A’s name, Business A can then have their lawyers issue Business B a Cease & Desist Letter. If Business B decides not to listen, they may then be setting themselves up for potential litigation. I am trying to simplify something rather complex, but the bottom line is that even if Business B has done nothing illegal, they may still find themselves in a position where they have to defend themselves. The cruel reality of litigation is that it can easily cost $100,000 in legal fees. Furthermore, a company cannot defend itself as an individual can, so a lawyer must be hired to defend a business (with certain exceptions that might apply to small claims court). Again, I am not a lawyer, but this is my understanding.

In the end, it appears that advertising on competitor names is legal and usually OK to do. If a competitor is upset, they will usually have their lawyers provide a Cease & Desist Letter, at which time you may want to comply with their request as litigation is incredibly costly. It must be understood that advertising on competitor names has the potential to result in unforeseen grief, litigation & legal fees, so it is important to understand your risk.

At JumpFly, we leave the choice of advertising on competitor names to the client. For those that have done this, it has often proven valuable and provided a very favorable ROI. However, this action can certainly lead to grief if a competitor is infuriated and willing to try and litigate, even if they would likely lose. So if you choose to go down this path, it must be done carefully & without confusing potential customers. Sadly, businesses advertising on competitor names that find themselves in litigation will likely find that even a victory in court still results in defeat in the pocket book.

JumpFly, The PPC Management Authority, is launching a Twitter social media experiment at http://twitter.com/JumpFly. JumpFly will be giving away one new iPad to a random follower that retweets this promotion. This iPad giveaway will continue each month for the remainder of 2010, starting in September, resulting in 4 free iPads total. The only thing required for entry is for Twitter users to follow JumpFly’s Twitter account and then tweet or retweet the promotion in their own Twitter account. There is no form to fill out, no information to provide – simple follow, retweet and win.

Twitter has more than 100 million users and adds millions more each month. This experiment is an effort to embrace these users and determine the potential value that Twitter and social media can have for businesses. JumpFly’s objective is to spread the word about their top rated service and the value it provides. JumpFly hopes this promotion will expose their business to thousands of new people and many new potential clients. Please visit http://twitter.com/JumpFly & follow JumpFly for a chance to win a brand new iPad. Winners will be announced live via Twitter on September 15th, October 15th, November 15th and December 15th. 

JumpFly Twitter iPad Giveaway winners will be notified via Twitter and sent their new 16GB Wi-Fi iPad upon confirmation of their retweeting this promotion and receipt of the mailing address to send it. JumpFly staff & family are not eligible for this promotion. All contest participants must follow Twitter guidelines, or they will be disqualified. Anyone found using multiple Twitter accounts in an effort to win are violating Twitter guidelines and will be ineligible to win the iPad.

JumpFly professionally develops, implements, and manages Google AdWords, Yahoo! Search Marketing and Microsoft adCenter campaigns. JumpFly was selected as TopSEOs Best PPC Management Company and they pride themselves on their unmatched reputation of providing cutting edge knowledge and valuable experience to maximize clients’ PPC investments. JumpFly works month to month without contract and provides a money back guarantee. JumpFly is completely dedicated to customer satisfaction.

The promotional tweet is: @JumpFly is giving away a free #iPad every month! Just follow JumpFly & retweet this message. http://bit.ly/cycAjL #giveaway #free

If you’ve never heard of Twitter, you might have been hiding under a rock the last few years as the media has been inundating us with it left and right.  You don’t have to work in the technology industry to have seen and heard that Twitter has been growing in leaps and bounds recently.  Twitter has evolved from a small, underground community of social media gurus to one of the best places to go for real-time information provided by millions of people all over the world.  The twinfluence of Twitter has become so great that, earlier this year, Google began including the tweets from Twitter users into its search results.

In my humble opinion, one of Twitters best features is the fact that it helps businesses connect with their customers on a personal level.  Customers can use Twitter as a platform to inform a company about their experiences with that company’s products or services, whether good or bad.  This one-on-one customer interaction should ultimately help businesses provide a better customer experience to the people who have to power to make their companies successful.  Twitter also allows businesses to keep people informed on industry happenings, tips, tricks and so much more.

So, JumpFly has bitten the bullet and has joined the Twitterverse!  We may not have gathered as many followers as Kanye West (@KanyeWest), but we hope to be able to provide interesting and relevant content to our Twitter followers.  JumpFly has been ranked as TopSEO’s #1 PPC Management Company for the last two years and now it is time to share our wealth of information with our tweeps.  We hope to build our twibe of followers by providing useful, inspirational, interesting and compelling information about Pay-Per-Click Advertising on Google, Yahoo and MSN’s Bing.

If you are on Twitter, please take a moment to follow @JumpFly – we are confident that you will find our content relevant and informational.  Hopefully we will become Twitter’s PPC Management Authority.  Stay tuned to see what we have to offer!