Wisconsin State Court OKs Bidding On Trademarks In Paid Search

Understanding the Legal Landscape

In 2013, a Wisconsin appeals court issued a landmark ruling that shaped the future of paid search advertising. The court affirmed that using trademarks as keywords to trigger paid search ads does not constitute trademark infringement. This decision aligned with search engine policies and established a legal framework that has been reinforced by multiple federal circuit courts, most recently in 2024.

For advertisers, this ruling opened the door to "keyword conquesting" - the strategy of bidding on competitor trademarks to capture search traffic. However, the legal landscape comes with critical nuances that every paid search advertiser must understand to maximize opportunity while minimizing risk. Understanding how these campaigns fit into a broader paid advertising strategy ensures you capitalize on competitive opportunities while maintaining compliance.

What Is Trademark Keyword Bidding?

Trademark keyword bidding, often called "conquesting," refers to purchasing a competitor's or brand's trademarked terms as keywords in paid search platforms. When a consumer searches for that trademarked term, your ad may appear alongside or above organic results for that brand.

How the Auction System Works

Search engines operate keyword auctions where advertisers bid on search terms they want their ads to trigger. When you bid on a competitor's brand name, your ad can appear when someone searches for that competitor, giving you an opportunity to present your alternative offering.

Key distinction: Courts distinguish between using trademarks as keywords (generally legal) and using them in ad copy (may create liability). The key is that keywords are not visible to consumers - only the ads themselves and landing pages are seen.

The Legal Framework: Likelihood of Confusion

Trademark law centers on "likelihood of confusion" - whether an advertiser's use of a mark is likely to cause consumers confusion about source or sponsorship. Courts evaluate keyword bidding cases using multi-factor tests.

Federal Circuit Standards

• Second Circuit (Polaroid test): Strength of mark, similarity of marks, product proximity, evidence of actual confusion
• Ninth Circuit (Sleekcraft test): Similar factors with additional considerations for marketing channels and consumer sophistication

Critical Distinction

Courts consistently hold that:

• Bidding on trademarked keywords is generally legal
• Displaying competitor trademarks in ad content may create liability
• Landing pages with competitor trademarks can strengthen confusion claims

The 2024 cases (1-800 Contacts v. Warby Parker and Lerner & Rowe) reinforced that purchasing competitor trademarks as keywords does not establish likelihood of confusion when marks are not used in actual advertising materials.

Strategic Considerations for Paid Search Campaigns

Trademark keyword bidding is just one tool in your paid search toolkit. Understanding when and how to use this strategy effectively requires balancing competitive opportunity against brand perception and legal risk.

When Conquesting Makes Sense

• You offer a genuinely superior alternative to the competitor
• Clear differentiation in your value proposition
• Competitive markets where brand switching is common
• High competitor brand search volume justifies investment

Alternative Keyword Strategies

If trademark bidding feels too aggressive:

• Use broad match and phrase match keywords for product categories
• Build negative keyword lists to avoid competitor searches
• Focus on your own value proposition rather than direct competitive positioning

Measuring Effectiveness

Track conquesting keyword performance:

• Click-through rates and conversion rates
• Cost-per-acquisition vs. other paid search efforts
• Brand perception metrics if campaigns are publicly visible

For more on optimizing landing pages for PPC traffic, see our guide on high-converting PPC landing page tips.

The Future of Trademark Keyword Advertising

The legal landscape continues to evolve as courts gain experience with digital advertising practices.

Evolving Judicial Understanding

Recent court opinions acknowledge that sponsored advertising has become a normal, expected part of the search experience. Judge Desai's Ninth Circuit concurrence noted that "scrolling through sponsored ads at the top of a results page is often the rule - not the exception - when using a search engine."

Platform Policy Evolution

Search engines periodically update advertising policies. Google and Microsoft maintain relatively permissive trademark keyword policies while enforcing stricter rules about trademark use in ad copy.

International Considerations

The legal framework discussed applies primarily to U.S. law. Trademark laws vary significantly across jurisdictions - advertisers running international campaigns should understand applicable standards in each market.

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Key Takeaways

1. Bidding on competitor trademarks as keywords is generally legal
2. The critical distinction is between keyword usage (hidden) and ad copy usage (visible)
3. Avoid competitor trademarks in any visible ad content or landing pages
4. Follow best practices to minimize legal risk while capitalizing on opportunities
5. Monitor the evolving legal landscape for changes that might affect your strategy

Sources

1. Search Engine Land: Wisconsin State Court OKs Bidding On Trademarks In Paid Search - Original 2013 coverage of the Wisconsin Appeals Court ruling that affirmed using trademarks as keywords to trigger paid search ads is legal
2. Buchanan Ingersoll & Rooney: Trademarks & Keyword Advertising - Analysis of 2024 Second and Ninth Circuit cases reinforcing the keyword bidding legal framework
3. JD Supra - Katten Muchin Rosenman: No Confusion From Keywords - Detailed breakdown of how federal courts analyze trademark bidding cases