Does using another business name for your keyword infringe intellectual property?

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An analysis of shared court decisions for using another company’s name as a search keyword

In cases of trademark infringement, we usually only focus on the confusion during the sale. Whether it concerns goods or services, we determine the infringement according to whether the mark used by the infringer during the period of the sale constitutes an infringement or lends itself to confusion with that of the owner of the rights. However, with the development of the Internet, “pre-sale confusion” can also constitute trademark infringement. This article will dive into a recent case to explore the issue.

Chen Jianmin
Senior lawyer
Gaowo Law Firm

In the recent case where Xi’an iRain IoT Technology Services sued Xiamen Keytop for trademark infringement and unfair competition, two judgments were rendered. The first-instance judgment of the Xi’an, Shaanxi Municipality Intermediate People’s Court in 2019 did not find the defendant guilty of trademark infringement, but found that his actions constituted unfair competition. The second-instance judgment, handed down by the Shaanxi Province Higher People’s Court in 2020, found the defendant guilty of both trademark infringement and unfair competition. The various judgments have been the subject of much debate.

The applicant had the exclusive licensed right to use the registered trademark of iRain (艾 润) and the exclusive right to use the trade names iRain and iRain IoT (艾 润 物 联) in its company name. These names are influential in the smart parking space, with iRain on its way to becoming a nationally well-known brand in the industry.

In October 2018, the Plaintiff discovered that the Defendant was using “iRain” and “iRain IoT” as keywords without authorization and was promoting them in a paid listing on “www.baidu.com”. So when a user searched for “iRain” and “iRain IoT” on Baidu, the first item to appear was a link to the title “iRain has extensive hands-on experience with independent R&D capability”, followed by texts reading “ iRain, company brand, etc. under the title.

By clicking on the link, the user would be directed to the official website of the defendant. In view of this, the plaintiff filed a lawsuit against the defendant in Xi’an Municipal Intermediate People’s Court for trademark infringement. In the first instance, the defendant argued that he had indeed used iRain as a keyword to search for Baidu, but because he was operating in a different industry than the plaintiff, his act did not infringe the right the applicant’s exclusive use of the registered trademark.

In its first instance judgment, the Xi’an Intermediate People’s Court held that the defendant’s use of iRain did not constitute trademark use and therefore did not commit trademark infringement. However, the defendant’s act was enough to mislead consumers into believing that there was some connection between the link and the iRain plaintiff, only to be directed to the defendant’s website, Keytop. As a result, the defendant’s act clearly hampered the plaintiff’s own online promotion, resulting in a loss of business opportunities. This act constituted unfair competition.

While upholding the finding that the defendant was guilty of unfair competition, the second instance judgment of the Higher People’s Court of Shaanxi Province further concluded that the defendant was guilty of infringing the plaintiff’s trademark.

In trademark infringement cases, all eyes are often on “in-sale confusion”, ignoring the fact that trademarks have an ongoing effect at different stages of the sale of products or the provision of services. Indeed, the function of a mark to distinguish the origin of goods or to identify the provider of services takes effect before, during and even after the completion of a sale.

In this case, as the Respondent admits, most consumers who clicked on the link to its official site did so because they were attracted to the keyword “iRain”. This indicates that confusion had been created regarding the provenance of the goods prior to any sale. Even if a consumer had been informed, at the time of purchase, that the counterparty to the transaction was the defendant, it remains undeniable that the defendant’s act was in fact a form of “bait and switch” at the pre-sale stage. which has led consumers to briefly misunderstand the source of the goods or the service provider.

Therefore, the respondent’s use of “iRain” as an online advertising and promotional keyword should be considered to have caused “initial confusion of interest” around the mark. In other words, the defendant followed goodwill towards the owner of the trademark right by misleading consumers about the origin of the goods or the provider of services before a sale, with the intention of leading them to enter into a contract.

The trial judgment did not convict the defendant of trademark infringement because it focused on the “confusion in the sale” caused by the use of the trademark. The second instance judgment, on the other hand, found the defendant guilty of trademark infringement because it recognized the actual harm to the owner of the trademark right caused by the “pre-sale confusion”, namely the disruption of the trademark. direct and necessary access link between the registered trademark of the applicant “iRain” and the applicant himself.

The authors argue that this is the main reason behind the various judgments.

In online business activities, the path to a consumer’s heart is often through their eyeballs – the so-called “eyeball economy”. One of the tangible manifestations of the eyeball economy is the creation and promotion of keywords. Even though the search keywords are not directly related to the goods or services concerned, they attract the attention and clicks of consumers, thereby directing them to specific web pages, which is the typical case of pre-sales confusion. .

Based on the characteristics of online business activities, the second instance judgment of the Shaanxi Province Higher People’s Court in 2020 concluded that “the use of another’s trademark as an advertising keyword to make promotion ”was a trademark infringement, further recognizing the role of brands in the pre-sale phase. This is undoubtedly a positive development in the protection of the exclusive right to use trademarks on the Internet.


Chen Jianmin is Senior Counsel at Gaowo Law Firm. She can be contacted on +86 10 82873 665 or by email at [email protected] Tan Rui, intern assistant at Gaowo law firm, contributed to the article


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