In practice, it is relatively common for entrepreneurs to use, in the context of contextual advertising, keywords that are identical or confusable with designations characteristic of their competitors in economic competition. This conduct can also be encountered with large and reputable undertakings or on the part of entities providing services in the field of SEO optimisation and SEO marketing. It is evident that the “proprietor” of a designation which is being used by a competitor in contextual advertising as a keyword may be adversely affected by such conduct. The advertisement of the competing undertaking is displayed alongside or instead of the presentation of the “proprietor” of the designation, which may result in the diversion of customers or potential customers seeking the services or products of the “proprietor” of the designation. Given the mass use of contextual advertising at the present time, it may be beneficial to examine this issue also from a legal perspective, specifically from the perspective of Czech law.

The operators of individual advertising systems tend to have certain rules in place (most commonly within the terms and conditions of the service) for cases where identical or confusable designations are used by advertisers. Nevertheless, the role of the advertising system operator does not primarily lie in assessing these possible conflicts. The “rules” of the advertising system serve primarily as a certain prevention against the arising of possible liability on the part of the advertising system operator. The arising of legal liability on the part of the advertising system operator in connection with the publication of the content of advertising messages of third parties cannot be excluded a priori. However, questions relating to the liability of the advertising system operator go beyond the focus of this article.

This contribution is devoted in particular to cases where a designation identical or confusable with a trade mark is used as a keyword within an advertising system, or cases where a designation identical or confusable with an unregistered designation already previously lawfully used by another entrepreneur is used as a keyword. The title of the article itself is therefore slightly misleading. Naturally, however, conflicts of keywords with other rights to intangible assets, such as a business name or copyright, are not excluded either.

In the area of possible conflicts of keywords with rights to trade marks, it is appropriate to mention at the outset the provision of Section 8(2) of the Trade Marks Act (Act No. 441/2003 Coll., as amended), which reads: “…, no person may, in the course of trade, use without the consent of the proprietor of the trade mark (a) a sign identical with the trade mark for goods or services which are identical with those for which the trade mark is registered, (b) a sign where, because of its identity with or similarity to the trade mark and the identity or similarity of the goods or services covered by the trade mark and the sign, there exists a likelihood of confusion on the part of the public, including the likelihood of association between the sign and the trade mark, (c) a sign identical with or similar to the trade mark for goods or services which are not similar to those for which the trade mark is registered, where, however, it is a trade mark which has a reputation in the Czech Republic and the use of the sign without due cause would take unfair advantage of, or be detrimental to, the distinctive character or the repute of the trade mark.” Section 8(3)(d) of the Trade Marks Act then supplements that “for the purposes of paragraph 2, use in the course of trade means…the use of the sign…in advertising.”

In cases where a keyword is used for the purposes of contextual advertising which is identical or confusable with a trade mark of a third party (most commonly a word or combined mark), such conduct may therefore constitute unlawful conduct – infringement of rights to a trade mark. Naturally, it is always necessary to address the question of confusability of the designation (keyword) used and the trade mark in question, particularly in cases where it is a mark other than a word mark. The claims of an entity whose rights to a trade mark have been infringed are governed by the special Act on the Enforcement of Industrial Property Rights (Act No. 221/2006 Coll., as amended). In connection with the possible claims of persons whose rights to a trade mark have been infringed, it is appropriate to draw attention to the legal regulation in Section 5(2) of the cited Act, which provides that the court may “determine compensation for damage, the amount of unjust enrichment obtained by the infringer as a result of the endangerment or infringement of the right, and reasonable satisfaction by way of a lump sum of at least double the licence fee that would be customary when obtaining a licence to use the right at the time of the unauthorised interference with it.” In the case of “more valuable” trade marks, this may therefore constitute a very significant private law “sanction”. By virtue of this fiction, in conflicts of rights to designations, the legal position of the proprietor of a trade mark is in most cases more advantageous than the legal position of a user of an unregistered designation (see below).

In cases where an unregistered designation used previously and lawfully by another competitor is used as a keyword by a competing undertaking within an advertising system, this may constitute unfair competition. Unfair competition is prohibited and is generally defined in Section 44 of the Commercial Code (Act No. 513/1991 Coll., as amended): “Unfair competition is conduct in economic competition which is contrary to good morals of competition and is liable to cause detriment to other competitors or consumers.” Even from the above definition, it is evident that the institution of unfair competition is conceived very broadly. One of the important prerequisites for the arising of liability for unfair competition is the existence of a competitive relationship between the affected entities. In the event that the parties are not competitors in economic competition, there cannot be unfair competition between them either. In the internet environment, however, the concept of competitive relationship tends to be interpreted in many cases very extensively (particularly in connection with domain name disputes).

If the prerequisites of the general clause of unfair competition are fulfilled, the application of certain specific factual bases also comes into consideration. First, it is possible to mention probably the most appropriate factual basis, namely the factual basis of parasitism on reputation pursuant to Section 48 of the Commercial Code: “Parasitism is the exploitation of the reputation of the undertaking, products or services of another competitor with the aim of obtaining, for the results of one’s own or another’s business activity, an advantage which the competitor would not otherwise achieve.” It is evident that this provision applies relatively precisely to situations where a designation characteristic of a known undertaking is used by a competitor as a keyword in contextual advertising systems.

Furthermore, in some cases, the factual basis of creating a danger of confusion pursuant to Section 47 of the Commercial Code comes into consideration: “Creating a danger of confusion is…the use of the business name or name of a person or a special designation of an undertaking already lawfully used by another competitor, where such conduct is liable to create a danger of confusion or a misleading impression of a connection with the undertaking, business name, special designation or products or performances of another competitor.” This regulation therefore applies in particular to those cases where, as a result of the use of a designation characteristic of a certain entrepreneur within contextual advertising systems, there is confusion of the offer of his goods or services with the offer of another entity. In practice, cases may be encountered where advertising messages are deliberately designed to confuse users. However, in the case of abuse of contextual advertising systems, the application of other specific factual bases of unfair competition cannot be excluded either, particularly the provisions regarding misleading advertising pursuant to Section 45 of the Commercial Code and misleading designation pursuant to Section 46 of the Commercial Code.

The claims of an entity affected by unfair competition are enshrined in Section 53 of the Commercial Code: “Persons whose rights have been infringed or endangered by unfair competition may require the disturber to refrain from such conduct and remedy the defective state. Furthermore, they may require reasonable satisfaction, which may also be provided in money, compensation for damage and surrender of unjust enrichment.” In this case, therefore, no fiction of double the customary remuneration applies, as is the case with infringement of rights to a trade mark (see above). The relationship between the legal regulation of trade marks and the regulation of unfair competition is not addressed in greater detail in this article for the sake of simplification. Likewise, the interpretation of general regulation in the field of advertising remains aside, particularly the restrictions arising from the provisions of Act No. 40/1995 Coll., as amended.

If a certain entity discovers that its rights to a trade mark are being infringed in contextual advertising or that unfair competition is occurring against it, it is most commonly in its interest to resolve the situation amicably (out of court). In such a case, the first step is usually to send a written notice of the unlawful conduct to the infringer, together with a demand to desist from this unlawful conduct. Furthermore, it is possible to turn to the advertising system operator with the information that rights are being infringed and with a request for redress on its part. In the event that this amicable procedure does not lead to the desired result, the injured party has no choice but to turn to the court.

This text was translated from Czech to English using an AI translator.