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São Paulo’s State Court recognizes the use of a third-party trademark in sponsored links as an unfair competition act

By Thaís Boyd and Mauro Ferreira, ClarkeModet Brazil

With the increase in the use of search tools on the internet, searches for products and services using search terms (keywords) became more frequent. Due to that, the search tools turned into advertising platforms widely used by companies.

As we know, when looking for a specific type of product or service on the internet, it is not uncommon to find advertisement from other suppliers before we come across what we are looking for. This happens because, in order to increase market-share and, consequently, sales, companies pay for advertisement through sponsored links defining as keywords terms that refer to their competitors and their marks.

This type of advertisement is widely used due to its low cost and high return, as the ad is viewed by all those who search for the keyword. This, however, creates risk of confusion and/or undue association on the part of an inattentive costumer, and, even if it is not the case, could take the costumer to purchase a competitor’s product/service because it is similar and sometimes cheaper.

In accordance with the understanding that is being consolidated in Brazilian jurisprudence, the 1st Reserved Chamber of Business Law, of São Paulo’s State Court of Justice recognized a request to determine that Google removes companies’ ads with terms that contain as keywords the names of their competitors, or their trademarks.

The case of civil action No. 1016104-20.2018.8.26.0196, filed by Paulista Saúde S/A (Boston Medical Group) against Ricardo dos Santos Freitas – ME (Saúde Garantida), was exactly about the above-mentioned understanding. The Defendant, Saúde Garantida, advertised through sponsored links that associated the advertising of its services to the “Boston Medical Group” mark, so that those looking for Boston Medical Group would be directed to the Defendant’s page – which, therefore, would divert the Plaintiff’s clientele to the Defendant.

The 1st Reserved Chamber understood that, although there was no reproduction, imitation, or even direct use of a third party’s mark to identify the offender’s products and services, the use of the “Google AdWords” tool in a way that associates the business activity of a company to a third-party is considered as an act of unfair competition.

The decision represents a step forward to the practices of trademark protection and the suppression of unfair competition in Brazil, reproducing a global trend for the understanding on this type of infringement.

This is not the first decision rendered by the 1^st Reserved Chamber regarding the practice of unfair competition and the use of AdWords. On lawsuit no. 1026231-19.2015.8.26.0100, mentioned in the decision, the Chamber understood that this kind of practice is “a new type of an unfair competition initiative, among others arising with the advancement of technology”.

Therefore, it is necessary that the advertiser act carefully when advertising any type of product or service through sponsored links, whether from Google or not, as the advertiser is liable to suffer sanctions if non-compliance is detected.

Aiming to support the compliance of companies with this understanding, which has been increasingly consolidated, ClarkeModet Brazil has a qualified team in the matter that, starting from the understanding of Client’s specific situation, outlining strategies to avoid future liabilities and/or effectively protect their assets.

Thaís Boyd