Case law: Organización Veraz S.A. c/ Open Discovery S.A. s/ Cease of trademark use
On December 19, 2024, the Supreme Court of Justice of Argentina ruled that the use of well-known trademarks as keywords in Google Ads’ sponsored advertising system does not, in itself, constitute trademark infringement or an act of unfair competition unless it creates consumer confusion or suggests an improper association with the trademark owner.
This ruling was issued by Argentina’s highest court in the case “Organización Veraz S.A. v. Open Discovery S.A. on Cease of Trademark Use” (CCF 1789/2009/3/RH1).
Case Background
Organización Veraz, a credit reporting company, sued Open Discovery, its competitor in the same market, for the unauthorized use of its trademarks “VERAZ” and “ORGANIZACIÓN VERAZ” as keywords in Google’s advertising system. The plaintiff argued that this practice allowed Open Discovery to position its advertisements among the top search results when users entered those terms, misleading consumers and diverting clientele, thus unlawfully benefiting from the plaintiff’s reputation.
The First Circuit Court ruled in favor of the plaintiff, determining that the use of trademarks by third parties in advertising systems constitutes trademark infringement, as it demonstrates an intention to benefit from their use, causing consumer confusion and, consequently, harm to the legitimate trademark owner.
The Civil and Commercial Federal Court of Appeals, Chamber III, upheld the ruling on May 4, 2018, ordering Open Discovery to cease using the trademarks and to pay damages amounting to $3,336,468. The court particularly noted that the VERAZ trademark had gained notoriety and was associated by consumers with a specific credit report provided by the plaintiff, rather than with a general report. Since it was established that the defendant was a competitor in the same market offering a similar service (and had entered the market at a later stage), the court concluded that there had been an unlawful exploitation of the plaintiff’s reputation and a diversion of clientele.
After its extraordinary appeal was rejected, Open Discovery filed a direct appeal with the Supreme Court, arguing that “Veraz” had become a generic term in the credit reporting market and that its use as a keyword did not cause confusion or undue exploitation.
Supreme Court Decision
By majority, the Supreme Court partially upheld the appeal and overturned the Court of Appeals’ ruling, referring to the opinion issued by Attorney General Víctor Abramovich on September 13, 2022. The Attorney General had stated that the use of a well-known trademark as a keyword in online advertising could only be considered an infringement if it caused direct or indirect consumer confusion or suggested an association with the trademark owner.
In other words, no confusion—and thus no trademark infringement—exists if consumers can recognize the advertiser as an alternative to the services offered by the well-known trademark owner.
Justice Juan Carlos Maqueda and Jorge Eduardo Morán joined the opinion of the Attorney General.
Justice Dr. Carlos Rosenkrantz (majority), among other arguments, pointed out that: (i) trademark protection is not absolute and does not prohibit all uses by third parties; (ii) using a trademark as a keyword in online advertising does not automatically constitute trademark infringement or an act of unfair competition (iii) mere exploitation of another’s reputation is not sufficient to establish an infringement; and (iv) to establish infringement, it must be proven that consumers are misled or that an improper association with the trademark owner exists.
In dissent, Justice Ricardo Lorenzetti argued that: (i) The use of a trademark must be analyzed from the perspective of the party contracting the advertising service. It is a paid contract between Google Adwords and the advertiser seeking to promote its products and services; (ii) when a third party uses an identical trademark for the same products or services, confusion should be presumed; (iii) the acquisition of competitor trademarks as keywords is intended to take advantage of the competitor’s reputation and efforts, and at the very least, seeks an association with the competitor’s brand; and (iv) from the consumer’s perspective, the resulting advertisement is comparative, subliminal, and misleading, thus constituting an infringement.
Finally, Justice Horacio Rosatti, deemed the extraordinary appeal inadmissible under Article 280 of the Civil and Commercial Procedural Code, without ruling on the merits of the case.
Conclusion
If the use of a trademark as a keyword in Google’s advertising system by a third party does not create consumer confusion—since the advertiser is recognized as an alternative provider—there is no trademark infringement or act of unfair competition.
For further information please contact lalmasque@ojambf.com.
