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Engaging an Advertiser to Purchase Keyword Advertising May Still Constitute Infringement
I. Relevant rules on infringement involving keyword advertising
According to the Intellectual Property Court's Civil Judgment 107-Min-Shang-Su No. 41, keyword advertising can be categorized into two types: "Contextual Advertising (or triggered keyword advertising)" and "In-Text Advertising (or insertion keyword advertising.)" Individually, "Contextual Advertising" refers to advertisements triggered by advertiser-designated keywords which yet do not appear in the advertisement itself. "In-Text Advertising" refers to advertisements triggered by advertiser-designated keywords which appear in the advertisement headlines, thereby creating a stronger association between the keywords and the words searched by Internet users. As the keywords are directly used in the "In-Text Advertising," such use may constitute trademark use and infringement if such keywords involve incorporated others' registered trademarks.
Paragraph 2, Article 7 of the Fair Trade Commission Disposal Directions (Guidelines) on Article 25 of the Fair Trade Act provides that using another enterprise's name as a keyword for advertising, or free riding on another enterprise's goodwill by using another enterprise's name as one's own name, or using wording related to another enterprise's name, representation, or business operations in one's own promotional activities, in a manner that causes others to mistakenly believe that the two enterprises have the same source or a certain relationship, for the purpose of promoting one's own goods or services, constitutes exploitation of the fruits of another's efforts and may violate Article 25 of the Fair Trade Act.
In the Intellectual Property and Commercial Court's Civil Judgment 114-Min-Shang-Su No. 33 (dated July 22, 2026), whether the defendants' conduct violated the Trademark Act and the Fair Trade Act was judged separately. The Court ultimately held that, although the conduct did not constitute trademark infringement, it nevertheless violated Article 25 of the Fair Trade Act.
II. Facts of the case
The plaintiff engages in the sale of sofas and furniture and is the owner of the registered trademarks "
", "
", and "
" (collectively, the "Trademarks at Issue"). After entering "赫里亞" into the Google search engine, the plaintiff discovered that an advertisement of Defendant Company 1 appeared in the search results (the "Advertisement at Issue"). The headline displayed "《新家園沙發》赫里亞," and clicking the advertisement directed users to the official website operated by Defendant Company 1.
The Advertisement at Issue was purchased by Defendant Company 2 at the request of Defendant Company 1. In its keyword proposal, Defendant Company 2 listed "赫里亞沙發" as a competitor keyword, and the proposal was reviewed and revised by personnel of Defendant Company 1.
The plaintiff argued that the defendants used the plaintiff's own brand name and the text "赫里亞" contained in the Trademarks at Issue in keyword advertising, which could cause consumers to mistakenly believe that the goods or services originated from the plaintiff, in attempt to increase visits to the defendants' website and opportunities for transactions. The plaintiff therefore alleged that the defendants infringed its trademark rights and violated the Fair Trade Act.
III. The Court's judgment
1. Both defendants jointly participated in the purchase of the Advertising at Issue
Defendant Company 2 expressly listed "赫里亞沙發" as a competitor keyword in its keyword proposal, which was reviewed and revised by the employees of Defendant Company 1. Defendant Company 2 subsequently purchased the keyword advertising from Google. The Court therefore held that both defendant companies participated in the decision-making and implementation of the Advertisement at Issue.
2. Use of the text "赫里亞" in the advertisement headline constituted trademark use, but did not violate Subparagraph 1, Paragraph 1, Article 68 of the Trademark Act and therefore did not constitute trademark infringement.
The Advertisement at Issue directly incorporated "赫里亞," the main distinctive part of the plaintiff's trademarks, into the advertisement headline "《新家園沙發》赫里亞", together with product descriptions such as "台灣沙發工廠" (translated as "Taiwan Sofa Factory"), "30年專業團隊(translated as "Professional Team with 30 years of experience"), and information concerning sofa materials. The Court held that such use was sufficient for relevant consumers to perceive "赫里亞" as identifying the source of sofa products and therefore constituted trademark use.
However, in addition to the Chinese characters "赫里亞," the Trademarks at Issue also contain elements including circular, square, and trapezoidal designs and the English word "HORIA," and are therefore composite word-and-device marks. The Advertisement at Issue only included three Chinese characters "赫里亞" and did not reproduce the Trademarks at Issue in their entirety. The Court held that the term "identical with the registered trademark" under Subparagraph 1, Paragraph 1, Article 68 of the Trademark Act requires the sign to be exactly identical to the registered trademark visually, aurally, or conceptually. Accordingly, the Advertisement at Issue only included the characters "赫里亞," which was not completely identical to the plaintiff's registered Trademarks at Issue. Thus, the conduct did not violate Subparagraph 1, Paragraph 1, Article 68 of the Trademark Act and did not give rise to trademark infringement liability.
3. The Advertisement at Issue violated Article 25 of the Fair Trade Act, but did not violate Article 21 of the Fair Trade Act.
As Defendant Company 2 is engaged in advertising and information services and does not compete with the plaintiff, which operates a sofa and furniture business, the Court held that Defendant Company 2 was not subject to liability under the Fair Trade Act in this case.
As to Defendant Company 1, the Court considered that modern Internet searches and advertisements are immediate, rapid and capable of reaching large numbers of consumers, and therefore have a broader impact on market trading order than traditional forms of advertising. Even if consumers could identify, after accessing the website, that the website was not operated by the plaintiff, the Advertisement at Issue nevertheless reduced the plaintiff's opportunities to reach potential customers. Conversely, the Advertisement at Issue increased Defendant Company 1's opportunities to reach consumers and may obtain business opportunities, thereby producing a substitution effect to some extent. However, by capitalizing on the goodwill accumulated in the plaintiff's "赫里亞" brand to attract more consumers, Defendant Company 1 engaged in an act of unfair competition involving free riding on another party's goodwill and therefore violated Article 25 of the Fair Trade Act.
In addition, although the characters "赫里亞" appeared in the headline of the Advertisement at Issue, consumers who clicked on the advertisement were immediately directed to the website of Defendant Company 1, which clearly used the "New House" brand and did not otherwise display the characters "赫里亞" or the plaintiff's trademark designs. This was sufficient for consumers to identify Defendant Company 1 as the actual provider of the goods. Accordingly, the Court found it difficult to conclude that the advertisement contained any false or misleading representation and held that it did not violate Article 21, Paragraph 1 of the Fair Trade Act.
IV. Conclusion
Where keyword advertising raises issues of trademark infringement and unfair competition, it is necessary to separately determine (i) whether the conduct constitutes trademark use and satisfies the elements of trademark infringement, and (ii) whether it constitutes an act of unfair competition. Even where a competitor's trademark is designated as a keyword or directly displayed in an advertisement headline, thereby constituting trademark use, trademark infringement may nevertheless not be established if the sign actually used is not identical to the registered trademark. However, even if trademark infringement is not established, conduct involving free riding on another party's goodwill and producing a substitution effect may still violate Article 25 of the Fair Trade Act.
It is also worth noting that an enterprise cannot necessarily avoid liability merely by entrusting digital advertising operations to a marketing company. Where the advertiser has participated in reviewing, revising, or making decisions regarding the keywords, it may still be found to have jointly participated in setting up the advertisement. We therefore recommend that companies establish a review mechanism for competitor keywords when engaging advertising agencies to operate search engine advertising, and avoid directly using competitors' trademarks in advertisement headlines or copy, so as to reduce legal risks under the Trademark Act and the Fair Trade Act.