TJ-SP recognizes unfair competition in the use of sponsored links with third party brand

The core of the controversy in Process No. 1016104-20.2018.8.26.0196 consisted of whether the use of a search term corresponding to a word element of a trademark licensed to a third party

The 1st Reserved Chamber of Business Law of the Court of Justice of the State of São Paulo (TJ-SP), by majority of votes, understood that the use of sponsored links is improper, when linking the advertising of the advertising company to the third party brand, having in view of the diversion of clientele from the legal entity that owns the rights to the brand, as well as unfair competition.

The core of the controversy in Process No. 1016104-20.2018.8.26.0196 consisted of whether the use of a search term corresponding to a word element of a brand licensed to third parties, which operates in the same market segment, by a company, as an advertiser , in a private advertising service, hired on an internet search engine, through sponsored links, constitutes a practice of unfair competition and, consequently, undue exploitation of the prestige of others to promote products or services.

The specific case was an appeal against a sentence that upheld an obligation not to act together with a claim for damages. In the first degree of jurisdiction, the appellant company abstained from using the brand name element licensed by the legal entity appealed to in a private advertising service that works on an internet search engine using sponsored links.

The appeal was based on the argumentative reasoning of active illegitimacy of the appealed company, due to the fact that the trademark is owned by a third party and the absence of a contractual provision of powers to the licensee to legally claim rights related to the trademark. Likewise, the lawfulness of comparative advertising was maintained and that the advertising service with sponsored links does not create confusion among consumers, considering, according to the appealing company, that the search only generates a global list of results, without specific targeting.

The appellate legal entity, in turn, argued the proven existence of unfair competition and trademark violation, by the association made between the companies, which aims, according to this reasoning, the diversion of customers, since the sponsored links promote preferential direction for third from searches made with terms equivalent to the brand in question. Furthermore, he asserted that the brand licensing agreement, duly registered with the INPI, stipulated for the appellate company the obligation to adopt the necessary measures for the preservation of the good commercial name of the brand.

The majority understanding of the TJ-SP recognized the active legitimacy, because of the authorization provided for in the license agreement for use and exploitation of the brand, in order for the appellate company to proceed with this type of action. Likewise, the provision of the sole paragraph of article 139 of Law No. 9,279 / 1996 was invoked, according to which “the licensee may be invested by the holder of all powers to act in defense of the brand”.

The configuration of unfair competition, according to the decision, was due to the fact that the use of sponsored links, when linked in a search tool, a keyword capable of referring to a competitor’s name, title of establishment or brand increases confusion in the consumer public, in addition to the presumption of harm from the improper use of another’s brand.

It was concluded, then, by the proof in the records that the advertising company used the corporate name or the brands owned by the appealed legal entity as search terms in the sponsored links in an Internet search engine, concretizing “overlapping potential customers, given the performance in the same market ”. Thus, the sentence was maintained, recognizing the duty to compensate for the damages caused and the obligation not to do so, in order to put an end to unfair competition.

By: Wilson Sales Belchior