This article on Trademark Infringement and Pay-Per-Click advertising was originally posted here at Google's knol website. Rather than reinvent the wheel, since this article is very well written, it is being repeated here with full credit given to the author, as follows:
Downhill, Fionn. Protecting Your Trademark Online:Trademark infringement and paid search [Internet]. Version 4. Knol. 2008 Jul 24. Available from: http://knol.google.com/k/fionn-downhill/protecting-your-trademark-online/8ff4qknad5fz/2.
Trademarks distinguish your brands from your competitor's brands. They reflect on your reputation and your identity. Successful brands and trademarks are the results of serious investment of time and capital. The goal is to give you an advantage over your competitors.
Trademark infringement issues are of great concern to online Pay-per-Click (PPC) advertisers. It is estimated that twenty percent (20%) of all searches online are trademark searches. Businesses around the world are losing millions of dollars because of trademark infringements. It also drives the price of PPC ads upwards.
While 1 in 5 searches for trademark terms may seem high, most conversions do not originate from trademarked terms. A study by comScore and Yahoo Search Marketing (Overture) found most buyers do not search by manufacturer or product name. Rather, buyers use broad search terms that do not include a manufacturer's name. Broad search terms account for 70% of total searches and 60% of total conversions.
Companies often bid on the brand names of their competitors. This means that when a searcher types in your brand name the ads for your competitors appear. They click on your competitor's site thinking it is related to your site. This is basically a form of bait and switch fraud, which offers your customers an alternative brand to your product. Currently it is possible to stop all advertisers from bidding on the terms within Yahoo and MSN. Google is the only one of the top three search engines that still maintains a strong stance in allowing advertisers to bid on trademarked search terms -as long as the trademarked term is not used within the advertiser's ad-copy.
If there are sites listed that use your trademark look at both the questionable result that is listed and also the site displayed in the result. When looking over the possible violator's site, don't just look over the visible content on the site; look over the code as well to uncover hidden text, image alt tags, and keyword meta tags that may include your trademarked names. There is also the possibility that they may be using a cloaked page, which includes your trademark. To check this out, you will need to view the search engine's cached page on file.
If there is evidence of a trademark violation document all of your findings by dating the violation as well as the site owner's complete contact information. Obtain Whois information for the site. For both organic and paid results, use a 'screen capture' of the page displaying the mark infringement. For mark infringements that are visible on a website, save the entire page's code as an .htm file. Once you have all of this information documented, you should send your findings to the appropriate search engine. You also have the option to take legal action. In this case you should present your complete set of records to your legal counsel. You may want to gather evidence by hiring a third party to collect evidence against the infringer of your trademark or copyrighted material.
MSN AdCenter on Trademarks
Microsoft requires all advertisers to agree that they will not bid on keywords, or use in the text of their advertisements, any word whose use would infringe the trademark of any third party or would otherwise be unlawful or in violation of the rights of any third party.
Google Adwords on Trademarks:
Google takes allegations of trademark infringement very seriously and, as a courtesy, we're happy to investigate matters raised by trademark owners. Also, our Terms and Conditions with advertisers prohibit intellectual property infringement by advertisers and make it clear that advertisers are responsible for the keywords they choose to generate advertisements and the text that they choose to use in those advertisements.
Solution or More Problems
Google
adwords-support@google.com
Google Inc.
Attn: Google AdWords, Trademark Complaints
2400 Bayshore Parkway
Mountain View, CA 94043
Yahoo! Search Marketing
trademarkconcern-ysm@yahoo-inc.com.
Formerly: Overture Services, Inc.
Attn: Business & Legal Affairs - Trademarks
74 N. Pasadena Ave., 3rd Floor
Pasadena, California 91103
Fax: 626 685-5601
Microsoft Corporation
Online Trademark Concern form
Attn: MSN Search Trademark Concerns
One Microsoft Way
Redmond, WA 98052
USA