• When Consumer Confusion Leads to Lawsuits

    When Consumer Confusion Leads to Lawsuits

    Analysis Group affiliate Donna Hoffman discusses the role of Internet search in the purchase process, the potential for consumer confusion and lawsuits, and inferences experts can make from their analyses of online search data. She is a marketing professor at the University of California, Riverside, and an expert in digital commerce, Internet marketing, and online consumer behavior.

    How do online searches factor into consumer confusion?

    Consumers search for product information online by typing keywords into various search engines, which use proprietary algorithms for generating results that are both sponsored (paid) and organic (unpaid). The consumer might start with something general, like “shoes,” and as she gathers information and moves toward the decision to buy, the keywords may become more detailed, like “hiking shoes” and “Company A hiking shoes.” If a competitor has used Company A’s trademark as a keyword online, consumers looking for Company A’s site may be misdirected to the competitor’s site instead. This is where questions of confusion and, potentially, infringement come in.

  • “It’s a painstaking process: segmenting and categorizing keyword searches, comparing them to benchmarks, and mapping them to purchase-process stages.”

    — Professor Donna Hoffman

  • How are search engine data used in court when claims of infringement arise?

    Experts can analyze keywords and associated web activity to help demonstrate the extent to which the use of trademarked keywords created consumer confusion at various stages in the purchasing process, potentially affecting sales and profits. They can look at the keywords firms buy to influence paid searches, the keywords firms embed in their web pages to influence organic searches, the number of visits to a website generated by particular keyword searches, and consumers’ behaviors once they reach certain sites using specific keywords.

    It’s a painstaking process: segmenting and categorizing keyword searches, comparing them to benchmarks, and mapping them to purchase-process stages. These analyses require expertise in both consumer behavior and statistics.

    Can you share an example?

    I was recently retained by an auto parts company that had trademarked its name and alleged that a competitor’s use of a permutation of that name was infringing, confusing customers, and diverting sales. Interestingly, the parties had foreseen the likelihood of confusion and entered into a contract that would have barred our client from using even its own name in the competitor’s limited geographic service area. The competitor countered that our client had breached this contract, resulting in consumer confusion and lost sales in that area.

    How were search engine data used?

    I worked with a team led by Vice President Peter Hess to examine how many visits to both companies’ websites were generated by search strings containing our client’s trademarked keywords and allegedly infringing permutations used by the competitor. We found that a significant number of visits to the competitor’s site generated through those searches were likely the result of consumer confusion. A relatively high share of visitors who used those keywords left the competitor’s site immediately, or stayed only a short period of time and viewed relatively few pages compared with visitors to our client’s site using those same keyword searches. These patterns were more pronounced for more-detailed searches than for generic ones, suggesting that greater confusion was happening closer to the final stages of the purchase.

    These results were consistent with other evidence indicating that consumers had mistakenly bought from the competitor. ■