When assessing the likelihood of confusion in the keyword advertising context, the Ninth Circuit primarily considers an expedited four-factor test: 

1. 1.  the strength of the mark;
   2.  the evidence of actual confusion; 
   3.  the type of goods and degree of care likely to be exercised by the purchaser; and 
   4.  the labeling and appearance of the advertisements and the surrounding context on the screen displaying the results page.

See Network Automation, Inc. v. Advanced Sys. Concepts, Inc., 638 F.3d 1137, 1154 (9th Cir. 2011). 

Such keyword advertising cases where a keyword search of a trademark returns advertising for a competitor's product, often invoke “initial interest confusion” from the diversion of potential consumers as a result. Playboy Enters., Inc. v. Netscape Commc'ns Corp., 354 F.3d 1020,1025 (9th Cir. 2004). “Although dispelled before an actual sale occurs, initial interest confusion impermissibly capitalizes on the goodwill associated with a mark and is therefore actionable trademark infringement.” Id. 

But “initial interest confusion” does not avoid the need to establish likelihood of confusion because “the owner of the mark must demonstrate likely confusion, not mere diversion.” Network Automation, 638 F.3d at 1149; see also Playboy Enters., 354 F.3d at 1035 (Berzon, J., concurring) (“There is a big difference between hijacking a customer to another website by making the customer think he or she is visiting the trademark holder's website (even if only briefly) . . . and just distracting a potential customer with another choice, when it is clear that it is a choice.”). 

The Ninth Circuit recently affirmed summary judgment of no infringement with respect to a rival law firm's purchase of the term “Lerner & Rowe” as a Google Ads keyword, for which rival advertisements would appear near the top of Google's search results list whenever someone searched for the “Lerner & Rowe” law firm. But the text of those rival ads never included the term “Lerner & Rowe” itself. Lerner & Rowe, PC v. Brown, Engstrand & Shely, LLC, No. 23-16060, 2024 WL 4537915 (9th Cir. Oct. 22, 2024). 

The Court also noted that evidence of a 6.82% click-thru rate bolstered the de minimus nature of actual confusion, citing 5 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 32:189 (5th ed.) (“When the percentage results of a confusion survey dip below 10%, they can become evidence which will indicate that confusion is not likely.”). See also 1-800 Contacts, Inc. v. Lens.com, Inc., 722 F.3d 1229, 1244 (10th Cir. 2013) (a click-thru rate represents the upper limit of initial interest confusion).

In her concurrence, Judge Desai suggested that the Ninth Circuit should reconsider the holding in Network Automation that keyword bidding and purchasing constitutes a “use in commerce” under the Lanham Act because, without more, “the buyer of keywords does not in any way display a trademark to sell or advertise services.”

Professor Goldman commented that the lack of “use of commerce” is the appropriate path to resolve competitive keyword ad cases.