How do I stop competitors from using my trademark in their advertising? EXPENSIFY v. WEBEXPENSES

A trademark is a word, phrase or symbol that signals to consumers the identity of a product manufacturer. Trademark law protects sellers of goods and services that brand their product with a trademark. A trademark owner is granted certain exclusive rights to brand goods with their trademark. In the United States, trademark law grants the first user of a trademark priority over subsequent users of a trademark. A trademark user can register their trademark with the United States Patent and Trademark Office to strengthen the rights associated with the trademark, however, registration is not required to begin using a trademark.

Trademark infringement is when someone, other than the owner of a trademark, uses a trademark in a way that causes consumers to be confused about the identity of the producer of a product. Clearly, if a competitor starts using a trademark to lead consumers to believe that products produced by the competitor came from the trademark owner, that would be trademark infringement. However, there are some instances when a competitor is allowed to mention trademarks it does not own without committing trademark infringement.

Nominative fair use, is a legal doctrine that provides an affirmative defense to trademark infringement, by which a person may use the trademark of another as a reference to describe the other product, or to compare it to their own. The test to determine if a defendant’s use of a trademark is a normative fair use can vary slightly between the different circuit courts but the test boils down to three points. One party may use or refer to the trademark of another if: (1) The product or service cannot be readily identified without using the trademark; (2) The user only uses as much of the mark as is necessary for the identification; and (3) The user does nothing to suggest sponsorship or endorsement by the trademark holder. This applies even if the nominative use is commercial, and the same test applies for metatags in websites.

EXPENSIFY, INC. v. WEBEXPENSES, INC., 19-cv-00035 (W.D.TX 2019) is an example of a case where the defendant will argue that their use of trademark is a nominative fair use. The plaintiff in this case is Expensify, a company that provides an online method to organize expense reports. The plaintiff allows customers to organize receipts into reports to be submitted to the customer’s employer, for reimbursement. The term “Expensify” is a federally registered trademark (Reg. No. 4,229,014) that the plaintiff has been using continually in commerce since
approximately 2009. In 2019 the plaintiff dramatically increased it’s advertising, the crown jewel of the ad campaign being an advertisement during the Superbowl. An advertisement during the Superbowl is the most expensive television advertising in the United States.

The defendant, Webexpenses, also offers an online expense reporting product. The defendant created a series of Internet-based advertisements. Its advertisements appear to be triggered when a consumer enters search terms such as “Expensify” and “Expensify This” into a Google search. The search results that come back to the user include advertisements for Webexpenses.

The plaintiff filed a complaint alleging trademark infringement, unfair competition, and unjust enrichment. The plaintiff argues that nominative fair use does not apply here because the defendant is not using only so much of the plaintiff’s trademarks as necessary to identify the competition. Rather the defendant is using the plaintiffs trademarks to trigger defendant’s advertisements when consumers use a search engine to find the plaintiff’s products.

The defendant has not answered the complaint yet. Ultimately it will be up to the courts to decide whether using a competitors trademark as an advertising search term is a nominative fair use or trademark infringement.

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