AdWords and trademarks in Argentina: Veraz v. Open Discovery reaches the Supreme Court

Latest developments in AdWords-related trademark litigation in Argentina

In recent times, there have been significant judicial developments in Argentina regarding keyword advertising, particularly concerning its legal implications. While the technological aspects of tools like Google AdWords are widely known, what’s emerging is a growing body of case law that addresses these tools from a legal perspective—especially within the context of trademark law and unfair competition.

A notable and ongoing case that has gone through all judicial instances, yet still circulates through the courts, is the following:

Case overview: “Organización Veraz S.A. v. Open Discovery S.A. on cease of trademark use”

At the core of this case lies a critical legal question: Does the use of a competitor’s trademark as a keyword (AdWord) in online search engines to attract clients constitute trademark infringement and unfair competition? And if so, can such conduct give rise to compensable damages?

In this instance, the defendant (Open Discovery S.A.) used the trademarks VERAZ and ORGANIZACIÓN VERAZ, registered by the plaintiff, as well as similar terms such as VERAS, BERAZ, and BERAS, as keywords in online search engines. This practice enabled Open Discovery to appear prominently through sponsored links when users searched these terms—often outranking the organic results that would otherwise lead users to the official Veraz website.

It’s worth noting that VERAZ is a well-known brand in Argentina within the credit reporting industry, whereas Open Discovery was relatively unknown when the dispute began.

Initial judicial rulings

Though the case dates back to 2009, the first rulings came years later. On June 16, 2017, the trial court held that the unauthorized use of a competitor’s trademark as a keyword did, in fact, constitute trademark infringement, and therefore entitled the plaintiff to damages.

This decision was upheld by the appellate court (Chamber III) on May 4, 2018, which not only affirmed the existence of trademark infringement but also introduced arguments related to unfair competition. Furthermore, the appellate court significantly increased the amount of compensation owed by the defendant.

Supreme Court intervention: A turning point

The Supreme Court of Argentina does not function as a regular third instance but rather as an extraordinary one, intervening only under specific legal conditions or in cases of significant institutional relevance.

In most cases, intellectual property disputes do not reach the Supreme Court. However, given the novelty and media relevance of this matter, the Court chose to hear it. Before issuing a decision, the Attorney General of the Nation—who leads the state’s legal team—must issue a non-binding opinion.

In his brief, the Attorney General criticized the appellate ruling, stating it deviated from proper federal legal standards. Specifically, he emphasized that determining trademark infringement in the context of keyword advertising requires evaluating whether there is a likelihood of consumer confusion or a perceived connection between the advertiser and the trademark holder.

Key excerpts from the Attorney General’s opinion include:

“In order to establish whether trademark dilution or undue exploitation of brand prestige has occurred, it is necessary to examine whether such use can lead to confusion or at least a perceived connection between the advertiser (Open Discovery S.A.) and the trademark holder (Organización Veraz S.A.). Conversely, there is no infringement if the sponsored link is recognized by the user merely as an alternative offer.”

“The mere fact that Organización Veraz S.A. and Open Discovery S.A. are market competitors in the credit reporting sector does not, in and of itself, constitute trademark infringement. It is one of many factors that must be weighed to determine consumer perception regarding the advertisement.”

He also noted that evaluating potential confusion should consider the structure of the sponsored ad (title, description, domain name), the distinction between sponsored and organic results, and the overall design of the search engine results page (SERP).

In short, the Attorney General concluded that using a well-known competitor’s trademark as a keyword does not automatically result in consumer confusion or constitute an unlawful act.

The Supreme Court, in a divided decision, adopted the Attorney General’s reasoning and overturned the appellate court’s ruling, instructing the lower court to issue a new judgment in line with these legal standards.

A new ruling: defiance or compliance?

The appellate court, this time through Chamber I, issued a new ruling just over a month ago. To the surprise of many—especially the defendant—the court once again found Open Discovery liable for trademark infringement and ordered it to pay damages, although the compensation amount was lower.

This ruling was unanimous.

What distinguishes this second ruling from the first is its more detailed analysis of the documentary evidence, primarily submitted by the plaintiff. The court examined how the defendant’s conduct likely misled users and created a risk of confusion—thereby aligning the decision with the legal standards set by the Supreme Court and the Attorney General.

Conclusion: Is the case closed?

Not yet. The defendant has filed an extraordinary appeal to bring the matter before the Supreme Court once again, arguing that Chamber I’s decision contradicts the Court’s earlier ruling. Meanwhile, the plaintiff argues that the court complied with the Supreme Court’s instructions, simply applying them to the specific facts of the case.

Regardless of the final outcome, our professional opinion on the legal issue is as follows:

Using a third party’s trademark as a keyword does not automatically constitute an illegal act. In both traditional commerce and the digital marketplace, there are many instances where such usage is lawful.

However, when a direct competitor adopts a well-known rival’s trademark as a keyword to capture traffic and mislead consumers, it crosses the line into trademark infringement and unfair competition, potentially giving rise to a legal obligation to compensate for resulting damages.