Newsletter
Taiwan Fair Trade Commission promulgates Disposal Directions (Guidelines) on Keyword Advertisements
On December 12, 2024, the Taiwan Fair Trade Commission (the "TFTC") promulgated the Fair Trade Commission Disposal Directions (Guidelines) on Keyword Advertisements (公平交易委員會對於網路關鍵字廣告相關案件之處理原則, the "Guidelines"), which aim to maintain market transaction order and, in particular, to prevent the obviously unfair conduct of improperly using keyword advertising through online search engines to exploit the fruits of others' work. The Guidelines, which have since taken effect, are summarized below.
I. Basic Principle of Applicability
The TFTC explains that, as the function of an online search engine is to provide Internet users with search results that are "related to," rather than "the same as," the keywords entered for the search query, when Internet users use the name, brand, or other trade dress (collectively, "trade dress") of a particular enterprise as the keyword for an online search, their search targets are not limited to those of the enterprise represented by such trade dress. The more diversified and relevant the search results, the more favorable it is for Internet users to gather adequate information and reduce search costs.
The use of one enterprise's trade dress in keyword advertisements or through website optimization tools or designs is not considered to be a violation of the Taiwan Fair Trade Act (the "TFTA") by default. When determining the legality of such use, it is necessary to consider the circumstances of each case, whether the use benefits the public by providing consumers with more varied and useful information, promoting the flow of market information, and lowering search costs.
II. Determination of Obviously Unfair Conduct
Regarding the obviously unfair conduct of exploiting the fruits of others' work by using keyword advertising or web optimization tools or designs, the TFTC has provided the following two types of practice as examples:
(I) The search results of an enterprise's keyword advertisement (such as headlines or URLs) display another enterprise's trade dress to free-ride on the goodwill thereof, misleading consumers into thinking that the goods or services of the two enterprises are from the same source or somehow related, in order to promote its own goods or services; the types of such advertisements include:
1. the search results of the keyword advertisement show both the trade dress of the two enterprises and the overall presentation thereof misleads consumers into thinking that the goods or services of the two enterprises are from the same source or somehow related; and
2. the search results of the keyword advertisement show the trade dress of another enterprise along with the URL of the advertising enterprise and the overall presentation thereof misleads consumers into thinking that the goods or services of the two enterprises are from the same source or somehow related.
The TFTC further elaborates that in determining whether such advertising constitutes obviously unfair conduct that exploits the fruits of others' work, the following factors must be taken into consideration:
1. whether the enterprise whose trade dress is being exploited has made significant efforts to develop such trade dress; and
2. whether the free-riding on the goodwill will mislead consumers into thinking that the two enterprises are from the same source or somehow related, such as being partners, affiliates, or belonging to the same parent brand, etc.
(II) Using web optimization tools or designs to improperly display the trade dress of another enterprise in organic search results in order to drive traffic to its own website.
III. Legal Consequences of Engaging in the Obviously Unfair Conduct
An enterprise engaged in obviously unfair conduct that suffices to interfere with market transaction order will be deemed in violation of Article 25 of the TFTA. Whether an act "suffices to interfere with market transaction order (足以影響交易秩序)" is determined based on the Fair Trade Commission Disposal Directions (Guidelines) on the Application of Article 25 of the TFTA (公平交易委員會對於公平交易法第二十五條案件之處理原則). If the enterprise's conduct does not meet the requirements under such Disposal Directions, then remedies should be sought under the Civil Code, the Consumer Protection Act, or other applicable laws.
Furthermore, if a keyword advertisement case involves other anti-competitive practices, the TFTC will also review whether other provisions of the TFTA have been violated on a case-by-case basis.
IV. Supplementary Provisions
The TFTC finally explains that, in addition to these Guidelines, the Fair Trade Commission Disposal Directions (Guidelines) on the Application of Article 21 of the TFTA and the Fair Trade Commission Disposal Directions (Guidelines) on the Application of Article 25 of the TFTA still apply to keyword advertisement cases.
Lee and Li has a professional practice group of Competition Laws. Therefore, if you have any comments or questions on the Guidelines, please do not hesitate to contact our professional group.