FTC Penalized Agoda’s Use of Competitor’s Name for Keyword Advertising (Taiwan)

Aaron Chen & Sally Yang

The Fair Trade Commission (hereinafter, the “TFTC”) rendered the Gong-Chu-110075 Disposition of November 4, 2021, holding that Agoda’s use of the corporate name of its competitor Easytravel for its keyword advertising and side-by-side depiction of the corporate name of Easytravel and Agoda’s website URL in the heading of its keyword advertisement are obviously unfair methods that exploit the fruit of labor of others and are sufficient to undermine trading order.  Since this violated Article 25 of the Fair Trade Act, the TFTC imposed a fine of NT$1 million.

Reasons of the TFTC’s findings

According to this disposition, Agoda used the corporate name of its competitor Easytravel in keyword advertising during 2017 through March 17, 2021 such that when a consumer entered the word “Easytravel” in a search engine, Agoda’s keyword advertisement would appear in the search result.  As a result, the corporate name of Easytravel would be presented with Agoda’s website URL also appearing above or below the heading.

The TFTC pointed out that the keyword advertisement at issue violates Article 25 of the Fair Trade Act on the following grounds:

1. “Easytravel” is a registered trademark of Easytravel Co., Ltd. Since Easytravel has worked with hotels to launch a share economy platform, this shows that it has continuously dedicated its efforts to promoting hotel reservation services and is a company that “has made significant efforts and enjoyed certain economic interests in the market.”

2. Agoda’s purchase of an advertisement in which “Easytravel” was used as a keyword was likely to cause Internet users to believe that Easytravel and Agoda are derived from the same source or are related enterprises. If a consumer clicks on the keyword advertisement out of confusion or lack of knowledge, the query will be intercepted and directed to Agoda’s online hotel reservation platform, thus reducing Easytravel’s opportunity to get in touch with potential customers and undermining the economic interests reflected in the corporate name of “Easytravel.”

3. Even though Agoda’s online hotel reservation platform is better known, Agoda should not have exploited the fruit of labor of others by leveraging its advantage of fame to constrain or undermine the efficiency competition in the market. The type of behavior involved in this case is the exploitation of the fruit of labor of others, is quite obvious in terms of the characteristics of its unfair competition, and has constrained or impaired efficiency competition in the market.

Points to note for this case

1. This case is somewhat different from a typical keyword advertising penalty case. Typical keyword advertising penalty cases in the past mostly involved enterprises purchasing advertisements using the names of competitors with the same or higher market popularity as keywords.[1]  However, the disposition for this case seems to affirm that Agoda is a corporate name well known to general consumers and is better known than Easytravel. Under such a circumstance, did Agoda have any economic incentive to exploit the fruit of labor of a less well known enterprise? In particular, this calls into question if Agoda was intentional or negligent in exploiting the fruit of labor of others when it automatically placed advertisements by way of machine learning.

2. In the past cases involving legal violations of keyword advertising, the keywords used were mostly corporate names for which the enterprises had devoted considerable resources to their marketing and which the consumers had been familiar with or had enjoyed a certain business reputation. In the disposition for this case, however, Easytravel was still found to meet the requirements that “significant efforts have been made” and that “certain economic market interests have been enjoyed” on the ground that Easytravel has a registered trademark and has launched share economy services, even if Easytravel detected the keyword advertisement several years after it was placed.  The standard applied in this disposition seems to be looser than before.

[1] Examples include the purchase of “Transtar Translation” as the keywords by Chien Hui Co. (Gong-Chu-101050), of “Taiwan Mobile” as the keywords by Taiwan Star Telecom (Gong-Chu-105064), etc.