Want to provoke a competitor's CEO? Try using his company's trademarks in your marketing materials for your competitive product. But wait, you can't do that…that is infringement and unfair competition, right?
Not necessarily. A company can legally use a competitor's mark or brand as necessary to fairly and accurately describe its products, or to fairly and accurately compare its products and services to those of the competitor. What it cannot do is market in a way that leads to a likelihood of consumer confusion about the source or affiliation of its products or its competitor's products.
More recently, a clear trend has emerged that a purchase or sale of a competitor's trademark does qualify as a "use in commerce.” Earlier this year, the 9th Circuit made clear in Network Automation, Inc. v. Advance System Concepts, Inc. that it agrees with the 2nd Circuit's leading 2009 decision Rescuecom, Corp. v. Google, Inc. that keyword transactions constitute a "use in commerce."
Whether or not a keyword purchase infringes a trademark will still depend on whether the use creates a likelihood of consumer confusion under all the relevant circumstances. So the real analysis again turns on whether the resulting ad is ambiguous or confusing as to source or affiliation.