Use of SEO to improperly display trademarks in search results violates Fair Trade Act – Commentary

Two Taiwanese companies used search engine optimisation (SEO) to improperly display specific brand names on search engine display results, making consumers mistakenly believe that the stores were selling specific branded products in order to promote their own website visit rates.

On 12 April 2022, the Fair Trade Commission decided that this behaviour violated article 25 of the Fair Trade Act, and imposed fines of 2 million and 800,000 new Taiwanese dollars on the two companies, respectively.

The Fair Trade Commission stated that when consumers enter a specific brand name in Google, the brand will appear in the search results. This is a result of these companies using SEO techniques. The Fair Trade Commission further explained that it does not oppose SEO in itself, but the presentation of search results should not have the effect of misleading consumers.

When consumers search for information about a specific brand on Google, they may be attracted by misleading text from companies improperly using SEO. This behaviour is equivalent to luring consumers to the wrong street. It not only increases the visitor rate of the companies’ websites, but may also persuade consumers to purchase other brands’ products, thereby reducing the sales opportunities for the brands the consumers originally searched for.

In the past, the Fair Trade Commission has found that using the company name or trademark of a competitor’s business as a keyword ad for a business, or juxtaposing the competitor’s business name or trademark in a keyword ad, violates article 25 of the Fair Trade Act.

Although the companies in this case did not directly use other enterprises’ brands as keyword ads, the final result still essentially constitutes “bait-and-switch” behaviour, as well as interrupting consumers’ normal search and purchase habits. This behaviour also constitutes unfair competition with other operators who sell branded products.

If improper SEO use remains unregulated, other competitors may imitate the behaviour in the future, making it more difficult for consumers to distinguish the authenticity of the information presented in the search results and threatening the competition order of the e-commerce market and the interests of consumers. The Fair Trade Commission considered that the act constituted deceptive and obviously unfair behaviour that would be sufficient to affect the transaction order and thus decided that it violated article 25 of the Fair Trade Act.