Attorney Comments
This case sets an important precedent for organizations working in the generative AI space concerning the management of digital marketing assets and the reduction of intellectual property risks. From a legal risk management standpoint, the court’s decision clearly establishes that advertisers cannot rely solely on automated tools provided by third-party platforms—such as keyword planners or automated bid management systems—to fulfill their duty of care. The judiciary has made it clear that the convenience of automation does not exempt businesses from trademark infringement claims.
For AI developers and marketing teams, this ruling highlights a significant shift in compliance expectations. It is no longer adequate to depend on platform algorithms to review promotional content; companies must establish thorough internal review processes to identify third-party trademarks before launching broad keyword campaigns. The court’s dismissal of the defendant’s “automated tool” defense indicates that businesses are expected to maintain active awareness of the competitive environment and existing trademarks.
Additionally, the difference between the damages awarded and the amount sought reflects a judicial preference for moderation when actual harm to reputation is not demonstrated. However, the legal expenses and operational challenges involved in defending such cases often far outweigh the nominal damages granted. Therefore, investing in proactive clearance procedures is a more cost-effective approach than facing the uncertainties of litigation. Companies should approach keyword selection with the same diligence as brand naming, ensuring their marketing efforts do not unintentionally infringe on competitors’ established trademark rights.
Background
In December 2021, Company B filed for registration of the LT text trademark under Class 42. Subsequently, Company B authorized its shareholder, Company A, to oversee the brand promotion as well as the development and operation of the related application. Company A created an AI long-form writing app called LT (also known as the Quantum Adventure App) and managed a Quantum Adventure account on the Douyin platform to promote the app.
Dispute
When Company C used LT as a keyword for Baidu search promotion, Company B initiated legal action against Company C, alleging trademark infringement and unfair competition.
Evidence
The plaintiff’s evidence showed that a Baidu search for LTai writing returned a second result linking to a webpage titled LTai writing.WX Intelligent Creation Platform…. The description mentioned Wancai AI is an AI content creation tool… along with information about the defendant and assurances of security. Visiting this link revealed content related to the Wancai AI writing tool, including features like AI short videos, photo digital humans, and AI face changing. The website operator was identified as Company C.
Plaintiff Argument
The plaintiff argued that the defendant had set LT as a Baidu search promotion keyword and used LT in promotional titles and descriptions without authorization. This, the plaintiff claimed, could confuse the public and cause significant loss of potential business opportunities for Company B. Therefore, the plaintiff asserted that these actions amounted to trademark infringement and unfair competition under Article 2, Paragraph 2 of the Anti-Unfair Competition Law.
Court Determination
After review, the court determined that the defendant had indeed infringed the trademark. The court found that the defendant’s use of LT in the webpage link title for promoting its AI writing tool functioned as a source identifier, constituting trademark use. Moreover, the services promoted by the defendant were identical to those covered by the plaintiff’s registered trademark. The court concluded that the infringing identifier was identical to the plaintiff’s trademark. Since the conduct fell within the scope of the Trademark Law, the court ruled that applying the Anti-Unfair Competition Law was unnecessary.
Defense
The defendant contended that LT was automatically generated by Baidu’s keyword tool and that it had not actively engaged in infringement, thus should not be held liable. The defendant explained that it used Baidu’s backend Keyword Planner tool to search for keywords related to ai writing and added thousands of related keywords in one operation. The defendant claimed these keywords were autonomously selected by the tool, and the inclusion of LTai writing was inadvertent and unknown to them. They also noted that Baidu did not provide any trademark-related warnings. The defendant maintained that, as a user of Baidu’s promotion tools, it should not bear a duty of care beyond what the law requires.
Supporting Evidence
To support its defense, the defendant submitted screenshots of its Baidu marketing account backend and the keyword tool’s user guide. The Keyword Report showed 989 impressions and 857 clicks, with only one conversion keyword. Top keywords included ai intelligent copy, ai online writing, and ai images. The keyword tool’s introduction explained that after adding keywords, the system opens the Keyword Planner, which helps users find and add recommended related words. Screenshots demonstrated that searching ai writing automatically generated suggestions like ai writing without login and ai novel creation software.
Court Rejection
The court rejected the defendant’s defense, emphasizing that since the defendant develops and operates AI writing software, it operates in the same industry as the plaintiff. Therefore, when adding keywords for promotion, the defendant owed a duty of reasonable care to review and verify keywords, whether added manually or via automated tools. Specifically, the defendant was required to avoid infringing on intellectual property rights, including registered trademarks, of others in the industry. 本院认为，某丙公司经营开发、运营AI写作软件工具，与某乙公司属同一行业，其在宣传推广网站添加关键词时应负合理审慎的注意义务，无论是自主添加的、还是通过添加工具添加的，均应进行审查核实，对相关行业内他人的注册商标等知识产权进行避让。
Ruling on Claims
At trial, the plaintiff requested that the court order the defendant to cease infringement, publish a statement to mitigate negative impact, and pay economic losses and reasonable expenses totaling 80,000 RMB. Since the infringing link was removed during the proceedings and the plaintiff withdrew the claim related to cessation, the court did not rule on that matter. Regarding the public statement, the court found the plaintiff had not provided evidence that its reputation or goodwill was harmed, so this request was denied.
Compensation
Concerning compensation, the plaintiff sought statutory damages. Due to insufficient evidence of actual losses or the defendant’s illicit gains, the court considered factors such as the trademark’s notoriety, the nature of the infringement, the defendant’s business scale, the plaintiff’s evidence-gathering efforts, and legal representation. Ultimately, the court awarded damages of 6,000 RMB.
Reference: (2024) Yue 0112 Min Chu No. 22967