Using a Competitor’s Name in Ads? What Trademark Law Says

I Can Say Lexus, Right?

Imagine you run an auto repair shop that specializes in fixing Lexus vehicles. Naturally, you want your website and Google ads to say so. But can you legally use the word “Lexus” without permission from Toyota? If you sell compatible replacement parts, can you reference a competitor’s brand to help customers find what they need?

This is where the doctrine of nominative fair use comes in. It allows businesses to refer to someone else’s trademark under very specific conditions—but cross the line, and you could face a cease and desist letter or even a lawsuit for trademark infringement.

In this article, we’ll walk the fine line between permissible brand references and unlawful use, with real cases involving big brands, small businesses, and the growing world of online marketing. We’ll cover landmark rulings from the Ninth Circuit, discuss how other courts treat nominative fair use, and lay out best practices to help your business stay compliant.

The Basics — What Is Nominative Fair Use?

Nominative fair use is a legal doctrine that allows you to use someone else’s trademark to refer to that trademark owner’s actual product or service. It’s different from other types of fair use in trademark law, such as descriptive or comparative fair use, because you’re not using the mark to describe your own product—you’re using it to identify theirs.

Let’s say you repair Apple laptops. You’re not selling counterfeit products. You’re just describing what you do: “We repair Apple MacBooks.” That’s a classic example of nominative fair use. You’re naming the brand to identify the product you work on, not misleading people into thinking you’re Apple itself.

But there’s a catch. Trademark law still prohibits uses that create consumer confusion—like implying sponsorship, affiliation, or endorsement when there isn’t any. Nominative fair use only protects your right to refer to another’s mark when it’s necessary, accurate, and not misleading.

The New Kids on the Block Test

The modern framework for nominative fair use comes from the Ninth Circuit’s influential decision in New Kids on the Block v. News America Publishing, Inc., 971 F.2d 302 (9th Cir. 1992). In that case, two newspapers conducted reader polls about the pop group New Kids on the Block. The band sued for trademark infringement, but the court ruled that using the band’s name was legally permissible under a new three-part test.

According to the court, use of another’s trademark is considered “nominative fair use” when all three of the following conditions are met:

1. The product or service is not readily identifiable without using the trademark.
   For example, it’s hard to describe a “Lexus” without calling it a Lexus.
2. Only so much of the mark is used as is reasonably necessary.
   You can say the name, but using the stylized logo, color scheme, or slogan may go too far.
3. The use does not suggest sponsorship or endorsement by the trademark holder.
   This is the most important part: you must avoid creating the impression that the brand owner is somehow affiliated with or endorsing your business.

In New Kids, the newspapers didn’t use logos, trademarks, or any special formatting. They just used the group’s name in plain text to ask readers their opinion. The court held that this was necessary, minimal, and not misleading—so it passed the test.

A Modern Application — Toyota v. Tabari and Online Use

One of the most important modern cases on nominative fair use is Toyota Motor Sales, U.S.A., Inc. v. Tabari, 610 F.3d 1171 (9th Cir. 2010). The case involved two independent auto brokers who specialized in helping customers lease Lexus vehicles. They operated websites with domain names like buy-a-lexus.com and buyorleaselexus.com.

Toyota sued, arguing that the use of the Lexus mark in the domain names was confusing and infringed its trademark. But the Ninth Circuit disagreed. Applying the New Kids test, the court held that the Tabaris’ use of the Lexus name was a textbook example of nominative fair use:

• They needed to use the word “Lexus” to describe the cars they specialized in.
• They used only the name, not the Lexus logo or stylized branding.
• They clearly identified themselves as independent brokers, not affiliated with Toyota.

Crucially, the court emphasized that when nominative fair use applies, it replaces the traditional multi-factor likelihood-of-confusion test. In other words, if your use meets the three-part test, you don’t also have to prove that consumers won’t be confused—the test already accounts for that.

Takeaway: You can refer to a brand by name online, even in your domain name, if you’re doing it accurately and without implying a connection that doesn’t exist.

What About Other Circuits?

While the Ninth Circuit has clearly adopted the nominative fair use doctrine, not all federal circuits apply the same test. This can create uncertainty for businesses that operate online or across state lines.

For example, the Third Circuit addressed nominative fair use in Century 21 Real Estate Corp. v. LendingTree, Inc., 425 F.3d 211 (3d Cir. 2005). Instead of adopting the New Kids test as a replacement for the likelihood of confusion analysis, the Third Circuit treated nominative use as just one factor within the traditional multi-factor infringement test. That means even if a use is “necessary” and “minimal,” courts in that circuit may still analyze whether consumers are confused—without automatically giving the defendant the benefit of the nominative use framework.

To date, this split in approach has never been resolved by the U.S. Supreme Court. As a result, the strength and availability of a nominative fair use defense can vary by jurisdiction.

Takeaway: If you’re doing business outside the Ninth Circuit, be aware that your use of another’s trademark—even in a factual, necessary way—might still be judged under a stricter standard.

What Makes Fair Use “Fair”? Key Factors Courts Weigh

Even when you’re using a trademark just to identify someone else’s product or service, that doesn’t automatically mean you’re in the clear. Courts look closely at how the mark is used—especially in commercial settings where confusion or implied endorsement is a real risk.

Here are some of the most important factors courts consider when deciding whether a use qualifies as nominative fair use:

• Logos and Stylization: Using the plain text name of a brand is much safer than using its distinctive logo, font, or color scheme. Courts view visual branding as more likely to create an impression of endorsement.
• Disclaimers: While not always legally required, disclaimers can help clarify that your business is independent and not affiliated with the trademark owner. In Toyota v. Tabari, the court noted that the Tabaris’ website explicitly stated they were not associated with Toyota.
• Necessity: You must actually need to use the brand name to identify the product. If there’s a generic way to describe it instead, you might not meet the first prong of the New Kids test.
• Commercial Context: Courts look at whether you’re using the mark in a neutral, informational way—or whether you’re trying to cash in on someone else’s reputation. For example, placing a competitor’s name in large font at the top of your homepage may weigh against you.

In LifeScan, Inc. v. Shasta Techs., LLC, 2013 U.S. Dist. LEXIS 143510 (N.D. Cal. 2013), the court held that while a reseller could mention LifeScan’s product, excessive use of logos and trade dress could mislead consumers—especially when no clear disclaimer was provided.

Bottom line: It’s not just about what you say—it’s about how you say it. The more your use mimics the trademark owner’s branding, the more likely it is to cross the line into infringement.

Cautionary Tales — When Small Businesses Cross the Line

Nominative fair use is a powerful defense—but only when used carefully. Many small businesses have found themselves in hot water for referencing another brand in a way that crosses the line from factual to misleading.

In Adobe Systems Inc. v. Christenson, 891 F. Supp. 2d 1194 (D. Nev. 2012), a reseller of Adobe software claimed nominative fair use. However, the court found that his website was designed to mislead customers into believing he was an authorized seller. He used Adobe’s stylized logos, offered discounted licenses without clear source disclosure, and failed to make it obvious he was unaffiliated. The court denied his fair use defense.

Similarly, in Yelp Inc. v. ReviewVio, Inc., 2024 U.S. Dist. LEXIS 101283, the defendant promoted software that removed negative Yelp reviews. Despite claiming fair use, the business used Yelp’s trademark in its domain name and marketing without adequate disclaimers—creating the impression that the service was endorsed by Yelp. The court rejected the fair use argument and granted a preliminary injunction.

One more example: in Xfinity Mobile v. Globalgurutech LLC, 2024 U.S. Dist. LEXIS 155310, a mobile phone repair service used “Xfinity” prominently in its Google ads and landing page, along with the Xfinity logo. Although the service did work on Xfinity phones, the court found the branding created a false impression of affiliation. The nominative fair use defense failed.

Takeaway: Even small businesses with good intentions can end up on the wrong side of the law. What sinks most of these cases isn’t what was said—it’s how the brand was presented. Logos, branding, and suggestive language matter.

Best Practices for Staying Out of Trouble

If your business needs to refer to a third-party brand—whether in a product description, advertisement, blog post, or domain name—nominative fair use may protect you. But the safest course is to structure your use in a way that avoids triggering confusion in the first place. Here are some best practices to help reduce your risk:

• Use the brand name only when necessary.
  If there’s a generic way to describe the product or service, consider using that instead. If you must use the brand, stick to plain text.
• Don’t use logos, slogans, or stylized marks.
  These visual elements increase the risk of confusion and make it look like you’re affiliated with the brand.
• Include clear disclaimers.
  A simple statement like “XYZ Repairs is not affiliated with Apple Inc.” can go a long way in reducing the likelihood of confusion. Place disclaimers where users are likely to see them—especially near any brand references.
• Watch your ad copy and domain names.
  Courts are especially sensitive to brand names used in URLs and headlines. Even if you’re legally allowed to use the name, pair it with clear signals that you’re independent.
• Don’t overdo it.
  If your site, ad, or product listing is covered in another company’s branding, it may look like you’re trying to ride their coattails—not provide factual information.

When in doubt, consult a trademark attorney. A quick review of your marketing language or domain strategy can save you from costly legal missteps.

When in Doubt, Ask Your Trademark Attorney

Nominative fair use is a narrowly tailored defense, not a loophole. Small businesses often think they’re safe because they’re just “telling the truth,” but courts are quick to scrutinize how that truth is presented. A single logo, domain name, or implied connection can tip the balance from fair use to infringement.

That’s why it’s smart to get a second opinion before launching a campaign that references another brand. At Harrigan IP, we help small businesses across the country navigate these issues—from clearance reviews and ad copy checks to full-on brand strategy. If you’re referencing another company’s name in your marketing, consider scheduling a quick consult or ordering a trademark clearance search to make sure your approach won’t invite legal trouble.

Conclusion

Nominative fair use gives small businesses the ability to refer to big brands without fear, but only if they do it the right way. The law protects your right to identify the products you work on, compare to, or talk about. But it doesn’t protect attempts to borrow goodwill or blur the line between reference and endorsement.

Whether you’re a repair shop, an online seller, or a service provider using competitor names in your ads, it’s essential to understand where the legal boundaries lie. When you’re unsure, a little guidance can prevent a big headache.

Still not sure whether your use is safe? Reach out to Harrigan IP and let us help you walk that fine line with confidence.