A São Paulo court found 99Food guilty of unfair competition and ordered the company to pay compensation of R$100,000 to Keeta, a subsidiary in Brazil of Meituan, a Chinese multinational in the delivery sector that began operating this week in São Paulo.
The decision was taken by Judge Fabio Prado de Toledo, of the Third Business and Dispute Arbitration Court of São Paulo.
In the lawsuit against 99Food, Keita said that the rival company, upon learning of its plans to operate in Brazil, paid Google to use its name. As a result, every time a user searches for the name “Keeta” on the search platform, he or she comes across ads from 99Food.
“This is clearly unfair behaviour, intended to confuse consumers and business partners, as well as distract potential Kita customers,” the company told the court.
Kita, which in China uses drones in its delivery service, said that this practice, in addition to unjustifiably capturing consumers searching for its brand, imposes a scenario of competitive imbalance. “The ‘Keeta’ name is not yet firmly established in the minds of the Brazilian public. 99Food’s strategy exacerbates this vulnerability, misleads consumers and partners, and takes away traffic that would normally go to Keeta, thus weakening its initial efforts to build a brand in the country.”
99Food said in its defense to the court that the fact that the advertiser used a competitor’s name as a keyword did not constitute infringement. He added, “Trademark ownership does not give its owner the ability to prevent other economic actors from presenting themselves as legitimate alternatives in the consumer market, nor the right to prevent the use of neutral media tools that allow freedom of choice and comparison between services.”
It stated that its advertisements do not contain an explicit reference to the Keeta brand, hence there is no confusion or unwarranted redirection to customers. “The keyword used serves only as a technical trigger for ad activation on Google Ads, being imperceptible to the average user and separate from any attempt at undue association with a competitor’s brand.”
99Food also said it was “perplexed” by the legal action, given that Kita had done the same thing in relation to other competitors. Keita responded that the accusation was not true.
In convicting 99Food of unfair competition and preventing it from continuing this practice, the judge said that “the company violated the principles of objective good faith and free competition.”
“The defendant’s conduct, by capturing searches for the name of the author of the case, using sponsored links, harms the market entry strategy and creates a tangible risk of diverting potential partners and consumers, thereby damaging the business image and reputation,” the ruling said.
99Food can still appeal.
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