Keyword Advertising: Still Under Construction

Thursday, November 1, 2007 - 01:00

Introduction

U.S. court decisions concerning Internet keyword advertising reflect an inconsistency in reasoning, particularly on the threshold question of whether the sale and purchase of another's trademark as a keyword constitutes "use" of that mark. This article reviews recent cases, and offers some practical tips for avoiding the legal potholes on the road to online advertising success.

"Initial Interest" Confusion

"Initial interest" confusion occurs when a competitor trades on a famous mark to attract a consumer's "initial interest," but not to make an actual sale, and unlawfully capitalizes on a famous mark's goodwill by potentially diverting sales. "Initial interest" confusion can trigger trademark infringement. Some courts have now extended the "initial interest" confusion doctrine to keyword advertising. The law in this area is still developing. But two primary questions have emerged: (1) whether a search engine's use of a mark to trigger Internet advertising is an actionable trademark "use;" and (2) if it is a trademark "use," whether the search engine's use is likely to cause confusion.

Trademark Use

While a number of courts (particularly in the Second Circuit) have disagreed over whether the "use" requirement is satisfied in the context of keyword-triggered ads, a majority of the decisions from 2006 to the present have held that the "use" requirement can be satisfied, particularly when the trademark / keyword appears in the title or text of the ad.1

Sale Or Purchase Of Another's MarkIs "Use"

Edina Realty, Inc. v. TheMLS-Online.com. 2The court held that purchasing another's mark for use as a search engine keyword to generate a sponsored link advertisement constitutes "use" of the mark under the Lanham Act. The case involved the federally registered mark EDINA REALTY, owned by the largest real estate brokerage firm in the Midwest. The defendant was a competing real estate brokerage firm that purchased the mark as a keyword on both Google and Yahoo! and used the mark in the text of its sponsored link ads and in hidden links and hidden text on its Web site.

800-JR Cigar, Inc. v. GoTo.com, Inc .3The court held that GoTo.com made trademark use of JR Cigar's marks by accepting bids from JR Cigar's competitors that paid for prominence in search results; by ranking its paid advertisers before any "natural" listings in a search results list, thus steering potential customers from JR Cigar to JR Cigar's competitors; and through its "search term suggestion tool," which identified JR Cigar's marks as effective search terms and marketed them to JR Cigar's competitors.

Buying for the Home, LLC v. Humble Abode, LLC 4 . Online furniture retailer Buying for the Home (totalbedroom.com), sued competitor Humble Abode (humbleabode.com). Buying for the Home asserted that Humble Abode misappropriated its common law mark TOTAL BEDROOM. The court noted that the ads in question included a link and access to Defendant's Web site, through which the user could purchase goods directly competitive with Plaintiff's. This factor contributed to the court's view that the purchase of the keyword was a commercial transaction that occurred "in commerce."

J.G. Wentworth, S.S.C. Limited Partnership v. Settlement Funding LLC 5 . The court held that a competitor's purchase of a trademarked keyword for the purpose of triggering Internet advertising constituted "use in commerce" under the Lanham Act.

Rhino Sports, Inc. v. Sport Court, Inc. 6 Rhino Sports was subject to a permanent injunction against buying Sport Court's mark SPORT COURT as a keyword in the Google AdWords program. It sought to have the injunction modified to permit such a keyword purchase, citing a number of recent cases and arguing that there had been a change in the law since the injunction was originally entered in early 2003. The court denied Rhino Sports' request, indicating that, although no U.S. court had yet held anyone liable for trademark infringement for the use of AdWords, this was also the state of the law when the injunction was entered. Further, the court noted the Ninth Circuit's holdings in Brookfield7 and Playboy8 still control the threshold "use" and initial interest confusion questions in that Circuit. The court acknowledged that other courts had ruled in different ways, but said that this only proved that the state of the law is as uncertain now as when the injunction was issued (in 2003).

Google, Inc. v. American Blind & Wallpaper Factory, Inc. After almost four years of litigation, the American Blinds lawsuit was settled on August 31, 2007. Previously, the U.S. District Court for the Northern District of California denied Google's motion to dismiss, stating that the law on the issue is "uncertain," and that the most relevant Ninth Circuit decision in Playboy determined that keyword ads are a trademark use.

Purchase Of Another's MarkIs Not "Use"

Fragrancenet.com, Inc. v. Fragra-nex.com, Inc. 9 The court found that the use at issue in the search engine context did not involve "placement" of the trademark "on any goods," and was not used "to indicate source or sponsorship." Accordingly, the mark was held not to have been used in a trademark sense.

Merck & Co. v. Mediplan Health Consulting Inc. d/b/a RxNorth.com 10 . The court held that the invisible-to-consumers use of a mark to generate search engine results was not a "use" of the mark that could give rise to trademark infringement. Merck charged that Mediplan Health Consulting Inc. was offering generic versions of Merck's cholesterol medication, Zocor, identifying it as "generic ZOCOR." So when Internet users searched for ZOCOR, they were hyperlinked to Defendants' sites. But the court held that Defendants had not used the marks to suggest sponsorship and concluded that the use of ZOCOR is not use of the mark in a trademark sense.

Rescuecom Corp. v. Google, Inc. 11The court found that Google's alleged sale of Rescuecom's mark as a keyword to trigger competitors' ads was not actionable because it did not satisfy the threshold requirement of "trademark use."

SitePro-1, Inc. v. Better Metal, LLC 12 . Defendant admitted that it had "purchased a 'sponsored search' from Yahoo! that caused the bettermetal.com site to be included among the listings when a Yahoo! search engine user searched for some combination of keywords 'I,' 'pro' and 'site.'" However, Plaintiff's mark, SITE PRO 1, was not displayed in the text of the sponsored search result. Citing 1-800 Contacts , Merck & Co. and Rescuecom , the court held that the Defendant's actions did not constitute trademark use and dismissed the complaint.

Likelihood Of Confusion

The second question is whether trademark "use" via keyword advertising is likely to confuse consumers. Many courts use an eight-factor test to evaluate likelihood of confusion.13But in the Internet context, three factors tend to be critical: (i) similarity of the marks, (ii) relatedness of the goods/services and (iii) either strength of the trademark or the parties' simultaneous use of the Internet as a marketing channel (depending on whether the action is brought in the Second or Ninth circuit).

International Profit Associates, Inc. v. Paisola 14 . The court, relying on "GEICO II"15 , granted a temporary restraining order against a Defendant who purchased IPA's trademark INTERNATIONAL PROFIT ASSOCIATES through Google's AdWords program. The Defendants were not competitors of IPA, but, rather, had become aware of disputes between IPA and some of its former customers, and created two Web sites to post commentary and other information about IPA. The INTERNATIONAL PROFIT ASSOCIATES mark did not appear in the text of the sponsored links; however, one of the links did include the text "National Profit Ripoff," and directed the user to the Defendant's Web site. The Defendants had also used IPA's trademarks on their Web site. In evaluating IPA's Lanham Act claims, the court concluded that IPA had sufficiently demonstrated that Defendants were "using terms trademarked by IPA as search terms in Google's AdWords program in a manner likely to cause confusion."

Open Issues

A number of important issues remain unsettled:

• Is the sale or purchase of keywords to trigger ads a "use in commerce"?

• To what extent do search engines have a responsibility to police trademarks in their advertising programs?

• Is labeling advertisements enough to avoid confusion? If so, what type of language is needed?

• To what extent will standards differ with respect to the purchase of keywords based on famous marks as opposed to non-famous marks?

Practical Tips For Preventing Confusion From Keyword Advertising

Review your company's keyword advertising.

• Avoid using another company's marks (verbatim or similar) in your keyword advertising, whenever possible.

• If possible, use only generic or descriptive terms as keywords.

• If another company's marks are used to trigger ads, avoid using the marks in the advertisements themselves ( i.e. , in the text that appears as a "Sponsored Link").

• Label your keyword ads and sponsored links ( e.g. , "An Ad from X Company").

• Make sure to investigate whether the keywords you purchase are being "matched" to other terms by the search engine in a manner that could give rise to an allegation that you are using another company's mark.

Run Internet searches to see if your company's marks are being used as the basis for keyword advertising.

• Note that if the potential defendant's goods/services are not related to your goods/services, an infringement suit is less likely to be successful.

• If you decide to litigate, be prepared to show how the use at issue is a bona fide "trademark use." This may be difficult depending on the jurisdiction.

• Given the recent rulings in the Ninth Circuit, trademark owners could fare better by litigating in that circuit.

Tips to reduce other Internet trademark exposure or liability:

• Have your company's IT department review its own metatags.

• Consider removing any metatags that are too similar to another company's trademark, especially those of a direct competitor.

• Advise your clients' marketing department and Web designers to avoid using competitor's trademarks as metatags.

• Review domain names used by your company.

• Consider removing or changing domain names that use another company's mark, especially those of a competitor.

• At the very least, post disclaimers of affiliation to a company whose mark is used in your domain name.

1 These cases continue to be filed. See for example, American Airlines v. Google , 4:07-cv-00487 (N.D. Tex., complaint filed Aug. 16, 2007)

2 No. Civ.04-4371-JRT/FLN, 2006 WL 737064, 80 U.S.P.Q.2d 1039 (D. Minn. March 20, 2006), reconsideration denied , 2006 WL 1314303 (D. Minn. May 11, 2006)

3 437 F. Supp.2d 273 (D.N.J. 2006)

4 459 F. Supp.2d 310 (D.N.J. 2006)

5 No. C.A. No. 06-0597, 2007 WL 30115 (E.D. Pa. Jan. 4, 2007)

6Nos. CV-02-1815-PHX-JAT(L), CV-06-3066-PHX-JAT(Cons), 2007 WL 1302745 (D. Ariz. May 2, 2007)

7 Brookfield Communications., Inc. v. West Coast Entertainment Corp., 174 F.3d 1036 (9th Cir. 1999) incorporating a trademark in a Web site metatag constitutes use of that mark under the Lanham Act, even though the trademark is not visible to consumers and third parties.

8 Playboy Enterprises Inc. v. Netscape Communications Corp., 354 F.3d 1020 (9th Cir. 2004) use of "playboy" and "playmate" as keywords by Netscape may have infringed Playboy's trademark rights. Defendants sold unlabeled banner advertisements tied to the terms. Consumers entering these terms into a search engine would receive unlabeled advertisements for marketers unrelated to Playboy. The court found that this could cause consumers to believe that the ads were sponsored by Playboy.

9 493 F. Supp 2d 545 (E.D.N.Y. 2007).

10 No. SC10 3650 (S.D.N.Y. March 30, 2006)

11 456 F. Supp 2d. 393 (N.D.N.Y. 2006)

12 2007 WL 1385730, 82 U.S.P.Q.2d 1697 (E.D.N.Y. 2007)

13See AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 348 (9th Cir. 1979)

14 461 F.Supp.2d 672 (N.D. Ill. 2006)

15Government Employees Insurance Company v. Google, Inc ., 77 U.S.P.Q.2d 1841 (E.D.Va. 2005)("GEICO II")

Richard S. Eisert is a Partner in Davis & Gilbert's Digital Media, Technology and Privacy Group. David A. Weems is an Associate in the firm's Intellectual Property Group.

Please email the authors at reisert@dglaw.com or dweems@dglaw.com with questions about this article.