INTELLECTUAL PROPERTY LAW
Keyword Advertising Remains Unsettled

By David S. Fleming

The Second Circuit is poised to decide an important keyword advertising case, Rescuecom v. Google, which will address whether the act of keying a sponsored search advertisement to a trademark owned by someone other than the advertiser constitutes use of that trademark. The court’s decision in Rescuecom probably will resolve the trademark use issue within the Second Circuit, but it will not end the keyword advertising debate.

Trademark owners complain that online advertisements keyed to their trademarks confuse consumers into believing the advertisements come from or are sponsored by the trademark owners and that they divert consumers to competing websites. Advertisers, and the search engines that offer sponsored search advertising services, respond that confusion is unlikely and that trademark keywords often are permissible uses of these trademarks for legitimate purposes such as comparative advertising, resale, and criticism.

What is keyword advertising? Keyword advertisements are text advertisements appearing on search results pages, placed above, to the right of, and sometimes below the algorithmic or “natural” search results. Advertisers pay search engines to deliver these advertisements when consumers enter certain terms, or keywords, in the search box in their browser. Whether and where an advertisement will appear in the results may depend in part on the price paid by the advertiser and possibly on other factors that may vary from one search engine to another. Search engines usually earn revenue from the advertisements only when the consumer clicks on the advertisement and is redirected to a landing page on the advertiser’s website.

The Second Circuit and trademark use. The issue before the Second Circuit in Rescuecom was whether an advertisement that is keyed to another’s trademark, but that does not include that trademark in its ad text, makes use of the trademark. The plaintiff provided computer- and Internet-related services, conducting much of its business from a website located at www.rescuecom.com. Google allowed Rescuecom competitors to key their sponsored search advertisements to the term “rescuecom.” The word “rescuecom” did not appear in the text of these advertisements. The advertisers were not selling Rescuecom’s products, providing information about Rescuecom, or making explicit comparisons between their own services and Rescuecom’s. Because the Rescuecom mark did not appear in the text of the advertisements, the advertisements did not explain the relationship between the advertisers and Rescuecom.

Rescuecom alleged various trademark claims, including trademark infringement, false designation of origin, and dilution. With respect to its infringement claim, Rescuecom was required to prove that the competitors’ advertisements were likely to confuse consumers into believing that the ads came from or were sponsored by Rescuecom.

Google moved to dismiss, arguing that the court need not reach likelihood of confusion because a threshold element—the use of plaintiff’s mark as a trademark—was not present. The district court agreed with Google’s argument, noting that the Rescuecom mark did not appear in the text of the advertisements. The court described Google’s use as internal and not visible to the public. It concluded that such internal use for the purpose of triggering advertisements is not use in a trademark sense.

Other district courts in the Second Circuit have reached the same conclusion. Even in cases where there was visible use of the trademark in the text of the advertisement, district courts in the Second Circuit have found for the advertiser, for example in S&L Vitamins v. Australian Gold (E.D.N.Y) and Tiffany (NJ), Inc. v. eBay, Inc. (S.D.N.Y.).

Trademark use beyond the Second Circuit. Outside the Second Circuit, most courts have held that keying an advertisement to another’s trademark does constitute use of that trademark. For example, in Australian Gold, Inc. v. Hatfield, the Tenth Circuit affirmed a jury verdict that found trademark infringement and other violations. Although not analyzing trademark use at length, the court found that the advertisers used the plaintiff’s mark on their websites and in metatags and by keying their advertisements to the mark.

In North American Medical Corp. v. Axiom Worldwide, Inc., a case involving metatags rather than keywords, the Eleventh Circuit concluded that the absence of a visible display might be relevant in deciding whether there is a likelihood of confusion, but the court challenged separating the likelihood of confusion from a use analysis.

Several district courts also have rejected or distinguished the Second Circuit’s “no trademark use” analysis, relying on differences between keyword advertising and pop-up advertising. These decisions include GEICO v. Google (E.D.Va.), Google, Inc. v. American Blind & Wallpaper Factory, Inc. (N.D.Cal.), and 800-JR Cigar, Inc. v. GoTO.com, Inc. (D.N.J.).

Different results regarding confusion. Although courts outside the Second Circuit typically find trademark use, they have reached differing conclusions as to whether keyword ads create a likelihood of confusion.

In GEICO v. Google, the court concluded that the plaintiff’s survey evidence was insufficient to prove a likelihood of confusion where the trademark did not appear in the ad text. As noted below, however, the court reached the opposite conclusion concerning ads that included the trademark in the ad text. In J.G. Wentworth SSC, Ltd. v. Settlement Funding, LLC (E.D.Pa.), the court found trademark use but granted a motion to dismiss because the defendant’s advertisements were not likely to cause initial interest confusion. In Boston Duck Tours, LP v. Super Duck Tours, LLC (D.Mass.), a case involving competing Boston “duck tours” services, the court found that the advertiser did not violate a preliminary injunction when it purchased ads keyed to the phrase “boston duck tours.” The court noted that the advertiser’s name and the content of its advertisement sufficiently distinguished it from the plaintiff. Finally, in Nautilus Group, Inc. v. Icon Health & Fitness, Inc. (W.D.Wash.), a suit involving dilution rather than likelihood of confusion and infringement, the court found that a clearly labeled comparative advertisement was excepted from the reach of the federal trademark dilution statute.

In GEICO, in contrast to its conclusion concerning advertisements that do not include the trademark in their text, the court found that advertisements containing the trademark did create a likelihood of confusion. However, the court reserved the question of whether the search engine was liable for such ads. In Storus Corp. v. Aroa Marketing, Inc. (N.D.Cal.), the court granted summary judgment to the plaintiff who claimed that the advertiser’s use of its mark as a keyword and in the text of the resulting advertisement caused initial interest confusion. The court found no triable issues with respect to key confusion factors, and the advertiser failed to show that other factors weighed strongly against a likelihood of confusion. In International Profit Associates, Inc. v. Paisola (N.D.Ill.), the court granted an ex parte motion for a temporary restraining order, finding trademark use in the purchase of keywords and likelihood of success in proving infringement.

Fact issues concerning likelihood of confusion. Other courts have found fact issues precluding summary judgment or dismissal on the issue of likely confusion. For example, in 800-JR Cigar, Inc. v. GoTO. com, Inc., the court denied cross motions for summary judgment based on fact issues as to several likelihood of confusion factors and the applicability of initial interest confusion. The court also concluded that the defendant search engine’s fair use defense was an issue for the trier of fact, noting that the search engine’s use “is probably fair” to the extent it permits bids on the plaintiff’s marks “for purposes of comparative advertising, resale of [plaintiff’s] products, or the provision of information about [plaintiff] or its products.” Similar fact issues and the uncertain state of the law prevent summary judgment or dismissal for plaintiff or defendant in several other cases, including Google, Inc. v. American Blind & Wall-paper Factory, Inc., Edina Realty v. TheMLSOnline.com (D.Minn.), Kinetic Concepts v. Bluesky Med. Group (W.D.Tex.), and T.D.I. International, Inc. v. Golf Preservations, Inc. (E.D.Ky.).

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- This article is an abridged and edited version of one that originally appeared on page 26 of Landslide, November/December 2008 (1:2).

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David S. Fleming is a shareholder and trademark specialist in the Chicago office of intellectual property firm Brinks Hofer Gilson & Lione. He may be reached at dfleming@usebrinks.com.

Copyright 2009

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