Courts Still Sorting Out Issues on Keyword-Triggered Search Engine Advertising
- United States
- 07/05/2006
- Arent Fox PLLC
It is no secret that keyword-triggered search engine advertising is big business. The practice, however, troubles many trademark owners, who complain that the sale of their trademarks as keywords, and the resulting placement of third-party ads on search result pages, is an improper attempt to profit from the goodwill of their marks and constitutes trademark infringement, unfair competition and, in some cases, trademark dilution. Because the ability to use a trademark owner’s mark to trigger ads can be purchased by a competitor, the issue has pitted trademark owners against both their competitors and Internet search engine providers.
Conversely, search engines and advertisers contend that the practice is permissible because the trademark is not being used as a source-identifying designation in connection with the sale of goods or services or in commerce but, rather, merely as a trigger for certain ads. They further contend that even if this can be considered trademark use, it is either “fair use” or else use that is not likely to cause confusion.
Court decisions to date reflect an inconsistency of approach and reasoning. One critical area of disagreement is the issue of whether the sale and purchase of another’s trademark as a keyword constitutes “use” of that mark for purposes of triggering liability for infringement under the federal trademark act, also known as the Lanham Act.
Two Opposing Views
Two recent decisions involving actions against keyword advertisers, rather than the search engines, highlight the differences in how the courts have considered the issue of trademark “use” in the context of search engine keyword-triggered advertising.
Purchase of Another’s Mark is “Use”
In Edina Realty, Inc. v. TheMLSOnline.com, the 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. No. 04-4371, 2006 WL 737064 (D. Minn. Mar. 20, 2006). 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!, used the mark in the text of its sponsored link ads, and used the mark in hidden links and hidden text on its Web site.
The defendant first argued that purchasing keywords is not “use in commerce” as that term is defined in the Lanham Act. The Lanham Act deems a mark to be used in commerce when it is “used or displayed in the sale or advertising of services.” The court, however, noted that while purchasing search engine keywords is not a “conventional” use of a mark, it nonetheless is use in commerce contemplated under the Lanham Act. The court supported its decision by drawing a parallel with the often-cited case Brookfield Commun., Inc. v. West Coast Ent. Corp., 174 F.3d 1036 (9 th Cir. 1999), which held that 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.
The defendant also argued that, because it offered actual EDINA REALTY real estate listings on its site (among other listings), its purchase of the keywords was “nominative fair use” (i.e., using a party’s mark to describe or refer to that party’s services, rather than to describe the user’s own services). However, the court noted that one of the requirements for claiming nominative fair use is that the party can use “only so much of the plaintiff’s mark as is necessary to describe plaintiff’s product.” The court therefore found that the defendant could not claim fair use in this instance because the EDINA REALTY mark was not necessary to describe the defendant’s listings, (_e.g._, it could have purchased keyword ads for “Twin Cities Real Estate,” which would have covered listings by Edina Realty).
As questions of fact still existed with regard to the likelihood of consumer confusion, the court denied the parties’ motions for summary judgment on the issue of trademark infringement. The Edina and Brookfield cases, therefore, both hold that use of another’s mark may violate the Lanham Act even if the use is invisible to third parties, (i.e., as a search engine keyword or hidden in a metatag).
Purchase of Another’s Mark Is Not “Use”
In sharp contrast to the reasoning applied in Edina Realty, another court, in a decision issued just 10 days later, interpreted the Lanham Act more narrowly and held that merely purchasing another’s mark as a search engine keyword does not constitute “use” of that mark under the Lanham Act Merck & Co. v. Mediplan Health Consulting Inc. d/b/a RXNorth.com, and Related Cases, Nos. 05 Civ. 3650 et al., 2006 WL 800756 (S.D.N.Y. March 30, 2006).
In Merck, online pharmacies purchased keyword ads for the plaintiff’s federally registered mark ZOCOR. Several of the defendants legitimately offered generic versions of the ZOCOR drug on their sites. The defendants filed a motion to dismiss, claiming that that their purchase of keywords did not constitute commercial use of the mark and their display of the mark in advertisements and on their sites constituted a nominative (fair) use because they needed to refer to the plaintiff’s product to describe their own generic versions of that product.
Even though the Merck court considered the same Lanham Act provision cited in Edina, it held that because the purchase of keywords does not involve the public display of a mark on containers or advertisements — that is, that it is purely an “internal” computer use of a mark not encountered by consumers — it is not “use in commerce.” The court supported this holding by citing, among other cases, the Second Circuit’s decision in 1-800 Contacts, Inc. v. WhenU.com, Inc. 414 F.3d 400 (2d. Cir. 2005)(which upheld the use of trademarks to trigger competitive pop-up ads), and stated that “[a] company’s internal utilization of a trademark in a way that does not communicate it to the public is analogous to a[n] individual’s private thoughts about a trademark.”
In other words, the Merck court held that because the plaintiff’s mark is not actually displayed to consumers and third parties, the defendants cannot be deemed to have “used” the mark for purposes of triggering a Lanham Act claim. As such, the plaintiff’s claim of trademark infringement in Merck could not be based on the keyword purchase.
The court also found for the defendants on the issue of fair use and held that they should be allowed to use the ZOCOR mark when advertising that they offer a generic version of the ZOCOR drug.
Even though the Merck court dismissed the trademark infringement claim based on the purchase of keywords, it recognized that other courts have held that Internet search engine providers (as opposed to the keyword purchasers involved in the Edina and Merck litigation) are deemed to have used a trademark by virtue of having sold that mark to a third party. See, e.g., footnote 9 to Merck
(citing GEICO v. Google, Inc., 330 F. Supp. 2d 700 (E.D. Va. 2004); Google, Inc. v. American Blind & Wallpaper Factory, Inc., No. C 03-05340(JF), 2005, WL 832398 (N.D. Cal. Mar. 30, 2005), and also referencing Playboy Enter., Inc. v. Netscape Comm. Corp., 354 F.3d 1020 (9 th Cir. 2004).
What Should Trademark Owners Do?
Several important cases are still pending at various stages. Those cases that have reached some decision point are inconsistent. Thus, it is still too early to know whether a consensus will be reached among the courts and circuits concerning the threshold question of whether the sale and purchase of a trademark as a search engine keyword constitutes a “use” of that mark under trademark law.
There are, of course, factual nuances to every case, so even a decision seemingly unfavorable to trademark owners may not be applicable to another particular situation. Also, once a complainant has overcome the “use” issue, likelihood of confusion must still be proved. A failure of such proof ultimately led to a settlement after a partial trial in the Geico v. Google case.
Certainly, to the extent the trademark owner can show evidence of actual confusion caused by a third party’s use of a mark as a search engine keyword, that information will be highly relevant. In any event, it is advisable for trademark owners to routinely police the Internet and other media to ascertain if and how third parties may be utilizing the owner’s marks in advertisements, Web sites, search engines, and other media. In certain cases, protective action may be warranted.
Sheldon H. Klein
202.857.6404
[email protected]
James R. Davis, II
202.857.6169
[email protected]
