The Journal of The DuPage County Bar Association

Back Issues > Vol. 22 (2009-10)

Use and Sale of Trademarks in Internet Applications: Avoiding Trademark Infringement in Keyword Advertising and Website Metatags
By Steven Behnken

For centuries, the law has recognized an intellectual property right in a "trademark," which is a distinctive word, phrase, or logo that is used in connection with goods to indicate that the trademark owner is the source, origin, or sponsor of those goods. Similarly, "service marks" indicate the origin, source, or sponsorship of services. In the United States, trademarks and service marks are established through use and may be registered with both the United States Patent and Trademark Office (if the use is "in commerce") and the states where the business sells its products or services.

In an effort to reach a larger consumer base, most businesses have gone online, displaying their products and their marks to both consumers and competitors alike. Thus, the internet provides ample opportunities for unscrupulous businesses to misappropriate the mark of competitor, particularly since keyword internet searches and advertisements are a primary method of connecting vendors with potential customers.

As explained more fully below, search engine operators ("search engines") may sell keywords to an advertiser as part of a search algorithm that places an advertisement on the screen when a searcher types in the purchased keywords. These keywords may be common words describing the goods desired, or they may be trademarks or service marks. In the past, it has not mattered that the trademark or service mark or source mark is not owned by the advertiser because the owner’s rights were generally ignored. Thus, the question arises whether the search engine or the advertiser is liable for trademark infringement if it selects the mark of a competitor as a keyword. Recent case law out of the Second Circuit and, closer to home, the Northern District of Illinois indicates that the owner of a mark may be able to successfully pursue a cause of action against the search engine for use of the owner’s mark as a keyword.

I. Keyword Adverting on Search Engines

As one of the largest and most profitable search engines, Google has been a frequent defendant in the controversy between search engine operators and trademark and service mark owners. Google uses its AdWords1 and KeyWord Tool2 programs to sell content-based advertising. AdWords is an automated program that allows an advertiser to select and purchase specific terms that cause a link to the advertiser’s web site to be displayed on the screen when a searcher enters the selected term or terms into the search bar. The link is usually displayed in a way which is at least as prominent as the search results. Advertisers pay Google based on the number of times that searchers click on the link.

Because these "AdWords" contracts are automated, the cost of origination and administration can be very low. Alternatively, having a person review the terms chosen by a customer to determine whether they infringe the trademarks of third parties would significantly increase costs. In addition, precluding the selection of third-party marks as "AdWords" would also remove a set of desirable terms and potentially decrease the effectiveness of the links.

Google’s Keyword Tool3 is another automated program that is designed to aid advertisers by suggesting potential keywords to advertisers to help direct the advertisements to the search results. In the past, the Keyword Tool has not discriminated between trademarks and generic or descriptive terms. Thus, Google specifically allows for the sale of third-party trademarks and service marks to advertisers and may even recommend them as search terms.

Sections 32 and 43 of the Lanham Act4 impose liability on unauthorized users who use a mark "in commerce" in a manner that is "likely to cause confusion, or to cause mistake, or to deceive as to the affiliation … or as to the origin, sponsorship, or approval of his or her goods…."5 Thus, for liability to exist for infringement of a mark, it must 1) be used in commerce without permission and 2) cause a likelihood of confusion.6 Much of the case law to date has held that the use of trademarks in search algorithms did not infringe because 1) the advertisements did not reproduce or display the owner’s mark, but instead displayed a slight variation of the owner’s mark,7 or 2) the advertisements were not a "use in commerce" because the advertisers could not request or purchase the keywords.8 Courts have also held that the mark was not used in commerce because it was not visible to the public and, therefore, did not infringe.9

II. Purchasing Competitor’s Trademarks as Keywords for Search Engine Advertizing

In Rescuecom v. Google Inc.,10 Rescuecom filed suit against Google because Google sold Rescuecom’s federally registered service mark, RESCUECOM, as an "Adword" to Rescuecom’s competitors.11 Thus, whenever a searcher typed the term "Rescuecom" into Google, an advertisement of Rescuecom’s competitors would appear either above the results list or in the right margin of the screen.12 Rescuecom argued that Google’s use of the service mark constituted a "use in commerce" and that there was a likelihood of confusion because users might be misled to believe that the advertisements were part of the search results. Rescuecom also argued that, since the advertisement contained the text "sponsored link," rather than text identifying it as an advertisement, users may think the advertisement was sponsored by Rescuecom.13

The District Court granted Google’s Fed. R. Civ. P. 12(b)(6) Motion to Dismiss on the basis that the use of the mark did not qualify as a "use in commerce." The Second Circuit reversed, saying that selling a competitor’s trademark or service mark to an advertiser does qualify as a "use in commerce" under the Lanham Act14 and remanded the case to determine whether there was there was a likelihood of confusion. 15

In discussing what constitutes "use in commerce," the Court clarified its previous decision in 1-800 Contacts, Inc. v. WhenU.com, Inc.16 In 1-800 Contacts, the Defendant sold advertising in the form of a pop-up advertisements that were triggered by the keywords of the searcher. The pop-up did not display the Plaintiff’s mark, "1-800CONTACTS"17 but, instead, displayed the Plaintiff’s web site, www.1800contacts.com, which was not being used as a mark.18 Further, the advertiser was not able to purchase specific search terms and the Defendant did not disclose the contents of its directory to the advertisers.19

In Rescuecom, the court explained that the 1-800 Contacts Defendant did not infringe by displaying the web site because the web site was not being used as a trademark.20 Further, since the advertiser could not purchase specific search terms and the Defendant did not disclose the contents of its directory to the advertisers, there was no "use in commerce" of a mark under the Lanham Act.21 Perhaps most importantly, the Rescuecom court rejected the assertion that a "strictly internal use," i.e., not visible to the public, of a mark precludes a finding of infringement, regardless of the likelihood of confusion.22 The court specifically noted that automatically diverting users to a web site and paying a search engine to appear at the top of a relevance list would be within judicial review of the courts.23

Rescuecom indicates that business attorneys may want to advise corporate clients that they may have a cause of action against search engines that sell or recommend trademarks or service marks to the business’s competitors. This may be particularly germane if there is a history of copying of products between the business and their competitors. Moreover, the preliminary indications are that the business’s trademark or service mark need not necessarily be displayed by its competitor’s advertisement for infringement to occur. Before proceeding, however, you must be sure that your client is using the mark and that it is actually the mark that is being used without authorization, rather than some slight variation of it.

Finally, practitioners may wish to suggest registering additional marks on the Principal Register, such as the uniform research locator (URL) of the web site. Because registered marks have a presumption of ownership and distinctiveness, this gives the business the advantage of not having to prove use or that the mark has become distinctive.

Illinois courts have stated that merely pleading use in commerce of a mark that is likely to cause confusion is sufficient to withstand a defendant’s motion to dismiss. In Vulcan Golf, LLC, v. Google Inc.,24 Plaintiff alleged that the unnamed Defendants colluded to divert searchers’ attention to competitors’ websites using a variety of strategies, including registering domain names that allegedly infringed the marks of the advertisers’ competitors.25 The Vulcan court stated, "The [First Amended Complaint] sufficiently pleads facts such that it is plausible that there was ‘use in commerce’… ‘in connection with the sale, offering for sale, distribution, or advertising of goods and services.’"26 The Vulcan court went on, stating "the court simply cannot make a definitive ruling on the ‘use’ issue without engaging in fact-finding, which is inappropriate at this stage of the litigation."27

III. Embedding Competitor’s Trademarks in Marks in Website Metatags

Purchasing a competitor’s trademark from a search engine is not the only way for a business owner to become ensnared in a costly infringement action. Another common method of diverting a searcher’s attention from the intended site is by placing a competitor’s trademark or service mark in the metatags of one’s web site. Metatags are not visible to the searcher but are used to provide information about a web site and are often used to help categorize the web page. Because search engines typically look at the entire website to determine relevance, metatags may have become largely irrelevant from a technological standpoint. Courts across the country, however, have focused not on the technology, but rather the confusion of the consumer and the intent and actions of the alleged infringer.

With respect to the use of another’s trademark or service mark in metatags, the issue often becomes whether there is initial interest confusion on the part of the consumer. Initial interest confusion "occurs when a customer is lured to a product by the similarity of the mark, even if the customer realizes the true source of the goods before the sale is consummated."28 In Promatek Indust., LTD. v. Equitrac Corp.,29 the Defendant placed the Plaintiff’s federally registered trademark in the metatags of its web site. The District Court granted a preliminary injunction prohibiting the use of Promatek’s trademark on the Defendant’s web site.30

In upholding the injunction, the Promatek court quoted the Ninth Circuit, stating "[u]sing another’s trademark in one’s metatags is much like posting a sign with another’s trademark in front of one’s store"31 and that "placing a competitor’s trademark in a metatag creates a likelihood of confusion. This is true in this case, because by Equitrac’s placing [Promatek’s trademark] in its metatag, consumers are diverted to its web site and Equitrac reaps the goodwill Promatek developed in the … mark."32

The Court further explained "that confusion as to the source of a product of service is eventually dispelled does not eliminate the trademark infringement which has already occurred …. What is important is not the duration of the confusion, it is the misappropriation of Promatek’s good will. Equitrac cannot unring the bell."33

To avoid liability, a business’s use of a competitor’s trademark should be limited to traditional "fair use," such as truthfully identifying the competitor’s products. A business which does not itself sell a trademarked product should avoid using that trademark as an "AdWord" or a metatag. In terms of damages, the Promatek court stated, "it is well settled that injuries arising from Lanham Act violations are presumed to be irreparable, even if the plaintiff fails to demonstrate a business loss."34 Thus, while not all uses are forbidden,35 it may be beneficial to discuss the implications of using a competitor’s trademark, not only in purchased internet advertisements, but also on web sites.

IV. Recommendations and Conclusion

Emerging case law out of both the Seventh and Ninth Circuits indicates that purchasing someone else’s trademark or service mark from a search engine could potentially subject a business to liability. The majority of cases discussed above dealt with the issue only in the preliminary stages of litigation and, unfortunately, these cases have a propensity to settle, so relatively few recent decisions are available to provide guidance.

While filing a suit against the search engine operator alleging unauthorized use in a search algorithm can be an expensive proposition, it may provide the necessary leverage to negotiate a settlement agreement. These cases are unique in that the search engine operators can implement filters or other procedures that effectively prevent the future automatic sale of the disputed mark as a keyword. This provides the owner of the mark with the desired relief at a negligible loss of economic opportunity to the search engine operator. A brief search for a pair of the litigated marks shows this may be exactly what is happening. A keyword search for the marks "Rescuecom" and "American Blind"36 (the litigation of the latter mark was also reviewed as part of researching this article) shows that no advertisements other than the owners’ are displayed on the screen with the search results. Thus, it may be that the parties simply took a low-cost, narrow settlement option and left for future litigation the wider issue of whether this scenario gives rise to liability for trademark infringement.

In practice, practitioners should remember several key items. First, liability exists where a mark is used in commerce without permission and causes a likelihood of confusion as to ownership, sponsorship, or origination. The mark may not have to visible to the public and it is becoming increasingly apparent that businesses may have a cause of action against anyone who purchases or sells that business’s trademark. Practitioners must ensure that it is the mark that is being used without authorization and not some minor variation not being used as a mark.

Second, business attorneys should recommend obtaining federal registrations for the marks of their corporate clients and may wish to recommend registering additional marks, such as the URL of the business’s web site. The resulting presumption of ownership and distinctiveness can significantly decrease the costs of any ensuing litigation.

Third, practitioners should counsel against using a competitor’s mark on their corporate clients’ web sites, particularly in the metatags. Doing so is seen as creating a likelihood of confusion and a misappropriation of their competitor’s good will, which cannot be undone.

Finally, the injuries arising from Lanham Act violations are presumed to be irreparable, so a finding of liability carries with it the possibility of injunctive relief. Currently, the algorithms used by the majority of search engines have evolved past the point where simply using a competitor’s mark will markedly increase the relevance of the search or number of hits directed to a web site. Instead, the risk of costly litigation appears to be rising, while the benefits appear to be waning.

1 http://adwords.google.com/

2 https://adwords.google.com/select/KeywordToolExternal

3 Id.

4 15 U.S.C. §§1114 & 1125

5 15 U.S.C. §§1125(a)(1)(A)

6 Id.

7 1-800 Contacts, Inc. v. WhenU.com, Inc., 414 F.3d 400, 408-409 (2d Cir. 2005)

8 Id. at 409.

9 S & L Vitamins, Inc. v. Australian Gold, Inc. 521 F.Supp.2d 188, 199-202 (E.D.N.Y. 2007)

10 Rescuecom Corp. v. Google, Inc., 456 F.Supp.2d 393 (N.D.N.Y. 2006)

11 Id. at 126-127.

12 Id. at 127.

13 Id. at 126.

14 Id. at 127.

15 Rescuecom Corp. v. Google Inc., 562 F.3d 123, 131 (2nd Cir. 2009).

16 1-800 Contacts, Inc. v. WhenU.com, Inc., 414 F.3d 400 (2d Cir. 2005).

17 Id. at 402.

18 Id. at 408.

19 Id. at 409.

20 Rescuecom Corp. v. Google Inc., 562 F.3d 123, 128 (2nd Cir. 2009).

21 Id. at 129.

22 Id. 129-130.

23 Id. n.3.

24 Vulcan Golf, LLC, v. Google Inc., 552 F.Supp.2d 752 (N.D. Ill. 2008)

25 Id. at 759.

26 Id. at 769.

27 Id.

28 Promatek Indust., LTD. v. Equitrac Corp., 300 F.3d 808, 812 (7th Cir. 2002).

29 Id.

30 Id. at 811.

31 Id. at 813. See also Brookfield Communications, Inc. v. West Coast Entm’t Corp., 174 F.3d 1036, 1064 (9th Cir. 1999).

32 Id. at 813.

33 Id. at 812-813.

34 Id. at 813.

35 Id. at 814.

36 Google Inc., v. American Blind & Wallpaper Factory, Inc., 2005 WL832398 (N.D.Cal.)

Steven Behnken is an associate at Momkus McCluskey, LLC in Lisle, Illinois. He holds a Bachelor of Science in Chemical Engineering from Purdue University and is a graduate of the DePaul University College of Law. Steve is a registered patent attorney concentrating his practice in the field of Intellectual Property.

 
 
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