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Joseph J. Lewczak is a partner in the Advertising, Marketing and Promotions group of Davis & Gilbert. He represents numerous multinational, national and local agencies and marketers in connection with all aspects of advertising, promotions, marketing, direct marketing and telemarketing.
Peter C. Welch is an associate in the Intellectual Property group and the Advertising, Marketing and Promotions group of Davis & Gilbert. He concentrates on all aspects of domestic and international trademark practice, including counseling clients on the clearance, registration, policing and enforcement of trademarks and copyrights.
The Washington Legal Foundation is a 30-year-old Washington nonprofit public interest group and think tank that advocates free enterprise principles, responsible government, property rights, a strong national security and defense and a balanced civil and criminal justice system.
Search engine providers (such as Yahoo!, Microsoft and market leader Google) offer Internet advertisers exceptional targeting capabilities through the sale of advertising space linked to "keywords." An advertiser that purchases keyword-linked ad space gets to display its advertisements adjacent to the results the search engine generates when a consumer searches for a particular keyword.
For example, an auto manufacturer might purchase advertising space linked to the keyword "car" in the hope that consumers looking for information about cars will be influenced by the advertising, or click on a link provided in the advertisement rather than one of the "organic results" the search engine culls from the Internet. While this circumstance is not particularly objectionable, what happens when a rival auto manufacturer purchases the keyword "Chevrolet," and arranges to display advertisements for competitive products (or links to competitive businesses) to users searching for "Chevrolet"?
Whether such action comprises trademark infringement is the $10,000 question (or more accurately, $10 billion dollar question) facing search engine providers.
Search engine advertising is big business -- published reports indicate that advertisers in North America spent close to $10 billion on search engine advertising in 2006, a 62% increase in spending over 2005. The business model is fluid and varies from company to company and deal to deal; some advertisers pay flat fees, others pay each time their advertisement is displayed or clicked on by a consumer. Some search companies display "sponsored links," (keyword-triggered advertisements) in a different area of the screen, segregated from the "organic results" returned by their engines; others include the advertisements adjacent to the organic results with disclaimer text of various sizes to indicate that the provided link or content is an advertisement. Google has recently considered "pay per action" ads, a new pricing model that allows advertisers to limit payments to those circumstances in which a defined goal is achieved via the advertisement (such as a sale being consummated with a consumer who arrived at the advertiser's site via the search engine's link).
Trademark Infringement on the Internet
At its most basic level, trademark law seeks to guard against consumer confusion. A plaintiff alleging trademark infringement must prove two main elements: the use of a mark by the defendant "in commerce" and that such use is "likely to cause confusion, or to cause mistake, or to deceive."
The explosion of the Internet raised novel questions about whether certain actions comprised a "use in commerce" from a trademark infringement perspective. In groundbreaking cases, the U.S. Court of Appeals for the Ninth Circuit sought to analogize Internet-related trademark conflicts to "real world" cases and to apply existing precedent to those conflicts. In Brookfield Communications, Inc. v. W. Coast Entertainment Corp., the court held that using a competitor's trademark in a Web site's metatags (the data which search engines review when searching for relevant hits) comprised an actionable and illegal "use in commerce."
In Playboy Enterprises, Inc. v. Netscape Communications Corp., the Ninth Circuit again considered a circumstance unique to the Internet (and similar to the one present in many keyword advertising related trademark disputes) -- does the sale of a party's trademark as a keyword for use in triggering pop-up advertisements comprise trademark infringement. Once more, the court acknowledged that sale of a keyword was a "use in commerce" and could comprise trademark infringement. The court stated that "some consumers initially seeking [Playboy's] sites may, initially believe that unlabeled banner advertisements are links to [Playboy's] sites or to sites affiliated with [Playboy.] Once they follow the instructions to 'click here,' and they access the site, they may well realize that they are not at a [Playboy] sponsored site. However, they may be perfectly happy to remain on the competitor's site, just as the Brookfield court surmised that some searchers initially seeking Brookfield's site would happily remain on West Coast's site. The Internet user will have reached the site because of defendants' use of [Playboy's] mark. Such use is actionable."
Sale of Trademarks as Keywords and Resulting Fallout
With Brookfield and Playboy as background, and businesses swarming to take advantage of search marketing, the battle lines were drawn. Microsoft and Yahoo! have sought to steer clear of possible issues arising from sale of keywords; both have policies which forbid the purchase of keywords which might violate the trademark rights of others. Market leader Google, however, allowed advertisers to bid on and purchase trademarks as keywords, and litigation swiftly followed.
In Government Employees Insurance Co. (GEICO) v. Google, Inc., GEICO alleged that Google violated the law by selling advertising space triggered when users entered the GEICO trademark into Google's engine. The Eastern District of Virginia denied a Motion to Dismiss by Google, premised on the contention that sale of advertising "triggered" through the use of GEICO's mark did not comprise a "use in commerce." In a subsequent proceeding, the court found that some of the sponsored links were likely to cause confusion. Thereafter the parties settled the litigation.
In the wake of GEICO, numerous courts have considered trademark infringement suits relating to search engine companies' sale of trademarks as keywords. In the past year, the U.S. District Court for the District of New Jersey has twice refused to dismiss on summary judgment suits alleging trademark infringement as a result of sale of a company's trademark as a keyword. The District Court for the Northern District of Illinois recently granted a temporary restraining order barring a company from "using terms trademarked by [their competitor], as keywords for any Internet advertising service, including services run by Google or Yahoo!."
Though a significant number of decisions have cut against their business model, Google has continued to vigorously defend trademark infringement suits relating to its sale of trademarks as keywords, and has refused to curtail the practice.
Rather than forbid the sale of trademarks as keywords, the company has instead barred advertisers from using the trademarks themselves in the text of sponsored links. So, a used car dealership not affiliated with Chevrolet may purchase the keyword "Chevrolet" and display advertising for its business along with search results for that trademark, so long as the advertisement itself does not include the Chevrolet trademark. Google's strategy is premised on the idea that even if a mark is used in commerce, infringement does not result absent a likelihood of confusion.
In this vein, Google successfully won a motion to dismiss a trademark infringement suit in the Northern District of New York last fall. The court in that case found that the "use" of the trademark to trigger the complained-of advertisements did not comprise an unlawful "trademark use in commerce," and that the advertisements themselves did not feature plaintiff's trademarks and were unlikely to cause confusion.
Similarly, in dismissing a trademark infringement suit premised on purchase of a competitor's trademark as a keyword trigger for search engine advertising, the Eastern District of Pennsylvania recently found that despite "use" of plaintiff's mark, no likelihood of confusion could be shown.
Practical Advice
In light of recent decisions, and pending state legislation, purchase of a trademark as a keyword to trigger search engine advertising is a risky proposition. Though courts have not agreed in all cases as to whether such registration must always comprise trademark infringement, the practice obviously subjects the buyer (and search engine company) to a risk of claim for trademark infringement. Companies making such purchases must be aware of this risk and prepared to face such challenges.
This summary was drawn from an article written for the Washington Legal Foundation. To read the entire piece, click here.
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