Originally published by Bloomberg Law Reports
In an increasingly competitive business environment, companies are aggressively seeking to achieve prominence and visibility in Internet search results in an effort to benefit from the extensive use of search engines by potential and existing customers. Some search engines sort results by the number of times a searcher's keywords appear in a website. Consequently, companies sometimes embed keywords in the metadata of their websites (known as "metatags") to manipulate the sites' relevance to certain searches. Indeed, some embed their competitor's trademarks in metatags to assure their link shows up alongside the competition in search results. Google and other search engines also now allowing parties to bid on keywords – including competitors' trademarks – which, when entered into the search engine, trigger ads and sponsored links that appear alongside non-sponsored search results.1 Google calls these keywords "AdWords." The practice of using a competitor's trademark in metatags or as AdWords has spawned a significant amount of trademark infringement litigation in recent years.
The U.S. District Court for the District of Utah recently decided 1-800 Contacts, Inc. v. Lens.com,2 a case that seems to typify the uncertain legal landscape in the world of metatags, AdWords, and companies' ever-evolving efforts to achieve prominence on Internet search engines. In a now-familiar fact pattern, the 1-800 Contacts plaintiff accused its competitor of trademark infringement by purchasing its service marks as AdWords from Google in order to generate sponsored links for itself in search engine results. When faced with this and related fact patterns, federal courts have split with regard to two of the required elements of a trademark infringement claim3: whether the invisible trigger is a "use in commerce" and whether the resultant ad or sponsored link creates a "likelihood of confusion." The Utah district court decision in the 1-800 Contacts case highlights these splits and the present uncertainty in determining whether a company will be liable for purchasing its competitors' trademark as an AdWord or using the competing mark in its website's metatags.
Use in Commerce
The "use" element of a trademark infringement claim requires a plaintiff to show that the defendant used its mark, or a confusingly similar mark, in commerce. Under the Lanham Act, a trademark or service mark is used in commerce when it is "used or displayed in the sale or advertising" of a service rendered in commerce or "placed in any manner" on a good transported in commerce.4
The Utah district court in 1-800 Contacts joined the majority of cases holding that the use of a competitor's trademark as a metatag or AdWord constitutes a use in commerce.5 The 1-800 Contacts court, like a number of other federal courts, reasoned that the language of the Lanham Act covers the use of a competitor's mark to generate one's own advertisement and website link, even though that use is invisible.6 When this occurs, a plaintiff's mark is used to promote its competitor's goods or services, and also provide the consumer with a link to make a purchase. The majority of courts have no difficulty concluding this is use in commerce.7
A small minority of courts disagree, generally considering an invisible trigger such as an AdWord or a metatag not to be a "use" under the Lanham Act because it is a completely internal function. A leading decision among this group is the Second Circuit case, 1-800 Contacts, Inc. v. WhenU.com.8 This 1-800 Contacts court found no use in commerce where defendant software owner entered plaintiff's website address (encompassing its service mark) in an unpublished keyword database that triggered randomly selected pop-up advertisements (including those of plaintiff's competitors) on a consumer's computer when she accessed plaintiff's website.9 The Court reasoned that defendant WhenU.com did not "use" 1-800 Contact's mark in a way generally at issue in an infringement claim because it did not place the mark on goods or services, but instead used it only internally, and thus, the mark was not displayed to the public.10 The Court also considered the differences between the web address and the actual trademark to be "quite significant"11 Recently, however, the Second Circuit clarified its 1-800 Contacts v. WhenU.com decision in the AdWords context in Rescuecom Corp. v. Google, Inc,12 in part based on Google's role as an Internet search engine operator compared to that of the advertiser using Google's AdWords. The Rescuecom panel held Google's practice of suggesting and selling competitor's trademarks as AdWords is not a merely internal use, but a targeted means of external competition. Though the Rescuecom holding applies to Google's program and not the AdWord purchasers, its reasoning undermines cases within the Second Circuit extending the decision in 1-800 Contacts to keyword triggers and embedded metatags.13
With the majority position growing among courts and the minority's leading case recently undercut, it seems the law is settling around the conclusion that it is a "use in commerce" to "invisibly" use a competitor's mark as a keyword to trigger the user's own advertisements and prominence in search engine results.
Likelihood of Confusion
The "likelihood of confusion" element of a trademark infringement claim requires a plaintiff to show that the defendant's use of its mark is likely to confuse a consumer as to the source or affiliation of the good or service. Courts recognize several types of confusion, but plaintiffs in metatag and AdWord cases most commonly assert "initial interest confusion." Initial interest confusion occurs when a consumer, seeking a certain trademark owner's product or service, is deceived or lured to a competitor through the competitor's use of the owner's mark. Though the consumer's initial confusion over source may be cleared up, she may nonetheless purchase from the competitor. In that case, it is argued, the competitor has unfairly benefited from plaintiff's goodwill to draw in a customer.
Plaintiffs asserting initial interest confusion have enjoyed success in the past. The seminal case adopting the theory in the metatag context is Brookfield Communications, Inc. v. West Coast Entertainment Corp.14 There, the Ninth Circuit enjoined a company from embedding its competitor's service mark in its website's metatags, analogizing the manipulated search engine results to posting a competitor's trademark on a roadside billboard: if Blockbuster put up a billboard with West Cost Video's trademark, advertising a store location off the next exit, and the consumer exited only to find a Blockbuster instead, she may simply go to Blockbuster, which has now capitalized on West Coast's goodwill.15
Though the Brookfield analogy has been criticized for failing to take into account the difference in time investment between the physical and digital worlds (i.e., a mouse-click versus driving back to the highway),16 it has been followed by courts arguing the time investment is irrelevant. In Promatek Industries Ltd. v. Equitrac Corp.,17 the Seventh Circuit followed Brookfield, arguing that what is important is the misappropriation of goodwill, not the duration of confusion. According to the Promatek court, a defendant cannot "unring the bell."18
A recent case from the Central District of California, Harry J. Binder v. Disability Group, Inc.,19 is worth noting because while the court did not rely on the theory of initial interest confusion, it did find a likelihood of confusion existed. In Binder, the Central District of California was presented with evidence of direct confusion showing consumers believed plaintiff was the source of defendant's services, even though defendant's only use of plaintiff's trademark was as an AdWord. Witness testimony and a survey commissioned by plaintiff established actual confusion and demonstrated that individuals accessing defendant's interactive website believed they were submitting information to plaintiff. The court did note, however, that actual confusion was not necessary for plaintiff to prevail in an infringement action. The court stated, with regard to evaluating a likelihood of confusion, it relied most heavily on three factors of particular importance in the context of the Internet: "(1) the similarity of the marks, (2) the relatedness of the goods or services, and (3) the simultaneous use of the Web as a marketing channel."20 How this latest decision will be incorporated into the ever-growing cadre of cases regarding initial interest confusion remains to be seen.
Not all courts have followed the Brookfield court's lead, however, when it comes to finding initial interest confusion. Some recent decisions, including that of the Utah district court in the 1-800 Contacts case, reject the Brookfield reasoning and hold that, by itself, the use of a competitor's mark in metatags or AdWords does not constitute initial interest confusion. For example, in J.G. Wentworth v. Settlement Funding, LLC,21 the U.S. District Court for the Eastern District of Pennsylvania reasoned that the Brookfield court mischaracterized the operation of a search engine. Rather than directing a consumer to a competitor, a search engine displays several independent and distinct links from which the consumer may choose.22 In these circumstances, initial interest confusion does not apply because consumers have no opportunity to confuse the source of the competitor's goods or services.23
The Utah 1-800 Contacts court agreed with the J.G. Wentworth characterization of a search engine, analogizing keyword-triggered search results to asking a pharmacist for Advil and being directed to the pain reliever aisle, housing both Tylenol and Advil. If the consumer still wants Advil, she will not be confused about the source and will purchase Advil.24 According to the court, no infringement occurs by the appearance of a sponsored link without additional indices of confusion, such as evidence that defendant's link or ad actually incorporates plaintiff's mark.25
A recent case from the District of Massachusetts, Hearts on Fire Company LLC v. Blue Nile, Inc.,26 articulates somewhat of a middle ground that may reflect where the law is headed in jurisdictions rejecting Brookfield's billboard analogy. The Hearts on Fire court agrees with those cases holding that the use of a competitor's trademark to trigger a sponsored link by itself is not enough to show initial interest confusion.27 When presented with a menu of clearly distinct links, a consumer may be diverted, but not likely confused by the presence of a competitor's link. However, the court also recognizes that amid intense online advertising competition, some merchants will try to blur the lines of distinction and capitalize on others' goodwill. For the grey area between the misleading billboard and menu-of-options analogies, the court defines its crucial inquiry as such: "[w]hether the consumer is likely confused in some sustained fashion by the sponsored link and the defendant's website, or whether the link serves instead as a benign and even beneficial form of comparison shopping."28
As the cases show, the likelihood of confusion element of the trademark infringement analysis is particularly uncertain in the metatag and AdWord context at this point in time.
Conclusion
The Utah district court's 1-800 Contacts decision is illustrative of the current trends in cases dealing with trademark infringement claims for use of a competitor's mark in metatags or bid on as AdWords. As to the "use in commerce" requirement, the law is becoming increasingly settled, with a majority of courts holding these invisible triggers constitute "use" under the Lanham Act. As to the "likelihood of confusion" requirement, the law is in flux. Some courts, influenced by Brookfield, adopt the view that using another's mark to gain inclusion in search results is a misappropriation of goodwill supporting an initial interest confusion theory, irrespective of the amount of time the confusion lasts or how hard it is to "undo the damage." Some courts, including the Utah district court in 1-800 Contacts, have re-examined the operation of search engines and concluded that displaying distinct links in the same search result, without more, is an opportunity for consumer choice rather than a source of confusion.
Internet advertisers using competitors' trademarks as keywords should note that plaintiffs usually bring other federal and state claims along with a trademark infringement claim in the metatag/AdWord context. An infringement claim is often accompanied by a trademark dilution claim and state unfair competition claim. Unfair competition laws vary widely from state to state, and thus the outcomes in such cases may differ, even with similar fact patterns. Trademark dilution claims enjoy mixed success in district courts29 and should also be considered with respect to the use of a competitor's trademark in or as metatags or AdWords.
Footnotes
1. See Google.com, Advertising Programs, AdWords, http://www.google.com/intl/en/ads/ (last visited Jan. 25, 2011).
2. No. 07-CV-00591, 2010 BL 296091 (D. Utah Dec. 14, 2010).
3. To prove a trademark infringement claim under the Lanham Act, a plaintiff must show: (1) its mark is valid and legally protectable; (2) it is the owner of the mark; (3) defendant has used the mark in commerce to identify goods or services; and (4) such use is "likely to create confusion concerning the origin of the goods or services." Id. at 24 (internal citation and quotation marks omitted).
4. 15 U.S.C. § 1127.
5. See Hearts on Fire Co., LLC v. Blue Nile, 603 F. Supp. 2d 274 (D. Mass 2009) (stating circuit and district courts outside the Second Circuit agree that keyword purchasing is a "use" under the Lanham Act); see also Chris Page, Comment, Searching for a "Use": Search Engines, Keywords, and Trademark Law, 28 TEMP. J. SCI. TECH & ENVTL. L. 93, 108 (2009) (collecting cases).
6. 1-800 Contacts, 2010 BL 296091.
7. See, e.g., Rescuecom Corp. v. Google, Inc., 562 F.3d 123, 129 (2d Cir. 2009); 1-800 Contacts, Inc., 2010 BL 296091; J.G. Wentworth v. Settlement Funding, LLC, 85 U.S.P.Q.2d 1780, 1786 (E.D. Pa. 2007); Buying for the Home, LLC v. Humble Abode, LLC., 459 F. Supp. 2d 310, 323 (D.N.J. 2006).
8. 414 F.3d 400 (2d Cir. 2005).
9. Id. at 404-405.
10. Id. at 408-409.
11. Id. at 409-410.
12. 562 F.3d 123 (2d Cir. 2009).
13. Id. at 129 (district court decisions extending 1-800 Contacts into the metatag and internal keyword context "over-read" the decision).
14. 174 F.3d 1036 (9th Cir. 1999).
15. Id. at 1064.
16. See J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 25:69 (4th ed. 2010).
17. 300 F.3d 808 (7th Cir. 2002).
18. Id. at 813; accord Morningware, Inc. v. Hearthware Home Products, Inc., 673 F. Supp. 2d 630 (N.D. Ill. 2009).
19. No. 07-CV-2760, 2010 BL 18561 (C.D. Cal. Jan. 25, 2011).
20. Id. at 5.
21. 85 U.S.P.Q.2d 1780 (E.D. 2007).
22. Id. at 1786.
23. Id.
24. 1-800 Contacts, 2010 BL 296091 at 31.
25. Id.
26. 603 F. Supp. 2d 274 (D. Mass. 2009).
27. Id. at 278.
28. Id. at 287.
29. Compare Shelby v. Factory Five Racing, Inc., 684 F. Supp. 2d 205, 216-17 (D. Mass. 2010) (holding that plaintiff adequately pled federal dilution claim based on use of plaintiff's trademark in domain name and metatags of defendant's website) with Google, Inc. v. American Blind & Wallpaper Factory, Inc., No.03-CV-5340, 2010 BL 10493 at 19 (N.D. Cal. Apr. 18, 2007) (granting counterclaim-defendants' motion for summary judgment on counterclaim-plaintiff's federal and state dilution claims based on sale of trademark as AdWord because mark was not sufficiently famous or distinctive).
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