The major search engine companies Google, Yahoo! and MSN among them generate revenue from their sale of search terms as a way to generate advertising revenue. Through Google Inc.'s "AdWords" program, for example, a customer may purchase one or more "keywords." When an Internet user enters one or more of these keywords in Google's search engine, the search results screen, in addition to the list of the organic search results, shows "Sponsored Links" to the websites of the companies or persons who purchased the keywords. The hyperlinks are displayed in a separate column labeled "Sponsored Links" to the right of the search results (and sometimes at the top of the search results). The links are typically displayed with a short text advertisement for the "sponsor" or the sponsor's website. Keyword purchasers may purchase keywords that are descriptive of their goods and services. Purchasers have, however, also purchased as keywords the trademarks of their competitors. The paid search term or keyword may or may not be used in the sponsor's advertising text.
As the use of search engines becomes more and more ubiquitous in the business and personal lives of Internet users, litigation seeking to restrain the use of keywords that are trademarks also has increased.1 Litigation to date has resulted in a split among the courts. The district courts in the Second Circuit, including those in New York, have held that the mere use of a keyword to generate a link alongside organic search results is not a "use in commerce" for purposes of trademark infringement under the Lanham Act. Other district courts (most notably in the Ninth Circuit and the Eastern District of Virginia) have held that use of a trademark as a keyword whether or not the mark appears in the advertising text is a use in commerce for purposes of Lanham Act liability, thus allowing the trademark owner to proceed with trying to prove a likelihood of confusion.
Does The Lanham Act Apply Here?
Establishing trademark infringement under the Lanham Act requires proof that (i) a defendant has used the plaintiff's mark in interstate commerce (ii) in connection with the sale or advertising of goods or services, (iii) resulting in a likelihood of confusion as to the origin of the defendant's goods or services. As noted above, courts have split over whether use of a trademark as a paid keyword to generate search engine "hits" can constitute a use in commerce for Lanham Act purposes.
Several courts in the Second Circuit have held that the use of trademarks as keywords to trigger the appearance of sponsored links does not constitute "use" for purposes of the Lanham Act. These courts have reasoned that the internal use of a trademark in a way that does not display the mark to the public does not violate the Lanham Act. For example, in Merck & Co. v. Mediplan Health Consulting, Inc.,2 a federal district court in New York noted that "internal use of the mark . . . is more akin to the product placement marketing strategy employed in retail stores."
In contrast, courts outside of the Second Circuit including the Ninth Circuit, where Silicon Valley and most television and movie studios are located have held that use of keywords in this context constitutes use in commerce. These courts have reasoned that the defendant has traded on the value and goodwill of the plaintiff's marks.
Likelihood of Confusion
As mentioned above, a finding of trademark infringement requires both a use in commerce and a likelihood of confusion. Trends and a split among courts have emerged as to the use in commerce prong. No trends, however, have yet emerged from which to predict whether the use of trademarks as keywords can satisfy the likelihood of confusion prong of an infringement claim.
Many Second Circuit courts have not reached the likelihood of confusion issue at all; once the use in commerce prong is held not to exist, no other elements need be explored. Some courts, however, have held that the use of trademarks as keywords alone in other words, when the trademark is not visibly displayed in the paid search result does not create a likelihood of confusion because the trademarks are not actually displayed in the text of the advertisement. For example, in J.G. Wentworth v. Settlement Funding LLC,3 a district court in Pennsylvania held that "no reasonable fact finder could find a likelihood of confusion" in such circumstances.
Federal courts in California, meanwhile, have found that the use of keywords for paid search purposes presented genuine issues of material fact to prevent summary judgment in favor of the alleged infringer. In other words, whether a likelihood of confusion may exist in the sponsored link context is an issue to be determined by the trier of fact. That is indeed what the district court held in Google Inc. v. American Blind & Wallpaper Factory, Inc.4 relying on the reasoning of Playboy Enterprises v. Netscape Communications Corp.5 In the latter case, the Ninth Circuit considered the use of the plaintiff's trademark as a keyword to trigger banner ads on an Internet search results page and held that a majority of the likelihood of confusion factors weighed in favor of the trademark owner and presented a genuine issue of material fact. In particular, the Playboy court identified the possibility of "initial interest confusion," a type of customer confusion that sparks initial interest in a competitor's product.
Other federal courts outside the Second Circuit have reached the same conclusion. For example, in Government Employees Insurance Co. v. Google Inc.,6 the Eastern District of Virginia found issues of fact regarding the likelihood of confusion created by sponsored links that did not specifically display GEICO's mark. (The district court did find, however, that survey evidence established a likelihood of confusion as to sponsored links that did display the GEICO mark.)
The split among courts over whether the use of trademarks as paid search keywords constitutes a use in commerce, along with the absence of any identifiable trends in assessing the likelihood of confusion in such cases, underscores just how new this area of litigation is. While we expect the importance of the Internet and search engines to lead to a greater number of disputes over paid search keywords and related issues, the creation of a uniform set of rules and with them settled expectations will require additional time. In the meantime, both trademark owners and those using trademarks as paid search keywords should pay close attention to this area of the law as it continues to develop.
Footnotes
1. As an alternative to litigation, trademark owners may in some cases submit a complaint directly with the search engine. Google and Yahoo! (and perhaps others) have adopted policies allowing trademark owners to request that the search engine conduct an investigation into whether an advertiser is improperly using trademark in connection with a sponsored link. In certain circumstances, the search engine may remove the advertiser's listing or modify its content. See, e.g., http://www.google.com/tm_complaint_adwords.html (Google's AdWords Trademark Complaint Procedure) and http://searchmarketing.yahoo.com/legal/trademarks.php (Yahoo's Trademark Policy).
2. Merck & Co. v. Mediplan Health Consulting, Inc., 425 F. Supp. 2d 402 (S.D. N.Y. 2006).
3. J.G. Wentworth v. Settlement Funding LLC, 2007 U.S. Dist. LEXIS 288 (E.D. Pa. 2007).
4. Google Inc. v. Am. Blind & Wallpaper Factory, Inc., 2007 U.S. Dist. LEXIS 32450 (N.D. Cal. 2007).
5. Playboy Enterprises v. Netscape Communications Corp, 354 F.3d 1020 (9th Cir. 2004).
6. Gov't Employees Ins. Co. v. Google Inc., 2005 US Dist. Lexis 18642 (E.D. Va. 2005).
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