News Not All Good For Google ' Or Its Advertisers

“Just because you can do something, doesn't mean you always should.” Never has that saying had more meaning than when it comes to Internet advertising. True, this new avenue for advertising has helped some companies exponentially increase their business, but the methods for “re-directing” prospective customers have come under great scrutiny by the courts in the last 6 months. Recent decisions warn that keyword advertising through paid placements such as “Sponsored” or “Featured” ads could lead you directly to the defendant's table in federal court.

Internet search engines (such as Google, Yahoo! and Excite) operate by enabling users to locate Web sites containing specific search terms ' most often brand names. Within seconds, users are presented with lists of sites containing that term ' the “Hit List”. Links to the Web sites ordinarily appear in order of decreasing relevance, meaning it's likely that only the top few sites on the Hit List will be visited by the user.

In the early ' and less sophisticated ' days of Internet advertising, sites appearing at the top of the Hit List generally contained the “searched” term in the content of the Web site, as well as the site's domain name. As the marketplace became more competitive, many advertisers seeking “extra” search engine attention adopted competitors' trademarks as domain names, and also hid the marks within the invisible text of their sites. This method has been prohibited by legislation, the Anti-Cybersquatting Consumer Protection Act, 15 U.S.C. '1125(d), and by case law from numerous circuits.

Today, the “short cut” to the top of the Hit List is through paid placement advertising. Paid placements enable advertisers to purchase search terms, which either jump the advertiser's site to the top of a Hit List, or highlight a link to the site as a “Sponsored” or “Featured” Ad. The search terms can be descriptive words, product names or, in some instances, the brand names of a competitor.

As a result, litigation has arisen over whether a company can use a competitor's brand name as an Internet search term, and whether the search engine, which profits from the practice of “selling” the search term, is contributorily liable. Decisions have been mixed, and have depended on whether the presiding jurisdiction considers the practice criteria for infringement as articulated by the Lanham Act, 15 U.S.C. ”1114 and 1125.

Geico v. Google: 'Use in Commerce' Alone
Does not Establish Liability

A plaintiff claiming infringement of its trademark must prove that: 1) It owns the trademark in question; 2) the defendant used the mark; 3) the defendant's use of the mark occurred in “interstate commerce”; 4) the defendant used the mark “in connection with the sale, offering for sale, distribution or advertising” of goods or services; and 5) the mark in question is likely to confuse consumers in the relevant channel of trade. Bijur Lubricating Corp. v. Devco Corp., 2004 U.S.Dist. LEXIS 16935 (D.N.J. 2004).

Controversy has arisen over whether paid placement advertising “uses” the relevant trademark “in commerce” within the meaning of the Lanham Act. In two recent cases, the court found that it did, and shifted the focus to the more relevant question of whether or not the consumer is likely to be confused by the practice. Examination of the cases discussed here would lead one to conclude that trademark infringement liability could attach to both advertiser and search engine for paid placement advertising, although no decisions have yet been issued.

In Government Employees Ins. Co. (“GEICO”) v. Google, Inc., 330 F.Supp.2d 700 (E.D.Va. 2004), keyword advertising was deemed a “commercial use” of the relevant trademark. Denying Google's motion to dismiss GEICO's claim of infringement, the Court held that “defendants' offer of plaintiff's trademarks for use in advertising could falsely identify a business relationship or licensing agreement between defendants and the trademark holder. In other words, when the defendants sell the rights to link advertising to plaintiff's trademarks, defendants are using the trademarks in commerce in a way that may imply that defendants have permission from the trademark holder to do so.” Id. at 704. The Court distinguished its holding from U-Haul Int'l, Inc. v. WhenU.com, Inc., 279 F.Supp.2d 723 (E.D.Va. 2003), which held that a software company using trademarks to generate pop-up Internet advertisements did not “use” the trademarks in commerce. In U-Haul, according to the Court in GEICO, the trademark use was purely for a “machine-linking function.” Id. at 727. Where keywords are sold for search engine placement, however, the GEICO Court concluded that the marks are bought and sold, and “the portals and search engines are taking advantage of the drawing power and goodwill of these famous marks.” GEICO, 330 F.Supp.2d at 704. The Court stressed, however, that satisfaction of this element alone did not constitute trademark infringement. Id.

In December 2004, the Court granted Google's motion for partial dismissal based on GEICO's failure to establish “that the mere use of its trademark by Google as a search word or keyword or even using it in their AdWord program standing alone violates the Lanham Act because … there's no evidence that that activity standing alone causes confusion.” Government Employees Ins. Co. v. Google, Inc., Civil Action No. 1:04cv507, Transcript of Bench Trial Before the Honorable Leonie M. Brinkema, United States District Judge (E.D. Va. Dec. 15, 2004), at 286. The trial will proceed on the issue of “whether Google is liable for violating the Lanham Act for those sponsored ads using GEICO's name in either the title or the text,” and whether this “situation creates a likelihood of confusion in the marketplace.” Id. at 287.

Thus, the ultimate determination of liability for keyword advertising has not yet been resolved, and awaits the decision of this court.

In March, Google faced another setback in Google Inc. v. American Blind & Wallpaper Factory, Inc., 2005 U.S.Dist. LEXIS 6228 (N.D.Cal. 2005). There, Google, Ask Jeeves, Inc., EarthLink, Inc., America Online, Inc., Netscape Communications Corp. and CompuServe Interactive Services, Inc. (Google) sought to dismiss claims that their sale of AdWords containing American Blind's trademarks constituted infringement. As in the GEICO litigation, Google claimed that its sale of American Blind's trademarks as AdWords could not satisfy the “use” requirement because Google was not using the mark to identify its own goods or services. Id. at 18.

Denying Google's motion and focusing on the “likelihood of confusion” element, the Court relied on the “expansive holding” in Playboy Enterprises, Inc. v. Netscape Communications Corp., 354 F.3d 1020 (9th Cir., 2004). Id. at 23. The Playboy decision is important because it differentiates the “use” and “likelihood of confusion” components of the Lanham Act's analysis. Specifically, it identifies the likelihood of confusion as the “core element of trademark infringement.” 354 F.3d at 1024 (quoting Brookfield Communications, Inc. v. West Coast Entm't Corp., 174 F.3d 1036, 1053 (9th Cir. 1999)). From this perspective, one's use of another's trademark in paid placement advertising is “a 'misappropriation' of the goodwill of the plaintiff's marks … whereby Internet users [are] led to the Web sites of the plaintiff's competitors.” Id. The Court in Google v. American Blind heavily relied on this analysis and identified the possibility of initial interest confusion among users who either are exposed to banner advertisements triggered by keywords (as in Playboy) or through the sale of AdWords. Google, 2005 U.S. Dist. LEXIS 6228, at 24.

Trademark Owners Should Enforce
Their Rights on the Web

To date, the question of whether paid placement advertising will result in liability for either the advertiser or the search engine is unresolved. Advertisers may, however, take away a few points: Adopting another's trademark in the text or title of one's paid placement advertisement could result in litigation for infringement. While a search engine presently may be insulated from liability for using a trademark in a “pure machine-linking function,” this defense may not be available to an advertiser. This is particularly true given the statutory prohibition of using a competitor's trademark as a domain name, eg, Anti-Cybersquatting Consumer Protection Act, 15 U.S.C. '1125(d) ' supporting case law, eg, DaimlerChrysler v. The Net Inc., 388 F.3d 201 (6th Cir. 2004); and cases imposing liability for the unlawful use of trademarks as metatags, see, Brookfield Com-munications, Inc, v. West Coast Entertainment Corp., 174 F.3d 1036 (9th Cir. 1999); or pop-up advertisements, see, 1-800 Contacts, Inc. v. WhenU.com, 2003 U.S. Dist. LEXIS 22932 (S.D.N.Y. 2003).

For the trademark owner as potential litigant, take note: These cases teach us to include all parties ' particularly advertisers ' in a trademark infringement suit arising from online infringement. Numerous parties profit from the misuse of your trademark on the Internet, some of whom are not identified and discussed here. Before initiating litigation, identify all of the parties using, selling or offering to sell your marks, including advertisers, search engines and other marketing entities. Liability may attach to each party in the chain who is profiting from the misappropriation of your trademark and goodwill on the Internet.

Melissa L. Klipp, Esq. is a partner in the Litigation and Intellectual Property Departments of Drinker Biddle & Reath LLP, concentrating on Internet and Computer-Related Disputes, as well as general intellectual property matters involving trademark, trade dress, trade secret, idea theft and copyright law. She can be reached at [email protected].

“Just because you can do something, doesn't mean you always should.” Never has that saying had more meaning than when it comes to Internet advertising. True, this new avenue for advertising has helped some companies exponentially increase their business, but the methods for “re-directing” prospective customers have come under great scrutiny by the courts in the last 6 months. Recent decisions warn that keyword advertising through paid placements such as “Sponsored” or “Featured” ads could lead you directly to the defendant's table in federal court.

Internet search engines (such as Google, Yahoo! and Excite) operate by enabling users to locate Web sites containing specific search terms ' most often brand names. Within seconds, users are presented with lists of sites containing that term ' the “Hit List”. Links to the Web sites ordinarily appear in order of decreasing relevance, meaning it's likely that only the top few sites on the Hit List will be visited by the user.

In the early ' and less sophisticated ' days of Internet advertising, sites appearing at the top of the Hit List generally contained the “searched” term in the content of the Web site, as well as the site's domain name. As the marketplace became more competitive, many advertisers seeking “extra” search engine attention adopted competitors' trademarks as domain names, and also hid the marks within the invisible text of their sites. This method has been prohibited by legislation, the Anti-Cybersquatting Consumer Protection Act, 15 U.S.C. '1125(d), and by case law from numerous circuits.

Today, the “short cut” to the top of the Hit List is through paid placement advertising. Paid placements enable advertisers to purchase search terms, which either jump the advertiser's site to the top of a Hit List, or highlight a link to the site as a “Sponsored” or “Featured” Ad. The search terms can be descriptive words, product names or, in some instances, the brand names of a competitor.

As a result, litigation has arisen over whether a company can use a competitor's brand name as an Internet search term, and whether the search engine, which profits from the practice of “selling” the search term, is contributorily liable. Decisions have been mixed, and have depended on whether the presiding jurisdiction considers the practice criteria for infringement as articulated by the Lanham Act, 15 U.S.C. ”1114 and 1125.

Geico v. Google: 'Use in Commerce' Alone
Does not Establish Liability

A plaintiff claiming infringement of its trademark must prove that: 1) It owns the trademark in question; 2) the defendant used the mark; 3) the defendant's use of the mark occurred in “interstate commerce”; 4) the defendant used the mark “in connection with the sale, offering for sale, distribution or advertising” of goods or services; and 5) the mark in question is likely to confuse consumers in the relevant channel of trade. Bijur Lubricating Corp. v. Devco Corp., 2004 U.S.Dist. LEXIS 16935 (D.N.J. 2004).

Controversy has arisen over whether paid placement advertising “uses” the relevant trademark “in commerce” within the meaning of the Lanham Act. In two recent cases, the court found that it did, and shifted the focus to the more relevant question of whether or not the consumer is likely to be confused by the practice. Examination of the cases discussed here would lead one to conclude that trademark infringement liability could attach to both advertiser and search engine for paid placement advertising, although no decisions have yet been issued.

In Government Employees Ins. Co. (“GEICO”) v. Google, Inc., 330 F.Supp.2d 700 (E.D.Va. 2004), keyword advertising was deemed a “commercial use” of the relevant trademark. Denying Google's motion to dismiss GEICO's claim of infringement, the Court held that “defendants' offer of plaintiff's trademarks for use in advertising could falsely identify a business relationship or licensing agreement between defendants and the trademark holder. In other words, when the defendants sell the rights to link advertising to plaintiff's trademarks, defendants are using the trademarks in commerce in a way that may imply that defendants have permission from the trademark holder to do so.” Id. at 704. The Court distinguished its holding from U-Haul Int'l, Inc. v. WhenU.com, Inc. , 279 F.Supp.2d 723 (E.D.Va. 2003), which held that a software company using trademarks to generate pop-up Internet advertisements did not “use” the trademarks in commerce. In U-Haul, according to the Court in GEICO, the trademark use was purely for a “machine-linking function.” Id. at 727. Where keywords are sold for search engine placement, however, the GEICO Court concluded that the marks are bought and sold, and “the portals and search engines are taking advantage of the drawing power and goodwill of these famous marks.” GEICO, 330 F.Supp.2d at 704. The Court stressed, however, that satisfaction of this element alone did not constitute trademark infringement. Id.

In December 2004, the Court granted Google's motion for partial dismissal based on GEICO's failure to establish “that the mere use of its trademark by Google as a search word or keyword or even using it in their AdWord program standing alone violates the Lanham Act because … there's no evidence that that activity standing alone causes confusion.” Government Employees Ins. Co. v. Google, Inc., Civil Action No. 1:04cv507, Transcript of Bench Trial Before the Honorable Leonie M. Brinkema, United States District Judge (E.D. Va. Dec. 15, 2004), at 286. The trial will proceed on the issue of “whether Google is liable for violating the Lanham Act for those sponsored ads using GEICO's name in either the title or the text,” and whether this “situation creates a likelihood of confusion in the marketplace.” Id. at 287.

Thus, the ultimate determination of liability for keyword advertising has not yet been resolved, and awaits the decision of this court.

In March, Google faced another setback in Google Inc. v. American Blind & Wallpaper Factory, Inc., 2005 U.S.Dist. LEXIS 6228 (N.D.Cal. 2005). There, Google, Ask Jeeves, Inc., EarthLink, Inc., America Online, Inc., Netscape Communications Corp. and CompuServe Interactive Services, Inc. (Google) sought to dismiss claims that their sale of AdWords containing American Blind's trademarks constituted infringement. As in the GEICO litigation, Google claimed that its sale of American Blind's trademarks as AdWords could not satisfy the “use” requirement because Google was not using the mark to identify its own goods or services. Id. at 18.

Denying Google's motion and focusing on the “likelihood of confusion” element, the Court relied on the “expansive holding” in Playboy Enterprises, Inc. v. Netscape Communications Corp. , 354 F.3d 1020 (9th Cir., 2004). Id. at 23. The Playboy decision is important because it differentiates the “use” and “likelihood of confusion” components of the Lanham Act's analysis. Specifically, it identifies the likelihood of confusion as the “core element of trademark infringement.” 354 F.3d at 1024 (quoting Brookfield Communications, Inc. v. West Coast Entm't Corp. , 174 F.3d 1036, 1053 (9th Cir. 1999)). From this perspective, one's use of another's trademark in paid placement advertising is “a 'misappropriation' of the goodwill of the plaintiff's marks … whereby Internet users [are] led to the Web sites of the plaintiff's competitors.” Id. The Court in Google v. American Blind heavily relied on this analysis and identified the possibility of initial interest confusion among users who either are exposed to banner advertisements triggered by keywords (as in Playboy) or through the sale of AdWords. Google, 2005 U.S. Dist. LEXIS 6228, at 24.

Trademark Owners Should Enforce
Their Rights on the Web

To date, the question of whether paid placement advertising will result in liability for either the advertiser or the search engine is unresolved. Advertisers may, however, take away a few points: Adopting another's trademark in the text or title of one's paid placement advertisement could result in litigation for infringement. While a search engine presently may be insulated from liability for using a trademark in a “pure machine-linking function,” this defense may not be available to an advertiser. This is particularly true given the statutory prohibition of using a competitor's trademark as a domain name, eg , Anti-Cybersquatting Consumer Protection Act, 15 U.S.C. '1125(d) ' supporting case law, eg , DaimlerChrysler v. The Net Inc. , 388 F.3d 201 (6th Cir. 2004); and cases imposing liability for the unlawful use of trademarks as metatags, see , Brookfield Com-munications, Inc, v. West Coast Entertainment Corp. , 174 F.3d 1036 (9th Cir. 1999); or pop-up advertisements, see , 1-800 Contacts, Inc. v. WhenU.com, 2003 U.S. Dist. LEXIS 22932 (S.D.N.Y. 2003).

For the trademark owner as potential litigant, take note: These cases teach us to include all parties ' particularly advertisers ' in a trademark infringement suit arising from online infringement. Numerous parties profit from the misuse of your trademark on the Internet, some of whom are not identified and discussed here. Before initiating litigation, identify all of the parties using, selling or offering to sell your marks, including advertisers, search engines and other marketing entities. Liability may attach to each party in the chain who is profiting from the misappropriation of your trademark and goodwill on the Internet.

Melissa L. Klipp, Esq. is a partner in the Litigation and Intellectual Property Departments of Drinker Biddle & Reath LLP, concentrating on Internet and Computer-Related Disputes, as well as general intellectual property matters involving trademark, trade dress, trade secret, idea theft and copyright law. She can be reached at [email protected].