Use of Another's Trademark in Web Site Metatags

A metatag is a coding statement for a Web site in the Hypertext Markup Language (“HTML”) that describes the site's content. The information provided in metatags can be used by search engines to determine Web page relevancy and to influence search results. In a surprising development, the U.S. District Court for the Eastern District of Wisconsin has determined that the use of metatags in Web site code does not create initial interest confusion, because current search engines no longer use metatags to determine the relative relevance of a Web site, preferring instead to use algorithms that rank the Web sites by the number of other sites that link or point to them. Standard Process, Inc. v. Banks, ___ F. Supp. 2d ___ (E.D. Wis. 2008). Thus, the court reasoned, an Internet search for a product by its trademark will no longer display a particular Web site in the search results just because it contains that mark in a metatag. A consumer will therefore not be lured to such a Web site through initial interest in the trademarked product.

The Standard Process Case

Standard Process, a company that manufactures and sells
dietary supplements, sued Dr. Scott Banks (“Banks”), a chiropractor and nutritional counselor who bought Standard Process' products from authorized distributors and then resold them over the Internet, for trademark infringement and false designation of origin. Standard Process sought injunctive relief against Banks, and Banks moved for summary judgment.

Standard Process sells its products only to health care providers and retailers that agree not to sell these products to other businesses, over the Internet, or to the general public (except through licensed pharmacies and health clinics). Banks was previously an authorized seller of those products, distributing Standard Process' products through both his clinic and his Web site. Because Banks' Internet sales were in violation of the company's policy, Standard Process terminated his account so that he could no longer buy products directly from the company or serve as an authorized distributor. Nevertheless, Banks continued to sell unaltered Standard Process products through his Web site, purchasing such products from authorized sellers. In addition, Banks continued to display Standard Process' trademarks and photographs of Standard Process products on his Web site.

After receiving an objection letter from Standard Process, Banks removed all Standard Process logos and pictures of products from his Web site. He continued to sell Standard Process products, but placed a disclaimer on each page of his Web site featuring Standard Process' goods, stating that he was “not an authorized seller of Standard Process, Inc. products” and was not “affiliated with, authorized, sponsored or related to Standard Process, Inc.” However, Banks continued to send e-mail solicitations to his customers that included Standard Process' name and, occasionally, photographs of Standard Process products. These solicitations did not include a disclaimer. Standard Process sued Banks for trademark infringement and false designation of origin.

To prevail on its trademark infringement claim, Standard Process had to show that: 1) it had a protectable trademark; and 2) there was a likelihood of customer confusion about the source of the goods sold by Banks. Ty, Inc. v. Jones Group Inc., 237 F.3d 891, 897 (7th Cir. 2001). To establish its false designation of origin claim, Standard Process also had to demonstrate a likelihood of confusion. As there was no dispute that Standard Process had a protectable trademark or that Banks sold Standard Process' products on the Internet without authorization, the main issue was whether Banks was likely to confuse customers into believing that he was an authorized retailer of Standard Process' products.

Under the “first sale doctrine,” the right of a manufacturer to control distribution of its trademark product does not extend beyond the first sale of the product. Sebastian Int'l, Inc. v. Longs Drug Stores Corp., 53 F.3d 1073, 1074 (9th Cir. 1995). Even an unauthorized seller may therefore resell the genuine goods of the trademark owner. This doctrine does not, however, protect unauthorized sellers who use another's valid trademark to create an impression that they are authorized dealers of that trademarked product. Because Banks' Web site did not include any pictures of the Standard Process products and displayed a prominent disclaimer stating that Banks was “not an authorized seller” and was “not affiliated with Standard Process” in the first paragraph of the page where Standard Process products first appeared, the court held that Banks' Web site effectively prevented the likelihood of consumer confusion through false designation of origin.

The court determined, however, that Banks' e-mail solicitations to customers, which did not include a disclaimer and had pictures of Standard Process products, were likely to cause confusion that Banks was an authorized dealer of Standard Process. Banks agreed to an injunction prohibiting him from using photographs of Standard Process products and requiring him to use a disclaimer on his Web site and in the solicitations he sends.

Standard Process contended that this injunction was not sufficient because Banks was selling “materially different,” not “genuine,” Standard Process products. Those sales, Standard Process argued, undermined the company's quality control standards because Banks' Web site did not require a one'on-one consultation with a health care professional. Proof that Banks violated Standard Process' quality control standards to the extent that he compromised the genuineness of the products themselves required Standard Process to show that it: 1) has established legitimate, substantial, and nonpretextual quality control measures; 2) abided by those procedures; and that 3) nonconforming sales would diminish the value of the mark. S&L Vitamins, Inc. v. Australian Gold, Inc., 521 F. Supp. 2d 188, 203 (E.D.N.Y. 2007).

Although Standard Process generally abided by its quality control measures of selling products only to health care professionals, its products sold by Banks were unaltered. As a customer making a purchase on the Internet does not expect to receive a one'on-one consultation, the court found that the absence of such a one'on-one consultation did not create a latent defect in the product. Therefore, there was no likelihood of customer confusion by the absence of the one'on-one consultation.

'Initial Interest' Confusion

Standard Process based its trademark infringement case on “initial interest” confusion, which occurs when a customer is lured to consider a product because of the similarity of the mark, even if he or she realizes the true source of the product before completing the purchase. Promatek Indus., Ltd. v. Equitrac Corp., 300 F.3d 808, 812 (7th Cir. 2002). Standard Process alleged that because Banks, like Promatek, used Standard Process' trademarks in the metatags of his Web site, he diverted customers to his Web site and confused them into believing that he was an authorized retailer of Standard Process products. The court rejected this argument, holding that trademark keyword metatags no longer create initial interest confusion because current search engines do not use them to generate the most relevant search results. Rather, today's search engines mainly use algorithms that rank Web sites by the number of other sites that link or point to them. The court further distinguished Promatek by noting that even if search engines still made significant use of metatags, consumers diverted to Banks' Web site by the metatags would purchase unaltered, genuine Standard Process goods, not a competitor's goods. As Banks was not using the metatags to lure customers to his site to sell them competitors' goods, the likelihood of confusion was not present in this case.

In addition to Promatek, a number of other federal appeals courts have held that a company using a competitor's trademark in the metatags of its Web site creates initial interest confusion in consumers. Brookfield Commc'ns, Inc. v. West Coast Entm't Corp., 174 F.3d 1036, 1062 (9th Cir. 1999); Australian Gold, Inc. v. Hatfield, 436 F.3d 1228, 1239 (10th Cir. 2006).

In another recent case, the U.S. District Court for the District of Arizona took a similar approach to keyword metatags and initial interest confusion. That court rejected the Tenth Circuit's reasoning in Australian Gold, finding that the use of a manufacturer's trademarks in the metatags of an unauthorized seller's Web site results in an initial interest confusion only if that use was deceptive and likely to confuse consumers into believing that the seller was an authorized retailer of the products. Designer Skin, LLC v. S & L Vitamins, Inc., No. 05-3699 (D. Ariz. May 19, 2008). Where the metatag leads consumers to a site that sells the trademark owner's genuine goods along with competitors' goods, the court held that there is no initial interest confusion.

Conclusion

If a company intends to use third-party trademark metatags in its Web site, it should bear in mind that the courts are still considering whether such a use is a deceptive “bait and switch” tactic; that is, whether the site sells genuine products of that third party or only competitors' goods. Disclaimers of affiliation may also be necessary in such cases.

Judith L. Grubner is a partner in the IP Practice Group of Michael Best & Friedrich LLP. Ivan T. Kirchev was a 2008 summer associate with the firm.

A metatag is a coding statement for a Web site in the Hypertext Markup Language (“HTML”) that describes the site's content. The information provided in metatags can be used by search engines to determine Web page relevancy and to influence search results. In a surprising development, the U.S. District Court for the Eastern District of Wisconsin has determined that the use of metatags in Web site code does not create initial interest confusion, because current search engines no longer use metatags to determine the relative relevance of a Web site, preferring instead to use algorithms that rank the Web sites by the number of other sites that link or point to them. Standard Process, Inc. v. Banks , ___ F. Supp. 2d ___ (E.D. Wis. 2008). Thus, the court reasoned, an Internet search for a product by its trademark will no longer display a particular Web site in the search results just because it contains that mark in a metatag. A consumer will therefore not be lured to such a Web site through initial interest in the trademarked product.

The Standard Process Case

Standard Process, a company that manufactures and sells
dietary supplements, sued Dr. Scott Banks (“Banks”), a chiropractor and nutritional counselor who bought Standard Process' products from authorized distributors and then resold them over the Internet, for trademark infringement and false designation of origin. Standard Process sought injunctive relief against Banks, and Banks moved for summary judgment.

Standard Process sells its products only to health care providers and retailers that agree not to sell these products to other businesses, over the Internet, or to the general public (except through licensed pharmacies and health clinics). Banks was previously an authorized seller of those products, distributing Standard Process' products through both his clinic and his Web site. Because Banks' Internet sales were in violation of the company's policy, Standard Process terminated his account so that he could no longer buy products directly from the company or serve as an authorized distributor. Nevertheless, Banks continued to sell unaltered Standard Process products through his Web site, purchasing such products from authorized sellers. In addition, Banks continued to display Standard Process' trademarks and photographs of Standard Process products on his Web site.

After receiving an objection letter from Standard Process, Banks removed all Standard Process logos and pictures of products from his Web site. He continued to sell Standard Process products, but placed a disclaimer on each page of his Web site featuring Standard Process' goods, stating that he was “not an authorized seller of Standard Process, Inc. products” and was not “affiliated with, authorized, sponsored or related to Standard Process, Inc.” However, Banks continued to send e-mail solicitations to his customers that included Standard Process' name and, occasionally, photographs of Standard Process products. These solicitations did not include a disclaimer. Standard Process sued Banks for trademark infringement and false designation of origin.

To prevail on its trademark infringement claim, Standard Process had to show that: 1) it had a protectable trademark; and 2) there was a likelihood of customer confusion about the source of the goods sold by Banks. Ty, Inc. v. Jones Group Inc. , 237 F.3d 891, 897 (7th Cir. 2001). To establish its false designation of origin claim, Standard Process also had to demonstrate a likelihood of confusion. As there was no dispute that Standard Process had a protectable trademark or that Banks sold Standard Process' products on the Internet without authorization, the main issue was whether Banks was likely to confuse customers into believing that he was an authorized retailer of Standard Process' products.

Under the “first sale doctrine,” the right of a manufacturer to control distribution of its trademark product does not extend beyond the first sale of the product. Sebastian Int'l, Inc. v. Longs Drug Stores Corp. , 53 F.3d 1073, 1074 (9th Cir. 1995). Even an unauthorized seller may therefore resell the genuine goods of the trademark owner. This doctrine does not, however, protect unauthorized sellers who use another's valid trademark to create an impression that they are authorized dealers of that trademarked product. Because Banks' Web site did not include any pictures of the Standard Process products and displayed a prominent disclaimer stating that Banks was “not an authorized seller” and was “not affiliated with Standard Process” in the first paragraph of the page where Standard Process products first appeared, the court held that Banks' Web site effectively prevented the likelihood of consumer confusion through false designation of origin.

The court determined, however, that Banks' e-mail solicitations to customers, which did not include a disclaimer and had pictures of Standard Process products, were likely to cause confusion that Banks was an authorized dealer of Standard Process. Banks agreed to an injunction prohibiting him from using photographs of Standard Process products and requiring him to use a disclaimer on his Web site and in the solicitations he sends.

Standard Process contended that this injunction was not sufficient because Banks was selling “materially different,” not “genuine,” Standard Process products. Those sales, Standard Process argued, undermined the company's quality control standards because Banks' Web site did not require a one'on-one consultation with a health care professional. Proof that Banks violated Standard Process' quality control standards to the extent that he compromised the genuineness of the products themselves required Standard Process to show that it: 1) has established legitimate, substantial, and nonpretextual quality control measures; 2) abided by those procedures; and that 3) nonconforming sales would diminish the value of the mark. S&L Vitamins, Inc. v. Australian Gold, Inc. , 521 F. Supp. 2d 188, 203 (E.D.N.Y. 2007).

Although Standard Process generally abided by its quality control measures of selling products only to health care professionals, its products sold by Banks were unaltered. As a customer making a purchase on the Internet does not expect to receive a one'on-one consultation, the court found that the absence of such a one'on-one consultation did not create a latent defect in the product. Therefore, there was no likelihood of customer confusion by the absence of the one'on-one consultation.

'Initial Interest' Confusion

Standard Process based its trademark infringement case on “initial interest” confusion, which occurs when a customer is lured to consider a product because of the similarity of the mark, even if he or she realizes the true source of the product before completing the purchase. Promatek Indus., Ltd. v. Equitrac Corp. , 300 F.3d 808, 812 (7th Cir. 2002). Standard Process alleged that because Banks, like Promatek, used Standard Process' trademarks in the metatags of his Web site, he diverted customers to his Web site and confused them into believing that he was an authorized retailer of Standard Process products. The court rejected this argument, holding that trademark keyword metatags no longer create initial interest confusion because current search engines do not use them to generate the most relevant search results. Rather, today's search engines mainly use algorithms that rank Web sites by the number of other sites that link or point to them. The court further distinguished Promatek by noting that even if search engines still made significant use of metatags, consumers diverted to Banks' Web site by the metatags would purchase unaltered, genuine Standard Process goods, not a competitor's goods. As Banks was not using the metatags to lure customers to his site to sell them competitors' goods, the likelihood of confusion was not present in this case.

In addition to Promatek, a number of other federal appeals courts have held that a company using a competitor's trademark in the metatags of its Web site creates initial interest confusion in consumers. Brookfield Commc'ns, Inc. v. West Coast Entm't Corp. , 174 F.3d 1036, 1062 (9th Cir. 1999); Australian Gold, Inc. v. Hatfield , 436 F.3d 1228, 1239 (10th Cir. 2006).

In another recent case, the U.S. District Court for the District of Arizona took a similar approach to keyword metatags and initial interest confusion. That court rejected the Tenth Circuit's reasoning in Australian Gold, finding that the use of a manufacturer's trademarks in the metatags of an unauthorized seller's Web site results in an initial interest confusion only if that use was deceptive and likely to confuse consumers into believing that the seller was an authorized retailer of the products. Designer Skin, LLC v. S & L Vitamins, Inc., No. 05-3699 (D. Ariz. May 19, 2008). Where the metatag leads consumers to a site that sells the trademark owner's genuine goods along with competitors' goods, the court held that there is no initial interest confusion.

Conclusion

If a company intends to use third-party trademark metatags in its Web site, it should bear in mind that the courts are still considering whether such a use is a deceptive “bait and switch” tactic; that is, whether the site sells genuine products of that third party or only competitors' goods. Disclaimers of affiliation may also be necessary in such cases.

Judith L. Grubner is a partner in the IP Practice Group of Michael Best & Friedrich LLP. Ivan T. Kirchev was a 2008 summer associate with the firm.