Digital Advertising: Customer Confusion and Trademark Infringement

Obviously, legal regulation of such an enormous and rapidly changing field presents substantial challenges, and over the past two decades (at least in the United States) that job has fallen primarily on courts. In the absence of a federal statutory scheme specifically aimed at digital advertising practices, the courts have focused on consumer-facing issues covered by existing law, such as privacy, transparency, and deceptive or misleading advertising practices. But digital advertising technology can also present new challenges in less obvious areas of the law, such as copyright and trademark protection.

Seventeen years ago, an online seller of contact lenses called 1-800 Contacts was at the center of these issues when the U.S. Court of Appeals for the Second Circuit wrote one of the earliest opinions on the trademark implications of "keyword advertising" — the use of trademarked terms as keywords to trigger pop-up ads on websites. In 1-800 Contacts v. Whenu.com, 414 F.3d 400 (2d Cir. 2005), the Second Circuit held that the use of plaintiff's mark as a keyword was not a "use in commerce" for purposes of the trademark law, because consumers never saw it — it was stored in a hidden list of terms inside a piece of ad tracking software.