Courts Struggle With Search Engines' Use of Trademarked Keywords

by Lee Gesmer on December 1, 2006

Lawyers love to have cases on the “cutting edge” – they thirst for it in law school, and brag about it when they get into practice. No law, no precedents, difficult issues? Bring it on! they say.

Clients, of course, feel exactly the opposite – no law, no precedents, no predictability? How is that possible?, they complain.

For the last few years Internet search engines have repeatedly found themselves astride this proverbial cutting edge. One of the “issues de jour” faced by the search industry is the sale of advertising triggered by trademarks owned by a competitor. Is it a violation of trademark law for Nissan to pay Google to have ads for Nissan appear when you search for Ford? (The last time I checked this actually occurred).

In evaluating legal challenges to this practice courts have focused on a somewhat narrow legal issue: is a search company’s sale of a company’s trademark as a keyword triggering third-party advertising “trademark use”? The answer to this question is critical because “trademark use” could give rise to legal claims, while its absence precludes them. This issue has confounded the courts, as several recent cases, summarized below, illustrate:

  • In the recent case of 800-JR Cigar, Inc. v. Goto.com, Inc. the District Court of New Jersey ruled that Goto did make “trademark use” of JR’s “JR Cigar” trademark and allowed its claims for trademark infringement and dilution to proceed. Specifically, the Court held that Goto’s pay for priority search engine results made “trademark use” of JR’s marks in three ways: by selling the right to display competitive advertising in response to searches for JR’s trademarks, by ranking the paid competitors’ advertising ahead of the “natural” search results for JR’s marks, and through Goto’s “Search Term Suggestion Tool” which identified “JR Cigar” and JR’s other marks as effective search words and marketed them to competitors. In support of its holding, the Court relied on several decisions from other jurisdictions including the Eastern District of Virginia case of Government Employees Insurance Co. v. Google, Inc. and the Ninth Circuit decision in Playboy Enterprises, Inc. v. Netscape Commc’n Corp., both of which reached the same result with respect to “trademark use.”
  • In another recently decided case involving similar facts, the Northern District of New York reached the opposition conclusion in Rescuecom Corp. v. Google, Inc. Here, the Court granted Google’s motion to dismiss Rescuecom’s trademark claims because Rescuecom could not show actionable “trademark use.” The Court made this finding after analyzing two of Google’s advertising practices: its use of the plaintiff’s “Rescuecom” trademark as a keyword initiating competitors’ advertising for a fee, and its “Keyword Suggestion Tool” that recommends to potential advertisers which keywords, including plaintiff’s mark, will yield the best results. Ultimately, the Court found that Google did not use Rescuecom’s mark in connection with any goods or services, a legal requirement for trademark claims, since Google’s use of the “Rescuecom” mark was strictly internal to Google’s computer systems and not displayed by Google in connection with its advertising practices. As support for its conclusion the Rescuecom Court relied on the Southern District of New York case of Merck & Co. Inc. v. Mediplan Health Consulting, Inc. and the Second Circuit decision in 1-800 Contacts v. WhenU.com, Inc.

Eventually, of course, a consensus opinion on this issue will emerge and this particular “cutting edge” of trademark law will become a thing of the past. Until then, companies that use search engine key word advertising (or whose competitors do so) need to remain aware of this issue.

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