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Keyword advertisers win some, lose some

For some years now, trademark owners have been battling search engines and online advertisers over the sale and purchase of keywords (trademarks) that trigger online advertising. Two recent and conflicting rulings show that the application of traditional trademark principles and law to the new keyword technology can be a complicated matter.

Online advertisers will find support in a recent court ruling on advertising triggered by the keyword (and trademark) "zocor." A search on the trademark ZOCOR at Google or Yahoo! brings up literally millions of hits, including dozens of paid-for advertisements, but is it legal for advertisers to buy "zocor" as a keyword and have Google or Yahoo! display their ads when a user searches for the term at those sites?

As explained in more detail below, the court in the ZOCOR matter ruled that such advertising cannot constitute trademark infringement because no "use" of the trademark is being made. Yet around the same time, a different court ruled that Edina Realty (Minnesota) had a valid trademark claim against a competitor that was "using" the EDINA REALTY trademark when it bought the keyword from the search engines. So, the debate continues.

What do "sponsored links" and "sponsor results" mean?

Keyword-triggered advertising is a multi-billion dollar business for search engines. Online advertisers clamor to purchase key words that would trigger their advertisements when a user enters the word in a search engine query. The advertisements appear as "sponsored links" on Google or "sponsor results" on Yahoo!, for example, whenever the user searches on keywords purchased by the advertisers.
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The trademark owners' main argument is that the user entering the keyword that is also a trademark is likely to be confused into believing that the "sponsored links" are authorized by, or affiliated with or sponsored by, the trademark owner. Thus, the purchase and sale of the keyword constitutes trademark infringement.

Indeed, the federal trademark statute, the Lanham Act, expressly uses the word "sponsored" in determining whether an infringement has occurred, and the Google and Yahoo! links are advertised as "sponsored."

Sponsored by whom? Do Web users understand that the sponsored links are paid-for ads, or do they believe they are sponsored by the trademark owner?

Keywords and "use in commerce"

Before answering the question of whether users are confused when they see the sponsored links, it's important to note that the Lanham Act requires that, to show infringement or dilution, the mark has to be used in commerce. The typical trademark use is placing the mark on goods or services to indicate that the goods or services are from, or authorized by, the trademark owner. For example, a shoe manufacturer puts a "swoosh" on its shoes, trying to dupe consumers into believing that Nike is the source of the goods.

So, one must ask: In the search engine context, are the purchasers and sellers of keywords that are also trademarks "using" them to show the source of the goods or services advertised in the sponsored links? If there is no use, then the claims fail under the Lanham Act.

What the GEICO court said

In one of the earliest court opinions on the legality of keyword sales and purchases, the Eastern District of Virginia Court found that that there was sufficient "use in commerce" by the search engines for GEICO, the mark owner, to state claims for infringement and dilution against Google. Government Employees Insurance Co. v. Google, Inc. (Case No. 1:04-CV-507 LMB TCB) (E.D. Va. 2004).

After GEICO presented its evidence at trial, the court ruled that the sale by Google of the GEICO trademark to any advertiser who wanted to purchase it, including competitors of GEICO, did not constitute trademark infringement.

However, according to the court on the evidence before it, where the advertisers used the GEICO trademark in the advertisement title or text, the advertisements caused a likelihood of consumer confusion as to source or sponsorship. So, if GEICO had sued the advertisers, which it did not, they would have been found liable. The case settled before the Court heard evidence on whether Google was "contributorily liable" for the advertisements it displayed that included the GEICO trademark in the title or text.

Recent conflicting rulings: Use, no use

Two recent court decisions also have addressed the issue of whether trademarks are being "used" by advertisers and search engines when they are bought and sold as keywords.

A District of Minnesota court, in Edina Realty v. theMLSonline.com, Civ. No. 04-4371, 2006 WL 737064 (D. Minn. Mar. 20, 2006) agreed with the GEICO court and found that there was trademark usage when a direct competitor purchased the EDINA REALTY trademark as a keyword to trigger its competing advertisements.

The court acknowledged that the use was not a "conventional use in commerce" but nevertheless found that "based on the plain meaning of the Lanham Act, the purchase of search terms is a use in commerce." Perhaps the court was swayed by other claimed bad acts of the competitor, including displaying the EDINA REALTY trademark on its site in white font on a white background. That case has now settled.

In direct contrast is the other recent ruling, issued from the Southern District of New York in Merck & Co., Inc. v. Mediplan Health Consulting, Inc., No. 05 Civ. 3650, 2006 WL 800756 (S.D.N.Y. Mar. 30, 2006). The court determined that there was no use in commerce of the trademark by the advertisers who purchased the ZOCOR trademark as a keyword for their advertisements appearing on the Google and Yahoo! search sites.

Upon a motion to reconsider and review the Edina Realty opinion, the Merck court reaffirmed its ruling dismissing the mark owner's trademark infringement claims. Merck., _ F.Supp.2d _, 2006 WL 1418616 (S.D.N.Y. May 24, 2006).

To explain its finding that there is no "use" of the ZOCOR trademark, the court compared it to the product placement marketing strategy employed in retail stores, "where, for example, a drugstore places its generic products alongside similar national brand products to capitalize on the latter's name recognition. The sponsored link marketing strategy is the electronic equivalent of product placement in a retail store."

The Merck court concluded that the search engine's internal use of the keyword "zocor" is not the type of use to indicate source or sponsorship. The court looked to precedent set in the 1-800 Contacts, Inc. v. WhenU.com, Inc., 414 F.3d 400 (2d Cir. 2005) case regarding pop-up ads, where the Second Circuit Court of Appeals determined that there was no use of 1-800's trademarks within the meaning of the Lanham Act when "When-U" caused pop-up ads to appear that were triggered by the 1-800 Website address.

The court concluded by stating: "It may be commercial use, in a general sense, but it is not trademark use. Indeed, if anything, keywording is less intrusive than pop-up ads as it involves no aggressive overlaying of an advertisement on top of a trademark owner's Web page."

Eye on the courts

Trademark owners, online advertisers, and search engines are all keeping a close eye on the keyword issues as various courts grapple with whether the existing intellectual property laws, written long before keyword technology was first used, are being violated.

Other articles by Deborah Wilcox
Renew your domain name!
That’s my trademark®

Deborah A. Wilcox is a lawyer and co-chair of intellectual property litigation at Baker and Hostetler, LLP, in Cleveland. She is a graduate of the University of Wisconsin-Madison Law School and regularly handles copyright, trademark and e-commerce litigation. She can be reached at dwilcox@bakerlaw.com.

The opinions expressed herein or statements made in the above column are solely those of the author, & do not necessarily reflect the views of Wisconsin Technology Network, LLC. (WTN). WTN, LLC accepts no legal liability or responsibility for any claims made or opinions expressed herein.



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