Notes & Comment
Vol. 2009, No. 1
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Trademarks
Rescuecom to the ™ rescue!
In a case widely anticipated by trademark lawyers throughout the land – and no doubt a case eagerly awaited by readers of this space – an influential U.S. Court of Appeals panel recently held that using someone's trademarks as a key word search tool for Internet advertising purposes without permission can potentially lead to trademark infringement liability under the federal Lanham Act (15 USC §1501, et. seq.). Rescuecom Corp. vs. Google Inc., 2009 U.S. App. LEXIS 7160 [Docket No. 06-4881-cv] (2nd Cir. April 3, 2009).
Beyond the technical issues of trademark law that this case presents, its general importance is to further adapt "horse and buggy" intellectual property law to meet the revolutionary changes brought about by the Internet.
The Facts
Rescuecom Corp. (Rescuecom) is a national computer service franchising company that offers on-site computer services and sales. It has a substantial online business that attracts between 17,000 and 30,000 visitors to its website each month. Google, Inc. (Google) is, of course, the pre-eminent Internet search engine worldwide. In response to a keyword search query, Google provides users a list of websites ranked for relevance. Google generates most of its revenue from Internet advertising. Its "AdWords" advertising model involves the use of text-based keywords purchased from Google by advertising customers. Through the technology of its remarkable search engine, Google search queries using such keywords drive Google users to the advertisers' websites.
Another aspect of Google's AdWords advertising program involves the use of a software program called the Keyword Suggestion Tool. This tool identifies and recommends the use of hidden keywords to Google advertising customers. Google's Keyword Suggestion Tool targets, among other things, the trademarks of its advertising customers' competitors. Google "sells" competitor trademarks to its advertising customers to be used as hidden keywords that, through the technology of Google's search engine, drive traffic to the advertisers' websites. In this case, for example, Google sold "Rescuecom" to certain Rescuecom competitors. They used that trademark as a hidden search keyword. When a search query for the trademark "Rescuecom" was initiated at the Google site, the Google user might not actually see a link to Rescuecom's website, but rather a competitor's advertisement (and a link to its website).
The Procedural Status of the Case
The trial court had dismissed Rescuecom's complaint filed against Google, holding that Google's practice of using the AdWord Keyword Suggestion Tool to target and sell Rescuecom's trademark as a hidden search keyword did not allege a violation of federal trademark law. This ruling was based in large part on 1-800 Contacts, Inc. vs. WhenU.com, Inc., 414 F.3d 400 (2nd Cir. 2005). The Court of Appeals reversed, holding that 1-800 Contacts did not preclude a suit by Rescuecom against Google. The case turned on a technical litigation issue about the adequacy of Rescuecom's pleadings. Whether Google's advertising practices are ultimately a trademark infringement – that was not at issue in the decision.
The Decision
The gist of federal trademark infringement is the unauthorized use of another's trademark in commerce which is likely to cause confusion or mistake or to deceive someone as to the origin, sponsorship, or affiliation of the trademarked goods or services. (See, e.g., 15 USC §1125(a)).
The Court of Appeals framed the trademark infringement claims in Rescuecom Corp. vs. Google Inc. as follows:
"According to Rescuecom's allegations, when a Google user launches a search for the term "Rescuecom" because the searcher wishes to purchase Rescuecom's services, links to websites of its competitors will appear on the searcher's screen in a manner likely to cause the searcher to believe mistakenly that a competitor's advertisement (and website link) is sponsored by, endorsed by, approved by, or affiliated with Rescuecom." 2009 U.S. App. LEXIS 7160, at 8-9.
The narrow question was whether this allegation was enough to state a claim for federal trademark infringement, which would let the case proceed to discovery. The Court said that it was.
Reaching its conclusion, the Second Circuit in Rescuecom vs. Google was required to distinguish 1-800 Contacts, Inc. v. WhenU.com, Inc. That 2005 case held that "use in commerce" for federal trademark infringement purposes was not alleged when the defendant used a plaintiff's website as the search term. In 1-800 Contacts, when a search user entered the plaintiff's website address, pop-up ads were generated in response to the search query. In that case, trademarks and keywords were not used to redirect search queries.
First, the Rescuecom court distinguished between use of an un-trademarked website address (as in 1-800 Contacts) and a protected trademark (as in Rescuecom). The former was not protected under federal trademark law, while the latter was protected.
Second, unlike Google's advertising model in Rescuecom, the 1-800 Contacts case did not involve the sale of trademarks to competitors for advertising purposes. Trademarks could not be purchased as search keywords even if the customer wanted to do so. The search results were dictated by the category associated with the competitor's website ("eye care") rather than a keyword or trademark term itself.
In deciding that Rescuecom had sufficiently alleged federal trademark infringement by Google, the Court rejected application of the 1-800 Contacts case to the facts in Rescuecom:
"Google, supported by amici, argues that 1-800 suggests that the inclusion of a trademark in an internal computer directory cannot constitute trademark use…[But] [i]f we were to adopt Google and its amici's argument, the operators of search engines would be free to use trademarks in ways designed to deceive and cause consumer confusion. This is surely neither within the intention nor the letter of the [federal] Lanham Act." 2009 U.S. App. LEXIS 7160, at 19.
What it Means
One of the challenges of intellectual property law in the Internet age is to make itself useful and relevant. As innovation expands and quickens, so do opportunities for mischief and misuse of another's valuable intellectual property rights.
Sometimes the perspective one gains "from 30,000 feet" is most constructive. Lawsuits aren't decided at such elevations but at the ground level case-by-case. Nonetheless, from on high, Rescuecom looks like an appropriate extension of federal trademark law to the facts at hand.
Google adopted advertising methods which targeted and exploited others' valuable trademarks. They received substantial advertising revenue for doing so, and the effect was to leverage those valuable trademarks to the benefit of Google's advertisers, who were often competitors of the trademark owners. Utilizing its proprietary and highly effective search engine technology, Google's program was designed to cause confusion or mistake or to deceive someone (a Google search user) as to the origin, sponsorship, or affiliation of the (Rescuecom) trademarked goods or services.
To suggest that Google's AdWord advertising model, and its Keyword Suggestion Tool, were not proper candidates for federal trademark infringement litigation is to deny the purpose of federal trademark law in the first instance.
© Matthew Joseph 2008. Law Offices of Matthew Joseph, San Mateo, California, practices in the areas of intellectual property licensing, commercial real estate leasing, corporate formations and business transactions. No legal advice is intended by the information provided herein and recipients should independently consult counsel before taking any action related to this subject matter.