For all media inquiries,
please contact:
Ariel Rivera
Communications Specialist
973.530.2453
arivera@csglaw.com

Keyword Advertising "Use in Commerce": A Pro-Plaintiff Trend Emerges

2009

Intellectual Property Litigation, Volume 20, Number 2

Keyword advertising, which is paying for the right to link certain words to an advertisement in the form of a web page, is an advertising tool on the Internet.1 It also has become a source of substantial litigation. Companies choose the words they want to link to their Internet advertisements and generally pay a fee each time a viewer chooses that word in a search engine and clicks through to that link. Legal issues do not emerge where the keyword is a generic term, such as the word "automobiles," linking to a choice of various automobile manufacturer websites. However, when the keyword is a competing company's trademark, an infringement claim may follow.

A preliminary dispositive issue is whether such keyword use is in fact a "use in commerce" under the Lanham Act. The law has been largely unsettled. But a number of recent decisions, finding use in commerce, suggest an emerging trend in courts outside the Second Circuit.

District courts in the Second Circuit, on the other hand, have continued not to find use in commerce. With the exception of a couple of narrowly defined decisions, district courts in the Second Circuit have held that the purchase of keywords and keyword use itself, without more, is not a use in commerce under the Lanham Act. The Second Circuit, however, currently has the opportunity to address this issue more broadly and/or comment on the law that has developed within the circuit in contrast to the law that has developed elsewhere.

The Second Circuit

To succeed on a claim under the Lanham Act, the moving party must demonstrate that the defendant (1) used the trademark in issue and (2) in such a way that is likely to cause confusion in the marketplace.2 A keyword advertising claim typically must withstand the first prong before a likelihood of confusion analysis is conducted. For the use of a trademark to be actionable under the Lanham Act, that "use" must be "in commerce" and "on or in connection with any goods or services, or any container for goods."3

It has been suggested that a plain reading of the Lanham Act does not provide that keyword advertising is a use in commerce under the act.4 District courts in the Second Circuit routinely have held that use of a competitor's mark as a keyword, standing alone, does not constitute use in commerce. Cases holding that the use of keywords fall outside the "use in commerce" include S&L Vitamins, Inc. v. Australian Gold, Inc.5 (the general rule in this circuit is that use of a trademark in keywords and meta tags, where the use is strictly internal and not communicated to the public, "is not a use under the Lanham Act"); Fragrancenet.com, Inc. v. Fragrancex.com. Inc.6 (no Lanham Act "use" for a trademark in a keyword or meta tag 7 because the use is strictly internal, "not communicated to the public," and "the use does not indicate source or ownership of the mark"); Site Pro-1, Inc. v. Better Metal, LLC8 (where the mark is not used to indicate source or origin, it is not a use in commerce); Merck & Co., Inc. v. Mediplan Health Consulting, Inc.9 (finding that the use of a keyword to trigger display of a sponsor's link is not a use of a mark under the Lanham Act because defendants are not placing the marks "on any goods or containers or displays or associated documents, nor do they use them in any way to indicate source or sponsorship"); and Rescuecom Corp. v. Google, Inc.10 (no use in commerce in selling plaintiff's mark as a keyword that alters a computer user's search result because the mark is not "displayed in any of the sponsored links").

Stating that whether there is a "use" is the threshold question, "because whilc any number of activities may be 'in commerce' or create a likelihood of confusion, no such activity is actionable under the Lanham Act absent the 'use' of a trademark." The S&L Vitamins court drew from earlier cases, including Site-Pro-1, which it noted "collect[ed] cases addressing this issue."11 In S&L Vitamins, the plaintiff, an unauthorized distributor of Australian Gold's products, sought a declaratory judgment that its sale of those products did not constitute infringement. S&L Vitamins promoted the products by purchasing keyword ads and using Australian Gold's mark in its "HTML source code and meta tags for its website." 12 The court distinguished Hamzik v. Zale Corp.,13 stating that unlike Hamzik, S&L Vitamins was actually selling the trademarked products.14 As a result, "there is nothing improper" where a party uses another's marks in keyword advertising and meta tags for products it actually sells.

In Hamzik, the plaintiff owned the registered mark "The Dating Ring."15 Defendant Zale purchased the keyword phrases "dating ring" and "dating rings" from Internet search engines Yahoo! and Google.16 When a user entered those phrases into those search engines, the resulting display read "Dating Ring-Zales" and showed links to different types of rings available from Zales.

The Northern District of New York held that keyword use is a use in commerce but qualified its opinion, explaining that the defendant's purchase alone of a keyword matching the plaintiff's mark is not a use in commerce, but if after a party clicks on the keyword and the plaintiff's marks appear on displays associated with defendant's goods, then the use is a use in commerce. 17 Distinguishing the facts in Hamzik from other district court opinions in the Second Circuit, the court found a "use in commerce,"18 (stating that the opposite result was found in several cases within the same circuit but noting that there were factual distinctions in those cases), citing Rescuecom Corp. v. Google, Inc.19 and Merck & Co. v. Mediplan Health Consulting, Inc.20 The Hamzik court stated that in cases where there was no "use in commerce," there were no allegations that the defendant had placed the plaintiff's trademarks on "any goods, containers, displays, or advertisements, or that its internal use [was] visible to the public." 21 In Hamzik, however, users of the keywords ended up with a result of "Dating Ring-Zales," which the court stated was a fact that could demonstrate that the plaintiff's mark "does appear on displays associated with the goods or documents associated with the goods or their sale."22

Hamzik and Site-Pro-l were decided within a month of each other (though Site-Pro-l is now a reported case). In Site-Pro-1, the court determined whether the use of another company's mark in "metadata or as part of a sponsored search constitutes use of a trademark in commerce."23 The plaintiff asserted that the defendant used its Site Pro 1 trademark in the meta tags or metadata of defendant's website and improperly purchased a keyword sponsor search from Yahoo!, using the mark in a search algorithm.24 When an Internet user searched under some combination of the words "Site," "Pro," or "1" on Yahoo!, the user would receive a list that included the defendant's website, and because of the meta tags, a search for "Site Pro 1" would yield a link to the defendant's website. The court found no use in commerce because the meta tags were not visible to consumers and because the defendant did not place the plaintiff's mark on any of its goods, advertisements, or displays associated with the sale of its goods.

The Second Circuit has held that where keyword use of a trademark is internal ("the customer sees only the defendant's advertisement, which makes no mention or other use of the trademarked phrase"), it is analogous to "an individual's private thoughts about a trademark" and is not an actionable use. 25

1-800 Contacts, Inc. v. WhenU.com, Inc. focused on whether there was a use in commerce where the defendant's software program caused a competitor's pop-up ad to appear as a separate window on the plaintiff's website when a user of the software accessed the plaintiff's website.26 The court found no use in commerce because the defendant's program did not place the plaintiff's marks on any goods or services and did not reproduce or display the mark or cause it to be displayed. Moreover, the court noted that the only place the plaintiff's name appeared in the defendant's software program was in the directory that resided on the user's computer, which was inaccessible to the user and was in the form of the plaintiff's website address, not its mark.

Although 1-800 Contacts addressed "use" under different facts than other lower court cases in the Second Circuit, district courts in the circuit have opined that "no Lanham Act 'use' exists for the use of a trademark in a keyword or meta tag." 27

Similarly, the Northern District of New York noted that "the Second Circuit has not considered whether the purchase or sale of a trademark as a keyword that triggers the appearance of an advertisement" is a use in commerce, but nevertheless found for the defendant.28

The law within the Second Circuit, however, may shift in the near future, depending upon the anticipated appellate decision in Rescuecom In 2006, Rescuecorn filed an appeal, which was followed by amicus curiae briefs from several parties, including Yahoo! Inc., AOL LLC, and eBay Inc. 29

Other Recent Law

Outside of the Second Circuit, courts have acknowledged that keyword use is a use in commerce under the Lanham Act, and this "emerging view is in accord with the plain language of the statute." 30 Indeed, other courts have stated recently that a plain reading of the Lanham Act demonstrates that such use is a use in commerce. 31

The court in Hysitron expressly discounted the various contrary opinions from the Second Circuit, noting that the majority of courts disagreed with the Second Circuit's reasoning, and holding that using a competitor's trademark to generate advertising, even where the use is a keyword in a search engine, is a use in commerce under the Lanham Act This holding, the court stated, adhered to the plain meaning of the Lanham Act's "definition of use in commerce," which suggests that such use "is not limited to affixing another's mark to one's own goods but also encompasses any use of another's mark to advertise or sell one's own goods and services.".32

In April 2008, the Eleventh Circuit held that a party's use of a competitor's trademarks within the "invisible" meta tags of a website is, in fact, a use in commerce under the plain language of the Lanham Act. When a consumer entered the plaintiff's trademark into the Internet search engine, the search result displayed the defendant's website and a brief description that included the plaintiff's trademarks. The court found such use represented an effort to "promote and advertise. . . products on the Internet," which, "under the plain meaning of the language" of the Lanham Act, "constitutes a use in commerce in connection with the advertising of any goods." 33

The defendant relied upon 1-800 Contacts, a meta tags case in which the Second Circuit held that there was not a use in commerce because the defendant's use was "internal." 34 But the Eleventh Circuit distinguished that case on the grounds that in 1-800 Contacts, the defendant used the plaintiff's website address, not its trademark, and the defendant did not cause the plaintiff's trademark to be displayed to any consumers.

In December 2007, the District of Massachusetts found use in commerce where the defendant, Super Duck Excursions, had purchased the right to link its Internet advertisements on Google to the phrase "Boston duck tours."35 However, that issue was not determinative because the defendant had made efforts to avoid consumer confusion by including a disclaimer on the linked page. Thus, there was a "use" but not confusion.

In another recent case, the Northern District of California held that "the sale of trademarked terms [as keywords] is a use in commerce for the purposes of the Lanham Act" In Google Inc. v. Am. Blind & Wallpaper Factory, Inc., the Internet search provider sought a declaratory judgment that its Adwords advertising program did not infringe American Blind & Wallpaper Factory, Inc.'s (ABWF) marks, "American Blind" and "American Blinds," which ABWF used "in connection with home decorating products and related services."36 In this case, a user who typed the words "America Blind" into the Google search bar would receive a page of links that included websites of companies who had purchased "American Blind" as a keyword. ABWF counterclaimed against Google Inc. and other online search engines for various trademark causes of action.

The district court noted that it was guided by Playboy Enterprises, Inc. v. Netscape Communications Corp.,37 even though the Ninth Circuit did not even address the "use in commerce" requirement. 38 The district court stated that the two cases were distinguishable. Playboy involved the practice of linking Internet keywords to Netscape's unlabeled banner advertisements that were paid for by sponsors, as opposed to keywords that linked to Google's sponsor advertisements.

The district court in Playboy focused on whether the keyword use fell within the likelihood of confusion test, and more specifically, the court concerned itself with whether the plaintiff demonstrated a specific type of "initial interest" confusion.39


Initial interest confusion is customer confusion that creates initial interest in a competitor's product. Although dispelled before an actual sale occurs, initial interest confusion impermissibly capitalizes on the good will associated with a mark and is therefore actionable trademark infringement.


According to Google, the fact that Playboy did not expressly hold that keyword use is a use in commerce and, in fact, did not even address "use in commerce" as an issue, indicated that the Ninth Circuit assumed there was trademark use in commerce. 40 Thus, the court in Google concluded that the sale of marks as keywords is "understood" to be a use in commerce. 41

Other courts finding that the use of another's trademark as an Internet keyword is a use in commerce include the District of New Jersey and the District of Minnesota. 42

Utah's Controversial Statute

Until the spring of 2007, the courts largely determined whether keyword use was a "use in commerce" under the Lanham Act. Then, in a move to create a blanket prohibition of keyword use of registered trademarks unless authorized, Utah's legislature amended its Registration and Protection of Trademarks and Servicemarks Act in 2007 (the Utah Act) 43. The amendments, which became effective on April 30, 2007, provided for state registration of an "electronic registration mark" and prohibited use of such a registered mark as a keyword or trigger to a competitor's website.44 The amendments included the establishment of a searchable mark database where parties could register their electronic marks and search for other registered marks.45 The database was also intended to provide a mechanism for parties to contact each other for permission to use a registered electronic mark. Recognizing a possible conflict with the U.S. Constitution, Utah's legislature expressly provided that its amendments only applied to "registered" electronic marks that are used as keywords or triggers for advertisements delivered in the state of Utah or sold by someone located within Utah.46 The Utah Act improved the favorable climate for plaintiffs in Utah.47

Shortly after the law took effect, however, businesses (including, reportedly, Google) met with Utah legislators to persuade them to repeal the statute, and an editorial in the Salt Lake Tribune apparently called for the same result.48 The Utah Act was amended, effective May 5, 2008, removing the term "electronic registration mark" from the statute and thereby removing keyword advertising claims as a cause of action for infringement under the Utah Act. 49

Conclusion

It has become fairly well settled outside of the Second Circuit that use of a competitor's marks in keyword advertising is indeed a use in commerce. Of course, it remains to be seen whether and how the anticipated opinion of the Second Circuit in Rescuecom will impact that circuit's divergent stance on this issue. If the Second Circuit stays true to form and finds that such use, with nothing more, is not a use in commerce, its split with other courts may ultimately have to be resolved by the United States Supreme Court.

Peter E. Nussbaum is a member of the firm and Nancy A. Del Pizzo is an associate with Wolff & Samson, PC in West Orange, New Jersey. Peter Nussbaum may be reached at (973) 530-2025 or pnussbaum@wolffsamson.com.

ENDNOTES

1. See http://en.wiklpedia.org/wiki/Keyword_advertising.

2. See 15 U.S.C. § 1125.

3. 15 U.S.C. §§ 1114(1)(a), 1125(a).

4. Interview of Steven Lieberman in Patent, Trademark & Copyright (BNA), No. 1843, at 7] (Nov. ]6,2007) (Lieberman pointing to the act's definition of a use in commerce where a mark "is placed . . . on the goods").

5. S & L Vitamins, Inc. v. Australian Gold, Inc., 521 F. Supp. 2d 188,202 (E.D.N.Y. 2007).

6. Fragrancenet.com, Inc. v. Fragrancex.com, Inc., 493 F. Supp. 2d 545,549 (E.D.N.Y. 2007).

7. A "meta tag" is a word or phrase that is embedded in the computer code of a website to describe the contents of the web site; consumers do not see meta tags, but when a consumer types in the word or phrase, the Internet search engine may provide the searcher with a description of the website that has the embedded meta tag. See N. Am. Med. Corp. v. Axiom Worldwide, Inc., 522 F.3d 1211, 1217 n.2 (11th Cir. 2008).

8. Site Pro-1, Inc. v. Better Metal, LLC, 506 F. Supp. 2d 123, 127 (E.D.N.Y. 2007).

9. Merck & Co., Inc. v. Mediplan Health Consulting, Inc., 425 F. Supp. 2d 402,415 (S.D.N.Y. 2006).

10. Rescuecom Corp. v. Google, Inc., 456 F. Supp. 2d 393 (N.D.N.Y. 2006).

11. S & L Vitamins, 521 F. Supp. 2d at 199,201.

12. Id. at 195.

13. Hamzik v. Zale Corp., No. 3:06-cv-1300, 2007 WL 1174863, (N.D.N.Y. April 19, 2007).

14. S & L Vitamins, 521 F. Supp. 2d at 201.

15. Hamzik, 2007 WL 1174863, at *1.

16. Id. at *2.

17. Id. at *1.

18. Id. at *3.

19. Rescuecom Corp., 456 F. Supp. 2d 393 (N.D.N.Y. 2006).

20. Merck &. Co. Inc., 425 F. Supp. 2d 402,415-16 (S.D.N.Y. 2006).

21. Hamzik, 2007 WL 1174863 at *3.

22. Id.

23. Site Pro-1, 506 F. Supp. 2d at 125.

24. Id. at 123-24.

25. 1-800 Contacts, Inc. v. WhenU.com,Inc., 414 F.3d 400, 409, n.ll (2d Cir.), cert. denied, 546 U.S. 1033, 126 S. Ct. 749, 163 L.Ed.2d 573 (2005).

26. Id. at 404.

27. Fragrancenet.com, 493 F. Supp. 2d at 550 ("It would be inconsistent with the reasoning set forth in 1-800 Contacts to conclude that the use of trademarks in keywords and meta tags constitutes Lanham Act 'use' where, as here, defendant does not place the trademark on any product, good, or service, nor is it used in any way that would indicate source or origin.").

28. Rescuecom Corp., 456 F. Supp. 2d at 395, 398, 403 (plaintiff claimed that Google's selling of plaintiffs trademark to competitors as a keyword triggering the appearance of links to the competitor's websites is a use in commerce).

29. See Rescuecom Corp., Docket Sheet, No. 06-4881-cv. Judges Leval, Calabresi, and Wesley heard oral argument on April 3, 2008.

30. Boston Duck Tours, LP v. Super Duck Tours, LLC, 527 F. Supp. 2d 205, 207 (D. Mass. 2007) (emphasis added), rev'd in part, appeal dismissed, on other grounds, 531 F.3d 1 (1st Cir. 2008).

31. Hysitron Inc. v. MTS Sys. Corp., No. 07-01533, 2008 WL 3161969, at *3 (D. Minn. Aug. I, 2008) (noting that the "majority of courts" have held that using a trademark for general advertising through keyword advertising is a use in commerce under the Lanham Act). See e.g., N. Am. Med. Corp., 522 F.3d 1211, 1219 (11th Cir. 2008) (noting that under the plain meaning of the Lanham Act, using trademark as meta tags to promote products on the Internet is a use in commerce).

32. Id. at *3.

33. N. Am. Med. Corp., 522 F.3d 1211,1219 (11th Cir. 2008).

34. Id. at 1219.

35. Boston Duck Tours, 527 F. Supp.2d at 206.

36. Google, Inc. v. Am. Blind & Wallpaper Factory, Inc., No. C03-5340, 2007 WL 1159950, at *6 (N.D. Cal. April 18, 2007).

37. Playboy Enterprises, Inc. v. Netscape Communications Corp., 354 F. 3d 1020 (9th Cir. 2004).

38. Google. 2007 WL 1159950 at *4.

39. Playboy 354 F.3d at 1024-26.

40. Google, 2007 WL 115990, at *5 ("Nothing in the majority's discussion of the relevant facts suggests that it questioned whether the plaintiff had shown that there was a use of its trademark in commerce. . . Judge Berzon does not identify 'use in commerce' as an open front in this area of law or suggest that remains a question for a later date.").

41. Id. at *5-6 (noting that the analysis in Playboy "would have been unnecessary in the absence of actionable trademark use").

42. See Buying for the Home, LLC v. Humble Abode, LLC, 459 F. Supp. 2d 310 (D.N.J. 2006) (finding use in commerce under the Lanham Act because it (1) involved a "commercial transaction that occurred in commerce, trading on the value" of the plaintiff's mark and (2) the "alleged use was both in commerce and in connection with any goods or services in that plaintiffs mark was allegedly used to trigger commercial advertising which included a link to defendants' furniture retailing website. Therefore, not only was the alleged use. . . tied to the promotion of defendants' goods and retail services, but the mark was used to provide a computer user with direct access. (i.e., a link) to defendants' website through which the user could make furniture purchases."); I-800-Jr. Cigar, Inc., 437 F. Supp. 2d 273 (D.N.J. 2006) (finding use in commerce where an Internet search engine (1) solicited bids from plaintiffs competitors for prominence in listings reached by keywords; (2) ranked paid advertisers in the search results list; and (3) using a "Search Term Suggestion Tool" that identifies effective search terms and markets them to plaintiffs competitors); Edina Realty, Inc. v. TheMLSonline. com, No. Civ. 04-4371JRTFLN, 2006 WL 737064, at *3 (D. Minn. March 20, 2006) (noting that use of a mark as a search term is not a "conventional use in commerce," but nevertheless finding a use in commerce based on the "plain meaning of the Lanham Act").

43. S.B. 236 Gen. Sess. (Utah 2007).

44. Id.; Utah Code Ann. §§ 70-3a-103, -203, -302, -304 to -306, -402, -501, -502 (2007).

45. Utah Code Ann. § 70-3a-501 (2007).

46. Utah Prohibits Search Keyword Advertising Triggered by 'Electronic Registration Mark,' Patent, Trademark & Copyright (BNA), No. 1816, at 815-16 (April 27, 2007). The law was purported to apply not only to a party that chooses to use a keyword that is a registered electronic mark but also to the Internet providers that sold keyword advertising. See id.

47. The Tenth Circuit Court of Appeals held that keyword advertising is a use in commerce. See Australian Gold, Inc. v. Hatfield, 436 F.3d 1228 (10th Cir. 2006).

48. See Eric Goldman, Utah Legislators Realizing They Screwed Up By Banning Keyword Advertising, Technology & Marketing Law Blog, April 27, 2007, available at http://blog.ericgoldman.org/ archives/2007 /04/utah_legislator.htm.

49. See Utah Code Ann. § 70-3a-402 (2008).

Published in Intellectual Property Litigation, Volume 20, Number 2, Winter 2009 © 2009 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.