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									Page 18                                                                   The Metropolitan Corporate Counsel                                                                         March 2007


Search Engine Advertising 101
           Paul W. Garrity                                                                       20, 2005), the court relied upon Playboy in      Lanham Act. The court so concluded
                                                                                                 denying Google’s motion to dismiss Amer-         because the purchase of the keyword
  KELLEY DRYE & WARREN LLP                                                                       ican Blind’s trademark infringement coun-        “trad[ed] on the value of [plaintiff’s
                                                                                                 terclaims. The court surmised that “it is not    mark]” and the use of the keyword was
    Search engine advertising, the place-                                                        at all clear that the [Playboy court’s] ulti-    “tied to the promotion of [defendants’
ment of advertising above, around and                                                            mate conclusion that the defendants’             products and services]” and facilitated the
sometimes within the search results pro-                                                         alleged ‘use’ of the plaintiff’s trademarks      sale of defendants’ furniture.17 See also
duced by Internet search engines (such as                                                        was ‘actionable,’ was not based on an            International Profit Assoc., Inc. v. Paisola,
Google, Yahoo! and MSN), is one of the                                                           implicit, preliminary determination of           2006 U.S. Dist LEXIS 82971 (N.D. Ill.,
fastest growing advertising mediums in                                                           actionable trademark ‘use’ in the sense dis-     November 14, 2006) at *9 and n.9 (“defen-
the United States. North American adver-                                                         cussed by [Google].”12                           dants are using terms trademarked by
tisers spent $9.4 billion on search engine                                                           The Tenth Circuit weighed in on the          [plaintiff] as search terms in Google’s
marketing (also called “paid search” or                                                          issue in Australian Gold, Inc. v. Hatfield,       Adwords program in a manner likely to
“keyword search”) in 2006, up 63 percent                                                         436 F.3d 1228 (10th Cir. 2006), in which         cause confusion.”).
over the $5.75 billion spent on search in                                                        the defendant was paying a search engine             Most recently, in J.G. Wentworth,
2005.1 Recent surveys indicate that adver-                                                       for a premium listing guaranteeing that          S.S.C., Ltd. Partnership v. Settlement
tisers are planning to raise search engine                                                       one of defendant’s Web sites would be            Funding LLC, 2007 WL 30115 (E.D. Penn.
advertising by 39 percent in 2007,2 and                                                          among the first three listed if one of the        January 4, 2007), the purchase of trade-
paid search advertising is projected to                                                          plaintiff’s trademarks was used in an Inter-     marks as keywords was again ruled to be a
grow to $18.6 billion by 2011.3 In the com-                                                      net search query. The court clearly found        “use in commerce” under the Lanham Act.
ing year, twenty percent of all advertising                  Paul W. Garrity                     that those purchasing keyword advertising        The court held that “defendant’s participa-
dollars are forecast to be spent in the Inter-                                                   were liable for trademark infringement,          tion in Google’s AdWords program …
net sector.4                                     advertising. Google thus stands alone on
                                                             9
                                                                                                 ruling: “[Defendants’] actions were              constitute[s] trademark use under the Lan-
                                                 the issue. Indeed, until June 2004 (shortly     attempts to divert traffic to Defendants’         ham Act.” 18 In so ruling, the court
How Search Engine Advertising Works              before its initial public offering), Google’s   Web sites... Thus, Defendants used the           expressly considered and rejected defen-
   Advertising appears on search results         policy was that, upon a complaint from a        goodwill associated with Plaintiffs’ trade-      dant’s argument, predicated upon the Sec-
pages through the use of “keywords.”             trademark owner, Google would prevent           marks in such a way that consumers might         ond Circuit’s ruling in 1-800-Contacts,
Keywords are terms or phrases entered by         advertisers from bidding upon third party       be lured to the locations from Plaintiffs’       that keyword-based advertising was not
search engine users as search terms when         trademarks as keywords. Google’s policy         competitors. This is a violation of the Lan-     actionable because the mark at issue was
looking for websites on the Internet. A          on keywords has resulted in much confu-         ham Act.”13                                      not actually displayed anywhere. Though
search engine uses algorithms to process         sion regarding this issue, as well as much          Against this tide of caselaw, in 1-800-      ultimately concluding (with little evidence
the keywords entered and produce a               of the litigation which has followed.           Contacts Inc. v. WhenU.com, Inc., 414            on a motion to dismiss) that confusion was
search-results page that displays links to                                                       F.3d 400 (2d Cir. 2005), a case involving        not likely, the court ruled that “defendant’s
                                                   Search Engine Advertising Litigation
Web sites indexed in the search engine’s                                                         “pop-up advertising” triggered by software       use of plaintiff’s marks to trigger Internet
database that match the keywords entered             With its growth, search engine adver-                                                        advertisements for itself is the type of use
                                                 tising has spawned litigation, as trademark     loaded onto the user’s computer, the Sec-
by the search engine user. Internet search                                                       ond Circuit ruled that some Internet adver-      consistent with the language in the Lan-
engines offer advertisers the opportunity        owners have objected to the sale and use                                                         ham Act … By establishing an opportunity
                                                 of their marks by search engines as key-        tising could be viewed as an “internal use”
to purchase or bid on keywords. When a                                                           of a mark not giving rise to claims under        to reach consumers via alleged purchase
search engine user enters that keyword, the      words (for instance, an Internet user typing                                                     and/or use of a protected trademark, defen-
                                                 “Kodak” into the Google search engine           the Lanham Act. The court in 1-800-Con-
search engine (in addition to delivering                                                         tacts expressly distinguished pop-up             dant has crossed the line from internal use
“organic results” – the common listing dis-      will be presented with an advertisement                                                          to use in commerce under the Lanham
                                                 for Snapfish, an online photo service           advertisements from keyword advertising,
played in order of decreasing relevance of                                                                                                        Act.19
                                                 which competes directly with Kodak). A          however, finding it significant that the
links to Web sites matching the user’s                                                           defendant’s activities did not “divert or                         Conclusion
query) generates links to the advertisers’       precursor to this litigation was Playboy
                                                 Enterprises, Inc. v. Netscape Communica-        misdirect [search engine users] away from            Advertisers today are overwhelmingly
Web sites. These “paid results” appear at                                                        [plaintiff’s] website, or alter in any way
the top of the search results page above the     tions Corp., 354 F.3d 1020 (9th Cir. 2004),                                                      drawn to search engines. When advising
                                                 a “banner advertising” case. In Playboy,        the results a [search engine user] will          clients who are placing advertising on
“organic results” on the page, and are, to                                                       obtain when searching with the [plain-
varying degrees, set apart from the true         Netscape and Excite sold Playboy’s trade-                                                        search engines, the central issue to con-
                                                 marks as keywords to advertisers, result-       tiff’s] trademark.”14 Subsequently, two          sider is the keyword used to generate the
results on the page. The “paid results” are
                                                 ing in banner ads appearing on the search       New York courts, Merck & Co. v. MSD              links to the advertisers’ paid listings.
not identified as advertisements but rather
                                                 results page when an Internet user entered      Technology, L.P., 425 F.Supp.2d 402              Though the Second Circuit appears to take
are labeled, alternatively, as “sponsored
                                                 searches including trademarks such as           (S.D.N.Y. 2006), and Rescuecom Corp. v.          a more liberal approach to Internet adver-
links” (Google and Yahoo!) and “spon-
                                                 PLAYBOY and PLAYMATE. The Ninth                 Google, Inc., No. 5:04-Cv-1055                   tising, clients should be counseled that the
sored sites” (MSN). Notably, studies have
                                                 Circuit, in reversing the district court’s      (NAM/GHL)(N.D.N.Y., September 28,                use of another’s trademark in keyword
demonstrated that over 60 percent of Inter-
                                                 grant of summary judgment in favor of the       2006), have relied upon 1-800 Contacts to        advertising can subject them to a claim of
net searchers are not aware of the distinc-
                                                 defendants, expressly held that there was       rule that keyword advertising is not action-     infringement under the Lanham Act.
tion between paid and unpaid results.5
                                                 “no dispute” that defendants used plain-        able under the Lanham Act. The Merck
  Use Of Trademarks As Keywords By               tiff’s marks in commerce and that the “use      court, it is noted, expressly limited its rul-
           The Search Engines
                                                                                                                                                  1
                                                                                                                                                     State of Search Engine Marketing 2006, Search
                                                 in commerce” requirement of the Lanham          ing to the circumstances presented, in           Engine Marketing Professionals Organization,
    Of the leading three search engines,         Act “sweeps as broadly as possible” to          which the defendants actually sold prod-         December 2006.
over 49 percent of online searches are con-      include infringement claims predicated          ucts bearing plaintiff’s trademark on their      2
                                                                                                                                                     HotTopics: Annual Ad Spending Study 2007 -
                                                                                                 website.15                                       What Publishers Need To Know About Advertisers,
ducted using Google, followed by 24 per-         upon such Internet advertising.10                                                                Outsell Inc. January 19, 2007.
cent of searches on Yahoo! and just under            Courts adjudicating keyword advertis-           Outside of the New York courts apply-        3
                                                                                                                                                     State of Search Engine Marketing 2006, SEMPO.
10 percent of search engine users using          ing disputes since 2004 have relied upon        ing the 1-800-Contacts decision to key-          4
                                                                                                                                                     Annual Ad Spending Study 2007, Outsell Inc.
MSN.6 One of the principal differences           Playboy to rule that the misuse of              word advertising, the use of another’s           5
                                                                                                                                                     Search Engine Users, Pew Internet & American
                                                                                                 trademark in such advertising continues to       Life Project, January 2005
between these search engines is their edi-       another’s trademark in such advertising                                                          6
                                                                                                                                                     Nielsen//NetRatings MegaView Search, July
torial guidelines relating to the use of the     rises to the level of “use in commerce”         be ruled to be actionable under the Lan-         2006.
trademarks of others (such as a competitor       actionable under the Lanham Act. In Gov-        ham Act. In 800-JR Cigar, Inc. v.                7
                                                                                                                                                     See http://advertising.microsoft.com/Home/Arti-
or marketplace leader) by advertisers as         ernment Employees Insurance Co. v.              GoTo.com, Inc., 437 F. Supp.2d 273               cle.aspx?pageid=708&Adv_Articleid=3211.
keywords. Microsoft’s “adCenter” pro-            Google, Inc., 330 F.Supp. 2d 700 (E.D. Va.      (D.N.J. 2006) the District of New Jersey,
                                                                                                                                                  8
                                                                                                                                                     See http://searchmarketing.yahoo.com/legal/
                                                                                                                                                  trademarks.php.
gram does not allow an advertiser to bid         2004), the Eastern District of Virginia         distinguishing 1-800-Contacts, considered        9
                                                                                                                                                     See www.google.com/tm_complaint_adwords.
on as a keyword “any term whose use              rejected Google’s claim that its use of         the search engine’s use of trademarks to         html. Notably, as Google has lost litigation in this
would infringe the trademark of any third        plaintiff’s marks in an internal database to    give prominence in search results to the         area in Europe, Google has different keyword poli-
                                                                                                                                                  cies for trademark rights in the United States and
party.”7 Likewise, Yahoo!’s Search Mar-          trigger the delivery of advertising with        highest bidder. “Such use,” the court            trademark rights outside of the United States. Out-
keting prohibits the use of keywords             search results did not constitute “use in       observed, “is qualitatively different from       side of the United States, Google will not permit an
which “violate the trademark rights of oth-                                                      the pop-up advertising context, where the        advertiser to use another’s trademarked term as a
                                                 commerce” of those marks under the Lan-                                                          keyword.
ers.”8 Google, however, in its “AdWords”         ham Act. The court ruled that “when             use of trademarks in internal computer           10
                                                                                                                                                     354 F.3d at 1024.
program, allows advertisers to bid on and        defendants sell the right to link advertising   coding is neither communicated to the            11
                                                                                                                                                     330 F.Supp. 2d at 704.
use other’s trademarks to produce their          to the plaintiff’s trademarks, defendants       public nor for sale to the highest bidder.”16    12
                                                                                                                                                     2005 WL 832398 at *6.
                                                 are using the trademarks in commerce in a       In Buying For The Home LLC v. Humble             13
                                                                                                                                                     436 F.3d at 1239.
Paul W. Garrity is a Partner in the Intel-       way that may imply that defendants have         Abode LLC, 2006 U.S. Dist. LEXIS 76371
                                                                                                                                                  14
                                                                                                                                                     414 F.3d at 410.
                                                                                                                                                  15
                                                                                                                                                     425 F.Supp.2d 416.
lectual Property and Technology Group at         permission from the trademark holder to         (D.N.J. Oct. 20, 2006) the court likewise        16
                                                                                                                                                     437 F. Supp.2d at 285.
Kelley Drye & Warren LLP. Kelley Drye            do so.”11 Likewise, in Google, Inc. v.          found that the defendants’ purchase of           17
                                                                                                                                                     2006 U.S. Dist. LEXIS 76371, at *26-27.
is counsel to American Blind in the case         American Blind and Wallpaper Factory,           keywords comprising plaintiff’s mark was         18
                                                                                                                                                     2007 WL 30115 at *11.
against Google discussed in this article.        Inc., 2005 WL 832398 (N.D. Cal. March           actionable “use in commerce” under the           19
                                                                                                                                                     Id.


                                   Please email the author at pgarrity@kelleydrye.com with questions about this article.

								
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