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 firstname.lastname@example.org with questions about this article.
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