No initial interest confusion in metatag and sponsored listing case

Designer Skin, LLC v. S & L Vitamins, Inc., No. 05-3699, 2008 WL 2116646 (D. Ariz. May 20, 2008)

It’s always a bit nerve wracking to write about decisions when I know that counsel of record is probably going to be reading the post. That’s the situation with the recent Designer Skin v. S & L Vitamins case. Law blogger Ron Coleman (whom I consider a friend though we’ve never met) is defense counsel in the case, and he has been a longtime supporter of Internet Cases with encouragement back when I started in 2005, and with frequent links to here from his blog Likelihood of Confusion.

Ron’s good reputation is in apparent proportion to his lawyering skills, as his client S & L Vitamins was largely victorious in summary judgment proceedings in a trademark infringement matter before the U.S. District Court in Arizona. The case exemplifies a modern issue concerning the use of trademarks on the Internet.

Plaintiff Designer Skin sells indoor tanning products. Designer Skin is pretty selective about who it allows to resell its goods. Defendant S & L Vitamins – a web-based reseller – is not on Designer Skin’s list of permitted resellers. But S & L sells the products anyway. And it gets traffic to its website in part by using Designer Skin’s trademark in metatags, in page HTML, and as a keyword to trigger sponsored search results.

Designer Skin sued S & L asserting a number of causes of action, including trademark infringement. The parties cross moved for summary judgment. One main issue was whether S & L’s conduct resulted in “initial interest confusion” a la Brookfield Comm. Inc. v. West Coast Entertainment Group, 174 F.3d 1036 (9th Cir. 1999). The court ruled in favor of S & L, holding that Designer Skin’s arguments for initial interest confusion failed as a matter of law.

The court ascertained that Designer Skin was arguing initial interest confusion based on (1) S & L’s use of Designer Skin’s marks in metatags, HTML and as keywords, (2) higher placed search results (presumably because of the metatags and use of the mark in HTML), and (3) the appearance of Designer Skin’s marks on S & L’s web pages.

The first argument – said the court – misstated the law. The mere fact that S & L used the marks in this way was not enough for initial interest confusion. Missing was the notion of “bait and switch”. The court emphasized that “[d]eception . . . is essential to a finding of initial interest confusion.” When web users clicked on links to S & L’s pages which indicated Designer Skin products were being sold, they were taken to pages which, not deceivingly, sold Designer Skin products.

The second argument for initial interest confusion failed essentially because it wasn’t plausible. Even if Designer Skin had presented evidence (which the court found it hadn’t) that S & L was showing up higher in search results for “Designer Skin,” only “the naive few” would be deceived. And fooling any less than an appreciable number of users would not be enough for the claim to survive.

As for the third argument, the court found it impossible for initial interest confusion to arise based on what appeared on the site. A searcher could not be tricked into initially visiting a site by the look of the site itself – by that time he or she would already be there.

In short, the court held that because there was no deception on the part of S & L, there could be no initial interest confusion. S & L was using Designer Skin’s marks to truthfully inform searchers what they could find at the S & L site – authentic Designer Skin products.

A look at some keyword cases and a PPC class action suit

Court orders use of “negative keywords”

Orion Bancorp, Inc. v. Orion Residential Finance, LLC, No. 07-1753, 2008 WL 816794 (M.D. Fla., March 25, 2008)

Plaintiff Orion Bancorp, Inc. is a bank operating under the ORION name and registered trademark since 2002. Defendant Orion Residential Finance, LLC provides financial and real estate related services, and used the term “Orion” in interstate advertising and in the domain name “orionresidentialfinance.com” without Orion Bancorp’s authorization or consent.

The court entered an agreed permanent injunction, ordering Orion Residential Finance to refrain from any and all use of the term “Orion”. The defendant was prohibited from purchasing the word “Orion” as a keyword to trigger sponsored advertising. Moreover, it was required to activate “Orion” as a “negative keyword” (specifically preventing Orion Residential Finance’s ads from appearing when one searches using the terms “Orion”).

N.D. Cal.: Competitor’s trademark as keyword causes initial interest confusion

Storus Corp. v. Aroa Marketing Inc., 2008 WL 449835 (N.D. Cal. Feb. 15, 2008).

Plaintiff Storus Corporation (“Storus”) sued Defendants Aroa Marketing, Inc. (“Aroa”) and Skymall, Inc. (“Skymall”) for trademark infringement based on the defendants’ use of Storus’ mark “Smart Money Clip” to trigger sponsored listings. Storus sells its patented Smart Money Clip, and Aroa sold competing products under its Steinhausen mark which were marketed as the “Smart Money Clip”. Aroa tried unsuccessfully to argue that Storus’ mark was a descriptive term not entitled to protection (but offered no evidence of lack of secondary meaning, i.e., it did not prove consumers do not think of Storus when they see the Smart Money Clip mark).

The Court found that Aroa’s use of Storus’ mark in the sponsored ad caused initial interest confusion. In 11 months, the ad was displayed 36,164 times in response to a search for “smart money clip,” resulting in 1,374 clicks on Aroa’s ad. The court found that the marks were identical, were used on the same type of product, and were marketed via the Internet. (Even though Aroa’s mark appeared in the ad, Storus’ mark appeared first, was larger, and was underlined).

11th Circuit: Competitor’s Trademark as Keyword Likely to Cause Confusion

North American Medical Corp. v. Axiom Worldwide, Inc., 2008 WL 918411 (11th Cir. April 7, 2008)

Eric Goldman has a thorough report on his Technology & Marketing Law Blog of a case where the defendant’s use of the plaintiff’s ACCU-SPINA and IDD THERAPY trademarks in metatags constituted use in commerce, and thus trademark infringement where a Google search listed the defendant as the second most relevant organic search result (below the plaintiff). In a footnote, the court did hint that if the defendant’s website included an explicit comparative advertisement, things might have come out differently.

Possible Class Action Suit against Google and PPC Groups

Finally, Sarah Bird reports on SEOmoz.org that a class action trademark and ACPA lawsuit against Google and other domain parking agencies will move ahead. (Goolge’s adsense program contributes to the pay-per-click links on “parked”, i.e., recently acquired, or tasted domain names). The Plaintiff’s are seeking to hold them liable for these PPC links which may offer competing goods. Though for Google’s part, it notes on its FAQ that it is not responsible for the domain names on which its adsense ads appear, it seems disingenuous to suggest that their algorithms are not behind the PPC links that appear. Google’s method for trademark owners to object to sponsored links places the burden for policing this practice on mark owners.

Former band members’ use of service mark is not so Chic

Rogers v. Wright, No. 04-1149, 2008 WL 857761 (S.D.N.Y. March 31, 2008)

The U.S. District Court for the Southern District of New York has issued a permanent injunction restricting the use of the service mark CHIC in connection with musical performances by two former members of the musical group of the same name.

Plaintiff Rogers (founder of the music group Chic) claimed that Defendants Wright and Martin (former Chic singers) infringed his rights in the service mark CHIC for music and vocal entertainment services. Rogers formed the group in 1977 and obtained service mark registrations for the band name in 1982 and 2004.

Chic

Wright and Martin, who previously performed on Chic albums and in live televised performances, had been performing in the U.S. and abroad since 2003. At various times, and without permission, they operated a Web site at www.ladiesofchic.com, and billed themselves as “First Ladies of Chic”, “Chic”, “The Original Ladies of Chic”, “Chic: Live!”, and “Les Chic”. They were billed by one venue as “original artists singing all the original hits.”

The court first found that Rogers had valid rights in the CHIC mark — regardless of whether those rights arose from the 1982 or 2004 registrations or from common law rights. The court then found a likelihood of confusion between Rogers’s mark and Wright and Martin’s use of the same using the 8-factor Polaroid test.

Specifically, the court found: (1) the CHIC mark was “at least moderately strong” in that it had created a tendency in the minds of consumers to associate it with Rogers’s band; (2) the defendants’ uses of the Chic mark (as noted above) were “sufficiently similar” to cause confusion; (3) the parties competed directly in the same market; (4) an analysis under “bridging-the-gap” was not required because of the third factor; (5) there was some evidence of actual confusion; (6) the defendants intended to take advantage of the plaintiff’s reputation and good will in adopting their various uses of his mark; (7) there was little evidence of the quality of defendant’s product; and, (8) similarly, there was little evidence of the sophistication of the relevant consumer group, i.e., concert attendees or promoters. Taking all of these factors together, the court found “little difficulty” in finding Defendants’ use of Plaintiff’s mark was likely to cause confusion.

The court was not persuaded by the defendants’ attempted fair use defense. The defendants had certainly used CHIC as a mark (and not, for example, mere comparative advertising or other descriptive purposes – see, e.g., Playboy Enters., Inc. v. Welles, 279 F.3d 796 (9th Cir. 2002). Moreover, the defendants’ promotional materials used the CHIC mark in a prominent manner. The court was similarly unpersuaded by the defendant’s argument that the Lanham Act did not apply to acts outside of the U.S.

Apple vs. the Big Apple charity over apple-shaped logos

Apple, Inc. is seeing red over New York City’s attempts to register a trademark for green-friendly services, and the dispute challenges one of Apple’s trademark registrations for its ubiquitous logo.

Apple comparison

Apple has filed an Opposition (No. 91/181,984) with the United States Patent and Trademark Office’s Trademark Trial and Appeal Board against NYC & Company, Inc.’s attempts to register the “Infinite Loop Apple” design mark (shown above at left). Apple asserts that use of NYC’s mark would likely cause confusion with Apple’s famous logo (shown at right) especially given the presence of Apple’s flagship Manhattan retail location.

NYC’s application states the mark is to be used for, among other things, promoting “education on environmentally friendly policies and practices of the City of New York” (See Application Nos. 77/179,942 and 77/179,968). Apple claims that confusion would be likely because of the similarities in appearance and commercial impression between the marks, and because certain of the goods and services recited by NYC are identical or highly related to goods and services offered under the Apple mark.

NYC answered the Notice of Opposition and filed a Counterclaim seeking to cancel Apple’s registration for the logo as used in connection with “mugs, dishes, drinking glasses, and wine glasses.” NYC claims that Apple procured the registration through fraud, because it knowingly misrepresented that it was using the mark in connection with those goods on its Declaration of Use and Renewal Application under sections 8 & 9 of the Trademark Act, when it fact no such use was being made. If the Board finds such fraud, Apple faces cancellation of its entire registration for those goods. Fraud has been a recurring issue before the TTAB of late, as evidenced by this recent post from John Welch’s TTABlog.

Apple, of course, denies the allegations of fraud. In any event, if the cancellation is successful, Apple’s most important marks (i.e., for computer hardware) would remain intact.

Time will tell whether Apple’s efforts to protect its mark will bear fruit. The company probably feels even more incentive to keep others from trading on its reputation and goodwill after hearing about this recent study, which found that people who see the Apple logo may feel more creative.

Blackberry and Twitter in a trademark tussle?

In April 2007, Twitter, Inc. filed application no. 77166246 to register the trademark TWITTER with the U.S. Patent and Trademark Office. (Twitter is the ever-more-popular tool that enables “friends, family, and co–workers to communicate and stay connected through the exchange of quick, frequent answers to one simple question: What are you doing?” It’s fun. You should try it if you’re not using it already. And you can start by following me.)

Anyway, in February the application reached the point where it was published for opposition. That means that any other trademark owner out there who feels it would be damaged by the TWITTER mark being registered can oppose the application in the Trademark Office.

On March 14, 2008, Research in Motion (of Blackberry fame) stepped up and requested an extention of time to oppose the TWITTER application. I ran a quick search for registered marks owned by Research in Motion (you can do that yourself here), but didn’t see anything close to “Twitter”. Can anyone think of an unregistered mark that RIM owns that is similar to TWITTER? Or any other reason why RIM would want to oppose this application? Comments are open, as they have been for some time.

1-800-SKI-VAIL found not to infringe VAIL ski resort mark

Vail Associates, Inc. v. Vend-Tel-Co., Ltd., — F.3d —-, 2008 WL 342272, (10th Cir. February 7, 2008)

[Brian Beckham is a contributor to Internet Cases and can be contacted at brian.beckham [at] gmail dot com.]

Vail Associates, owner of the incontestable service mark VAIL (which is used in connection with a wide variety of skiing and resort-related services), sued Vend-Tel-Co, the operator of the “1-800-SKI-VAIL” phone number, for infringement. After trial, the District Court entered judgment in Vend-Tel-Co’s favor, and Vail Associates sought review.

The Court of Appeals for the Tenth Circuit affirmed the lower court’s judgment, holding that use of Vend-Tel-Co’s “1-800-SKI-VAIL” mark (registered in 2001) was not likely to cause confusion with Vail Associates’s VAIL mark (registered in 1989).

Key to the appellate court’s decision was witness testimony from the proceedings. Vail Associates’s vice-president of marketing and sales testified that customers dialing the phone number would mistakenly think they were reaching Vail Associates, but acknowledged “hundreds of uses of the letters V-A-I-L in the names of [other] businesses in the Vail Valley.” As for the descriptive term “ski,” testimony from another witness revealed ownership of no less than 23 vanity phone numbers incorporating that term. Also important was the testimony of a travel agent who fielded calls to the number 1-800-SKI-VAIL. She testified that the typical caller would ask questions of a general nature (e.g., about products, directions, lift prices, ski conditions, etc.).

Vend-Tel-Co’s main witness, trademark attorney Kenneth Germain, testified that in the context of ski resorts, the VAIL mark was a “world renowned” strong mark, but that in the context of goods and services offered by businesses in the Vail area, it was weak (being geographically descriptive). Germain further testified that he did not deduce an intent to infringe (Vend-Tel-Co’s advertising materials promoted area businesses), and that use of the VAIL mark was a necessary, good faith component of the Vend-Tel-Co’s marketing activities.

Viewing the evidence in the light most favorable to the Vail Associates, the Court of Appeals was satisfied that the District Court did not err in finding that consumers perceive the VAIL mark as referring to a particular geographic location, namely, a Colorado skiing destination. It held that Vail Associates failed to prove consumers associate the word “Vail” exclusively with its resort services.

As to the likelihood of confusion factors, the court found none favored Vail Associates. It observed that (1) Vail Associates offered little evidence of actual confusion, and the testimony reflected that consumers recognized Vail as a destination, not a specific service provider, (2) despite some showing of secondary meaning, the VAIL mark was found to be “not particularly strong”, (3) Vail Associates did not prove that in creating the phone number Vend-Tel-Co intended to deceive the public, trade on Vail Associates’s goodwill or reputation, or infringe its mark, (4) the marks were not similar in sight, sound, or meaning, (5) the parties’ services were not similar, but rather “symbiotic”, and were not marketed in a similar manner, or with similar connotations, and (6) consumers exercised great care in purchasing Vail Associates’s services which the court termed “first class accommodations at first class prices” in contrast to dialing a toll-free number.

The dissenting opinion offered that: (1) the marks were confusingly similar (indeed, the additional “1-800-SKI” elements furthered consumer confusion), (2) Vend-Tel-Co intended to trade on the goodwill and reputation of Vail Associates, (3) there was ample testimonial evidence of actual confusion (namely the travel agent’s testimony), (4) the services and their marketing “appeal to exactly the same class of consumers,” (5) despite care exercised by consumers in purchasing ski packages, there was significant, uncured initial interest confusion, and (6) VAIL is an incontestible descriptive mark whose strength was proven by evidence of secondary meaning, and that Vend-Tel-Co did not take VAIL out of the ski resort services context; instead, it emphasized that context with their choice of mark.

NASCAR beat to checkered flag in domain name dispute

[Brian Beckham is a contributor to Internet Cases and can be contacted at brian.beckham [at] gmail dot com.]

Complainant NASCAR filed a complaint under the Uniform Domain Name Dispute Resolution Policy (“UDRP”) against The Racin’ Connection, Inc. over the domain name nascartours.com. In the stock car racing business since 1948, NASCAR is a household name in U.S. motor sports. Its DAYTONA 500 attracted 30 million television viewers in 2007. NASCAR licensed its various marks to over 200 licensees to the tune of USD 2 billion in 2006. An entire industry revolves around providing tickets and packages to NASCAR-sanctioned events. One such entity, The Racin’ Connection, Inc. has provided such tour packages for over 30,000 customers in part through its website at the nascartours.com domain name since 1996.

NASCAR alleged in its complaint that the unlicensed domain name was confusingly similar to its NASCAR mark, that The Racin’ Connection, Inc. had no rights or legitimate interests in the domain name, and that the domain name was registered and was being used in bad faith. NASCAR further asserted that use of its marks in a domain name (as opposed to on a website) was not a fair use, and that such use was intended to “entice…[and] misleadingly divert consumers for [] commercial gain.”

The Racin’ Connection, Inc. argued that the domain name was not confusingly similar to the NASCAR marks, but that its use of the marks was a fair use as part of a bona fide offering of services as a “race package reseller”. It further pointed out that it promoted only NASCAR events and displayed a disclaimer on its website.

Finding the The Racin’ Connection, Inc.’s argument of laches unavailing, the 3-member Panel found that the domain name was confusingly similar to the NASCAR mark. The Panel noted that there is a split in URPD cases regarding whether a bona fide offering of goods or services on a reseller’s (authorized or not) website using a mark in a domain name confers a legitimate interest on the reseller. In this case, the Panel found that The Racin’ Connection, Inc.’s use of the NASCAR mark in its domain name did confer such rights. (The Panel considered several factors from the previous Oki Data case paramount: The Racin’ Connection, Inc. was only offering NASCAR tours; the website disclosed the parties’ relationship; and the respondent did not try to “corner the market” in domain names incorporating the mark). Finally, the Panel found that The Racin’ Connection, Inc.’s sales of NASCAR tours since 1992 and disclaimer on its website coupled with a lack of evidence from NASCAR as to any actual consumer confusion negated a finding of bad faith in its registration or use of the domain name.

Ultimately, despite confusing similarity between the domain name and the NASCAR mark, given the good faith use of the mark in connection with a bona fide offering of services and the rights created thereby, NASCAR was not able to stop the use of its mark in a domain name.

The Full text of the Decision is available at: http://www.wipo.int/amc/en/domains/decisions/html/2007/d2007-1524.html

Alienware goes after “free” computer offer

Alienware Corporation v. Online Gift Rewards, No. 08-1560, S.D.N.Y. (Filed February 14, 2008).

High-performance computer manufacturer Alienware has filed suit against an online marketer alleging trademark infringement, dilution, and other theories of unfair competition. Alienware claims that the defendant has “disseminated mass unsolicited electronic solicitations” and posted Web pages offering “free” Alienware laptops, when in reality, one has to perform some “onerous” tasks to get them.

According to Alienware, after accepting the offer, users must purchase a specified amount of goods from various other sites. And this obligation is not clearly communicated, but is “presented to the consumer, if at all, only after he or she expends significant time and effort in responding to inquiries and navigating the multiple prompts.”

One may be tempted to speculate that the defendant in this case could raise some kind of defense based on fair use of the trademark. (How could you let people know what you’re offering unless you tell them; and giving away actual Alienware computers also seems like it could be protected under the first sale doctrine.)

And Alienware may have anticipated this defense, by alleging that it’s only “Alienware” serving as the source identifier for the offer, and “[t]here is no other recognizable or identifiable indication of source.” The defendant is an entity called “Online Gift Rewards.” Alienware claims that the designation is “likely to be perceived as a generic description of the offering rather than a source indicator.”

[Download the complaint]

Sponsored listing trademark action survives motion to dismiss

T.D.I. Intern., Inc. v. Golf Preservations, Inc., (Slip Op.) 2008 WL 294531 (E.D.Ky. January 31, 2008)

Plaintiffs T.D.I. International and XGD Systems sued their former employee Samson Bailey and his company Golf Preservations for, among other things, violation of the Lanham Act, 15 U.S.C. §1051 et seq. Plaintiffs alleged that defendants’ purchase of plaintiffs’ trademarks to trigger competitive advertising on Google and Yahoo was trademark infringement and unfair competition.

Defendants moved pursuant to Fed. R. Civ. P. 12(b)(6) to dismiss the complaint, but the court denied the motion. It found that under the Twombly standard, plaintiffs had alleged facts sufficient to state a claim to relief that was plausible on its face.

Predictably, defendants had argued that the purchase of plaintiffs’ marks as keywords did not constitute a “use” of the marks as provided in the Lanham Act at 15 U.S.C. § 1127. They relied heavily on Interactive Products Corp. v. a2z Mobile Office Solutions, Inc., 326 F.3d 687, 695 (6th Cir.2003) (a case involving the appearance of a mark in the post-domain path of a URL), and 1-800 Contacts, Inc. v. When U.com, Inc., 414 F.3d 400 (2d Cir.2005) (involving pop-up advertisements triggered by page content and user activities).

Plaintiffs relied on a number of cases to argue that the purchase of keywords was a use as defined in the Lanham Act, and also (correctly) asserted that the scenario of buying keywords to trigger advertising is notably different from use in a post-domain URL (as in Interactive Products) and unseen triggering of pop-up advertisements (as in 1-800 Contacts). Given the split of authority and the corresponding “uncertain state of the law on the specific issue presented in [the] case,” the Court sided with plaintiffs and found that defendants’ arguments were not sufficient to warrant dismissal.

Finding ATLAS COPCO and ATLAS CASPIAN confusingly similar, court awards in rem ACPA relief to unopposed plaintiff

Atlas Copco AB v. Atlascopcoiran.com, No. 07-1208, 2008 WL 149128 (E.D. Va. January 8, 2008)

Unable to hail the overseas registrants of domain names, including atlascaspian.com and atlascopcoiran.com into a U.S. court, plaintiff Atlas Copco AB sought in rem relief against the domain names under 15 U.S.C. §1125(d)(2)(a). After the defendants failed to answer the complaint, Atlas Copco moved for summary judgment, relying on the allegations of its verified complaint.

The court granted the motion and ordered the domain names transferred.

In finding that the defendants had engaged in cyberpiracy, the court looked at the “dominant or salient portions of the marks” at issue – the plaintiff’s mark and the marks comprising the offending domain names.

For you trademark experts out there, query whether you might characterize the following analysis as a bit of a stretch:

The dominant portion of each of the Defendant Domain Names is “ATLAS COPCO” or “ATLAS.” These “dominant” terms are paired with the generic terms “CASPIAN” and “IRAN,” which are generic geographic terms that do not distinguish the Defendant Domain Names from the ATLAS COPCO trademark. An internet user might reasonably assume that the geographic term “CASPIAN” and “IRAN” were added to the ATLAS COPCO trademark by the Plaintiffs to identify its geographic location.

It looks like another motivation for the court’s finding was some of the subterfuge on the sites at the offending domain names. Turns out some of them pointed to “copycat” websites bearing “Atlas Caspian” logos confusingly similar to the plaintiff’s trademark, and linked to phishing sites bearing the actual Atlas Copco mark.

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