A review of the Rescuecom case: AdWords trademark infringement suit dismissed

Plaintiff Rescuecom, a computer services business, filed suit against Google, claiming that the search engine infringed its trademark by suggesting and selling the registered mark RESCUECOM as a keyword to competitors advertising through Google’s AdWords program. Google moved to dismiss for failure to state a claim, arguing that Rescuecom had not adequately alleged that Google’s sale of the keyword and triggering of ads was an actionable trademark use under the Lanham Act, 15 U.S.C. 1051 et seq.

The court agreed with Google and dismissed the case.

The court first looked to the Lanham Act for the elements of a trademark infringement claim. Under the Act, infringement occurs when (1) a defendant uses a plaintiff’s valid and protectible mark in commerce, without the plaintiff’s consent, in connection with the sale or advertising of goods or services, and (2) that use is likely to cause confusion as to the source of those goods or services.

The court observed that the Second Circuit has not decided whether the sale of a trademarked keyword for advertising purposes constitutes trademark infringement. It noted, however, eight recent decisions indicating a split among district courts over the issue of trademark use in the sponsored listing context.

Rescuecom offered four arguments as to why Google’s suggestion and sale of RESCUECOM as a keyword was trademark “use” under the Lanham Act. First, Google was free-riding on the good will associated with the trademark. Second, Google lured searchers away from the Rescuecom website. Third, the keyword’s use by competitors altered search results, causing confusion. Fourth, Google used “Rescuecom” internally as a keyword to trigger competitor’s advertisements.

The court addressed Rescuecom’s good will argument first, and found that Rescuecom’s allegations could not support improper trademark use by Google. Although the allegation of use of the mark “in commerce” could be supported, the court gave a nod to the decisions in 1-800 Contacts v. WhenU, 414 F.3d 400 (2d Cir. 2005) and Merck v. Mediplan Health Consulting, 425 F.Supp.2d 402 (S.D.N.Y. 2006) to hold the subtle point that commercial use is not the same as “use in commerce” for trademark purposes. In the absence of an allegation of an improper trademark use, there could be no violation of the Lanham Act.

In addressing Rescuecom’s next argument – that Google lured searchers away from Rescuecom’s website – the court rejected the faulty premise that a trademark use occurs when a searcher clicks a sponsored link triggered by “Rescuecom” but the user is not led to the Rescuecom site. Critical to the court’s analysis in rejecting this argument was that Rescuecom had not alleged that any of the sponsored links, besides those leading to Rescuecom’s own site, displayed the RESCUECOM mark.

The court also rejected Rescuecom’s next argument, that Google caused confusion via altered search results. Similar to its analysis for the previous argument, the court found that because searchers could still find Rescuecom’s website in the search results, and because none of the sponsored links displayed Rescuecom’s trademark, there was no infringing use by Google.

Rescuecom’s final argument, namely, that Google’s internal use of the mark to trigger ads was infringing also failed. Where Google did not place the RESCUECOM mark on any “goods, containers, displays, or advertisements” and where Google’s “use” of the mark was not visible to the public, there was no cognizable trademark use under the Lanham Act.

Because Rescuecom had not adequately alleged that Google’s actions constituted a trademark “use,” the court dismissed the federal trademark infringement, false designation of origin and dilution claims. The court refused to exercise supplemental jurisdiction over the remaining state law claims.

Rescuecom Corp. v. Google, Inc., 2006 WL 2811711 (N.D.N.Y., Sept. 28, 2006).

Trademark dilution law about to change

Some time in the next few days President Bush is expected to sign the Trademark Dilution Revision Act of 2006. [Full text of the Act] Among other things, the Act essentially overrules a significant portion of the Supreme Court’s 2003 Moseley decision, which held that in order to be successful, a dilution plaintiff must allege and prove actual dilution of its mark. The Act provides that a plaintiff must show a mere likelihood of dilution to sustain a claim.

Inasmuch as lowering the standard to “likelihood of dilution” may assist plaintiffs with part of their case, the Act makes another aspect more difficult. Certain circuits (including the Seventh) currently hold that a plaintiff need only show that its mark is well-known among a defined segment of the population (e.g., Star Trek fans) in order to be famous for trademark dilution purposes. This is known as “niche market fame.” The Act does away with niche market fame by providing that “a mark is famous if it is widely recognized by the general consuming public of the United States as a designation of source of the goods or services of the mark’s owner.”

Hat tip to John Welch for picking up on this legislation.

“Google” as trademark takes a step toward “genericide”

Calvin (as in this Calvin, not this one) said “verbing weirds language.”

Yesterday the publishers of the Merriam-Webster dictionary announced that the word “google” has been added to the English lexicon as a verb, meaning “to use the Google search engine to obtain information . . . on the World Wide Web.” [Covered here on SiliconValley.com.]

Surprisingly, a Google spokesman said that the listing is “appropriate.” Is it? Perhaps Google should be concerned that widespread acceptance of the word “google” as a verb could mean that the word is becoming generic — i.e., is becoming the very name of the service the company provides. Generic terms are not subject to trademark protection.

In the case of America Online, Inc. v. AT & T Corp., 243 F.3d 812 (4th Cir. 2001), the court held that the term “IM” was not subject to trademark protection because, among other things, AOL had used the term as a verb. The court also pointed to books, dictionaries, and glossaries defining “instant message” with the “IM” designation. (The court did not, however, find IM to be generic.)

Other case law also indicates Google shouldn’t think the inclusion is “appropriate.” The Seventh Circuit advises that “[a] serious trademark holder is assiduous in endeavoring to convince dictionary editors, magazine and newspaper editors, journalists and columnists, judges, and other lexicographically influential persons to avoid using his trademark to denote anything other than the trademarked good or service.” Illinois High School Ass’n. v. GTE Vantage, Inc., 99 F.3d 244 (7th Cir. 1996).

One redeeming quality of the definition is that “googling” is limited to using Google and not conducting searches in general. But perhaps Google’s domination of the search market makes it think that when someone talks of “conducting a search” (now a/k/a “googling”), he or she could not possibly be talking about using Yahoo!, MSN, or Ask.com.

Macabre result avoided in mortician domain name case

If a court won’t let you use your own name, you might feel like you’re a mere ghost of your former self. That happened to Ed Kalis of Broward County, Florida. In a recent case, Florida’s court of appeal considered whether a trial court’s order against Kalis, enjoining him from using his own last name in various means of advertising and in the URL for his company’s website, was proper.

The appellate court held that the injunction was overkill.

For many years, Kalis worked for Kalis Funeral Home, which his father started in 1959. The family sold the business in 1994, but the funeral home kept the Kalis name, and Kalis stayed on staff. In 2004, Kalis left and moved 100 yards down the street to start up a new “funeral, burial, cremation and mortuarial business.” The name for the new business was a dead ringer of the old one: Ed Kalis Memorial Services.

So you can see the problem here. The owner of the old funeral home was rightfully concerned that people were going to be confused when they saw two very similar businesses with very similar names just down the street from one another. So they filed suit.

Kalis changed the name of his new business to Edwards Cremation & Funeral Services, but the old funeral home still had a bone to pick. The old funeral home asked the court to stop Ed Kalis from listing himself as the licensed director of his new business on signs, in the Yellow Pages, and in the URL for his website.

The court’s opinion is only two pages, so there’s just a skeleton of analysis. It determined that the lower court had abused its discretion in prohibiting Kalis from using his actual name in connection with advertising and in the URL. That prohibition was overbroad.

So it sounds like the injunction was hardly the death knell for Kalis’s new enterprise.

Ed Kalis Memorial Servs., LLC v. McIntee Holdings, LLC, — So.2d —-, 2006 WL 1627131 (Fla.App. 4 Dist., June 14, 2006).

Court enjoins use of metatags in trademark infringement case

The recent case of Shainin II, LLC v. Allen is a straightforward metatag trademark infringement case. On May 15, 2006, Judge Pechman of the U.S. District Court for the Western District of Washington entered an order enjoining a former employee from using his former employer’s trademarks as metatags in a website promoting competing services.

Nodding to the well-known case of Brookfield Communications, Inc. v. West Coast Entertainment Corp., 174 F.3d 1036 (9th Cir. 1999), the court addressed the possibility of “initial interest confusion” arising from the wrongful diverting of web traffic to the defendant’s site. The court acknowledged, however, that use of another’s trademark as a metatag does not automatically mean trademark infringement. As in Playboy Enters., Inc. v. Welles, 279 F.3d 796 (9th Cir. 2002), sometimes metatag trademark use is permissible “nominative use.”

But in this case, the plaintiffs had raised serious questions going to the merits of their trademark infringement claim. Moreover, the balance of the hardships weighed heavily in favor of the plaintiffs, as defendants would suffer little or no harm in being forced to remove the metatags. In fact, they had already done so by the time of the hearing. Accordingly, an injunction against further use of the trademarks in the metatags was appropriate.

Shainin II, LLC v. Allen, (Slip Op.) 2006 WL 1319405 (May 15, 2006).

Contrary ruling in sponsored link trademark case

The U.S. District Court for the District of Minnesota recently issued a substantive ruling on the issue of whether a company commits trademark infringement by purchasing its competitor’s trademarks as key words to generate sponsored listings on Google and Yahoo!.

In that case (Edina Realty v. TheMLSonline.com) the court held that such conduct constitutes “use in commerce” as defined by the Lanham Act, and ordered that the case proceed to trial on the question of likelihood of confusion (which is the sine qua non of trademark infringement).

On March 30, 2006, the U.S. District Court for the Southern District of New York issued a ruling that is contrary to the Edina Realty case. As usual, Professor Eric Goldman has all the details. This later case is called Merck v. Mediplan Health Consulting.

Simply stated, the point on which the Merck case is directly contrary to the Edina Realty case is on the question of whether purchasing a competitor’s trademark as a keyword constitutes use in commerce. While in Edina Realty the court held that this does constitute use in commerce, the court in Merck agreed with the defendants in holding that purchasing [the term] “ZOCOR” as a keyword on Internet search engines does not constitute trademark use.”

Merck v. Mediplan Health Consulting, (Slip Op.) — F.Supp —, 2006 WL 800756 (S.D. N.Y. March 30, 2006).

Buying competitor’s trademark as AdWords not fair use; infringement case to head to trial

[Thanks to Professor Eric Goldman for notifying me of this case.]

The U.S. District Court for the District of Minnesota has denied summary judgment motions filed by both parties in a trademark infringement case concerning the purchase of sponsored listings on Google and Yahoo!. The court held that the defendant’s practice of purchasing search terms incorporating its competitor’s registered trademark is not protected by the doctrine of fair use. The court also held that the plaintiff had presented enough facts to show that a triable issue existed as to trademark infringement. The case is called Edina Realty, Inc. v. TheMLSonline.com.

Defendant TheMLSonline.com, a real estate brokerage firm, contracted with Google and Yahoo! to purchase several search terms incorporating variations of plaintiff’s registered trademark EDINA REALTY. Accordingly, when Google and Yahoo! users did a search for “Edina Realty,” a link to the defendant’s website appeared as a sponsored link above the link to plaintiff’s website, which appeared in the “natural” search results.

Plaintiff filed a federal lawsuit alleging, among other things, that defendant’s conduct was trademark infringement. Both parties moved for summary judgment on the question of infringement.

In denying both motions, the court considered the following three issues:

(1) Whether defendant’s purchase of key words was “use in commerce” as contemplated by the Lanham Act,

(2) Whether plaintiff presented sufficient evidence of likelihood of confusion to survive summary judgment, and

(3) Whether defendant’s purchase of the search terms was permissible under the doctrine of “nominative fair use.”

On these issues, the court answered, yes, yes, and no.

PURCHASE OF SEARCH TERMS AS “USE IN COMMERCE”

Without lengthy analysis, the court held that the defendant’s purchase of search terms did constitute use of the plaintiff’s mark in commerce. The court noted that although defendant’s use was not “conventional,” the purchase of terms comprising the marks, in order to generate sponsored link advertisements, satisfied the definition of use in commerce as provided in 15 U.S.C. §1127.

The court also relied on the case of Brookfield Communs., Inc. v. W. Coast Entm’t Corp., 174 F.3d 1036 (9th Cir.1999) (finding metatags to constitute use in commerce), to hold that defendant had “used” plaintiff’s mark.

EVIDENCE OF LIKELIHOOD OF CONFUSION

To assess plaintiff’s evidence of likelihood of confusion, the court analyzed six factors as instructed by the case of 3M v. Rauh Rubber, Inc., 130 F.3d 1305 (8th Cir.1997).

Strength of the owner’s mark. In this case there was no dispute that the plaintiff’s mark was descriptive, thus the court considered it “relatively weak” in assessing the evidence of likelihood of confusion.

Similarity between the owner’s mark and the alleged infringer’s mark. There was no dispute that defendant had used words identical to plaintiff’s mark in purchasing the search terms. Accordingly, this factor weighed in favor of the plaintiff.

Degree to which the products compete with each other. The evidence was undisputed that the plaintiff and defendant were in direct competition with one another. This factor also weighed in favor of the plaintiff.

Alleged infringer’s intent to pass off its goods as those of the trademark owner. On this factor, the court held that there was a genuine dispute as to material facts showing that the defendant intended to trade off the plaintiff’s goodwill. The defendant claimed that it had no bad intent, demonstrated by the fact that it had, on various occasions, directed confused customers back to the plaintiff. On the other hand, the plaintiff argued that defendant’s persistence in using the terms EDINA REALTY to generate sponsored links after being warned of potential infringement showed the defendant’s unlawful intent.

Incidents of actual confusion. On this factor as well, the court held that there was a genuine dispute of fact. Plaintiff had brought forth evidence that potential customers had called and e-mailed the defendant, inquiring about plaintiff’s properties. Defendant, in turn, offered what it believed to be legitimate explanations for these calls. Without deciding whether there was enough evidence to show actual confusion, the court concluded that there was enough evidence to raise a triable issue as to the likelihood of confusion.

Degree of purchaser care. The court concluded that there was a genuine issue of fact on the degree of care that the parties’ customers would exercise. Defendant argued that consumers exercise a great deal of care in selecting a broker, because real estate is a long term investment. On the contrary, plaintiff argued that because surfing the web is so easy, consumers do not put a lot of effort into the selection of a broker. Furthermore, plaintiff pointed to a study showing that nearly two thirds of Internet users cannot distinguish between sponsored and “natural” search results. Because of these conflicting views taken by the parties, the court concluded that a triable issue as to the degree of purchaser care remained.

Accordingly, the court denied plaintiff’s motion for summary judgment on the question of infringement, and the case will proceed toward trial.

NOMINATIVE FAIR USE

The court wasted no time in shooting down defendant’s argument that its purchase of plaintiff’s mark as search terms was protected as a nominative fair use. The court applied the test set forth in the recent case of Century 21 Real Estate Corp. v. Lendingtree, Inc., 425 F.3d 211, 222 (3rd Cir. 2005).

The court held that the defendant could have easily described the contents of its website for purposes of generating search results without using the plaintiff’s name. Additionally, the defendant’s use of the plaintiff’s mark in the sponsored results did not reflect the true competitive relationship between the parties. The court believed that the defendant could have done more to prevent an improper inference regarding the relationship.

Edina Realty, Inc. v. TheMLSonline.com, (Slip Op.) 2006 WL 737064 (D. Minn. March 20, 2006).

No relief for prostitution website owner

Court wouldn’t enter injunction where plaintiff had “unclean hands”

Plaintiff First Global Communications operates a website called “World Sex Guide.” In 2000, First Global got a federal trademark registration for the name of its site, to be used in connection with “guides in the field of travel and entertainment.” Defendant Powertools Software was the web developer that First Global hired to build the site.

First Global sued Powertools in federal court in the state of Washington, claiming that Powertools had set up several other websites that were illegally trading on the goodwill associated with the World Sex Guide trademark, and diverting visitors from the site. This act of diverting traffic was especially egregious, First Global claimed, since most of the content on the website consists of “travel reports” submitted by the site’s members. First Global asked the court to enter a preliminary injunction, ordering Powertools to stop diverting traffic and to turn over several domain names.

As it turns out, First Global’s site is a bit more than merely a guide to “travel and entertainment.” In fact, the site consists largely of information about how and where to pick up prostitutes, as well as advice on avoiding law enforcement efforts. Because of its content, the court determined that the website served an illegal purpose.

In reaching this conclusion, the court rejected First Global’s argument that the site’s content does not illegally advance prostitution. It also rejected First Global’s argument under the First Amendment, holding that “speech that aids or abets criminal activity can be prohibited.”

The court determined that entering an injunction “would have the effect of encouraging illegal activity and would serve an unconscionable purpose.” Relying on the equitable maxim that “those who seek equitable relief must come to court with clean hands,” the court refused to enter a preliminary injunction against Powertools.

First Global Communications, Inc. v. Bond et al., 2006 WL 278566 (W.D. Wash., Feb. 3, 2006).

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Mall owner uses Section 43(a) of Lanham Act to successfully challenge domain name registrations

A few days before the public groundbreaking ceremony for the shopping mall that would be known as Provo Towne Centre, Plaintiff Rasmussen, unaffiliated with the mall, registered the domain name provotownecentre.com. Claiming an intent to start an online shopping mall, he also registered the domain names provotownecentre.biz and provotownecentre.net.

In an arbitration proceeding brought by the owner of the Provo Towne Center mall before the World Intellectual Property Organization (“WIPO”) pursuant to the Uniform Domain Name Dispute Resolution Policy, Rasmussen was found to have registered the domain names in bad faith. As an “apparent appeal” of the WIPO decision, Rasmussen filed suit in a Utah federal court against the mall owner, General Growth Properties, Inc.

General Growth filed several counterclaims against Rasmussen, alleging, among other things, violation of Section 43(a) of the Lanham Act, 15 U.S.C. §1125(a). It then moved for summary judgment on that claim. (It is interesting to note that although the case had at its root the use of a domain name, the opinion makes no mention of the Anticybersquatting Consumer Protection Act, another portion of the Lanham Act specifically drafted to address a cybersquatting case like this one.)

The court granted General Growth’s motion for summary judgment, and ordered the domain names transferred.

In its opinion, the court considered two elements to find that no genuine issue of material fact remained in regard to the alleged violation of Section 43(a). First, the court found that although General Growth’s mark “Provo Towne Centre” was merely descriptive of the services that General Growth provided, there was “exhaustive, unrebutted evidence” to show the term had acquired secondary meaning. Thus, it was protectable as a trademark.

Secondly, the court considered whether the use of the domain name would create a likelihood of confusion with General Growth’s “Provo Towne Centre” mark. It found that confusion would likely occur. The court determined that the marks were virtually identical, and that the bad faith intent found by the WIPO panel had been confirmed in the record before the court. It found the similarities between the parties’ “use and manner of marketing the services” was “problematic,” comparing Rasmussen’s intended online shopping mall with General Growth’s establishment of a successful site promoting the Provo Towne Centre mall. The court also found that the lack of sophistication in the affected consumers and the strength of the Provo Towne Centre mark weighed in favor of a finding of likelihood of confusion.

Accordingly, because General Growth had a protectable mark, and because Rasmussen’s use of the domain name would likely cause confusion, the court held that no reasonable jury would find in Rasmussen’s favor under Section 43(a).

Rasmussen v. General Growth Properties, Inc., 2005 WL 3334752 (D. Utah, December 7, 2005).

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