Can I Use My Competitor’s Trademark as a Keyword for My Website Advertising?

So, you may have a website and you want to drive traffic – potential customers – to your site. One of the ways that you do that is by designating “keywords”. These are descriptive words that are associated with your website. When a potential customer enters words into a search engine, perhaps looking for a local florist by way of example, various search engines (e.g. Yahoo and Google) use proprietary software algorithms that compare the customer’s search word query with a database of keywords associated with websites. The search engine returns links to internet websites that might match the search engine user’s interests. The resulting links are sorted by relevance, hopefully pointing the user to a great, local florist.

Your company may also have a trademark (or service mark). This is a word or group of words that is associated with your particular business. The trademark informs the customer about the “source” of the goods/services. So, when you see “Intel®” on a computer chip, you know where it came from and you may develop certain expectations regarding the desirability/quality of those goods. Trademarks protect the consumer from confusion about who they are doing business with. These designations of source are legally protected and a trademark owner can request treble damages from a party misappropriating their trademark. Under the Lanham Act, there is liability for unpermitted “use in commerce” of another’s mark which is “likely to cause confusion, or to cause mistake, or to deceive as to the affiliation… or as to the origin, sponsorship or approval of his or her goods [or] services… by another person.”

But what about using someone else’s trademark as one of your keywords? When a trademark is entered into a search engine as a search term, the results returned should provide a link to the webpage maintained by the trademark owner although it may also provide a host of other links to site’s that the search engine’s search algorithms determine to be relevant to the search term. Misappropriation under the Lanham Act requires use in “commerce”. There has been a question of whether keywords that are hidden to the customer are really “use in commerce”. After all, if you search for Ford and the computer also shows you links related to Chevy, isn’t that just showing the potential customer options? Is that really creating “confusion” regarding the source of goods? Isn’t that just like “product placement” where generics are shown on the shelf next to the brand names? Trademark holders have had an issue with using their trademark to trigger a link to a competing company’s site, but these questions have not been answered with clarity by the courts.

On April 3, 2009, the United States Court of Appeals for the Second Circuit issued an opinion in Rescuecom v. Google discussing these issues and holding that use of a keyword can be a “use in commerce” under the Lanham Act. This is a case coming out of the Northern District Court of New York where Rescuecom filed a lawsuit against Google, Inc. for trademark infringement, false designation of origin, and dilution under the Lanham Act (15 USC 1114 & 1125). The lawsuit alleged that Google’s recommendation and sale of Rescuecom’s trademark to Google advertisers as a keyword triggered the appearance of the competitor’s advertisements and links in a manner likely to cause confusion to the consumers. The District Court (i.e. here the lower court) dismissed Rescuecom’s lawsuit for failure to state a claim for relief because Google did not use Rescuecom’s trademark “in commerce” within the meaning of the Lanham Act.  Rescuecom appealed this decision to the Second Circuit Court of Appeal, which vacated the dismissal and remanded (sent back) the lawsuit to the District Court.

An additional irritant to trademark holders mentioned in this case is the fact that “sponsored” search links (i.e. where the search engine site gets paid for creating “clicks” to the sponsored site) are often shown at the top of the search results. On many search engines, these sponsored links will appear in a different color but do appear prior to the actual search results that appear in order of relevance to the search terms. Trademark holders argue that this further “dilutes” the value of their trademark. They argue that some potential customers may be confused that the first links are the most desirable links even though these are paid sponsor links rather than unpaid most-relevant results. Also, in the Rescuecom case, Google used a program that suggests keywords to people using Google’s AdWords program to drive traffic to their websites. This keyword suggestion tool was making the suggestion that competitor’s trade names be used as keywords. In the litigation, Rescuecom suggested that this would potentially divert customers to competitor’s websites by using Rescuecom’s trademarked name as a keyword to trigger competitor’s ads, potentially causing confusion to and misdirection of search engine users.

The District Court explained its dismissal of the case by indicating that even if Rescuecom were able to prove that the trademark-keywords were deceptive to searchers, Google’s use of the trademarks as keywords was still not a “use in commerce” because the keywords were never actually seen on the computer screen of the searcher. The District Court based that decision on its interpretation of 1-800 Contacts, Inc. v. WhenU.com. Inc. (2d Cir. 2005) [“1-800 Case”]. The 1-800 Case was about software that created pop-up ads. In deciding the Rescuecom case, the appeals court distinguished the 1-800 Case from Rescuecom’s case in two ways: (1) the 1-800 Case involved triggering pop-ups through typing in a web address, not a trademark and (2) the defendant’s pop-up software was not a “use in commerce” because the pop-ups were triggered by ad categories and not particular keywords.

The appeals court offered a different outlook on the Rescuecom case. The appeals court noted that various other District Court cases have concluded that including a trademark within an internal computer directory (i.e. within metadata) is not trademark use as contemplated by the Lanham Act because the usage is only internal to the software and is never communicated to the user/public. In Rescuecom, however, Google actually suggested using trademarks as keywords and so those suggestions did appear to AdWords customers. Further, the appeal court noted that the 1-800-Case “did not imply that use of a trademark in a software program’s internal directory precludes a finding of trademark use. Rather, influenced by the fact that the [1-800 Case] defendant was not using the plaintiff’s trademark at all, much less using it as the basis of a commercial transaction, the court asserted that the particular use before it did not constitute a use in commerce.”

See 1-800 Case, 414 F.3d at 409-12. In contrast, the court noted, that “What Google places on the searcher’s screen is more than simply an advertisement. It is also a link to the advertiser’s website, so that in response to such an ad, if the searcher clicks on the link, he will open the advertiser’s website, which offers not only additional information about the advertiser, but also perhaps the option to purchase the goods and services of the advertiser over the internet.”

What does all this mean for you? The yellow caution flag is up. While your keywords remain hidden and may not constitute “use in commerce”, there is a trend toward courts recognizing trademark owner’s rights relating to keywords. The courts are still not completely clear on what is okay to do and what is not, but if you want to play it safe, don’t use your competitor’s trademarks as keywords for your website advertising.

Disclaimers: This information is provided as general information regarding an emerging legal question for discussion and does not constitute legal advice concerning your specific situation or create any attorney-client relationship with the law offices of Cathy Cowin. Further, the law offices of Cathy Cowin is licensed in the state of California and does not purport to offer advice outside of the scope of its license. The law offices of Cathy Cowin does not undertake any responsibility to update this information or guarantee that it remains current law. Consult with legal counsel regarding your particular facts and circumstances.

Copyright 2009 Cathleen A. Cowin, Esq.

Cathy Cowin practices law in Fresno, California and is a member of the LawGuru Attorney Network.

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