On February 13, 2015, Yelp, Inc. filed a lawsuit in the Northern District of California against three companies offering to “game” Yelp’s review system by creating and posting bogus positive reviews on Yelp’s website. Among other things, Yelp alleges that these companies are infringing Yelp’s trademarks by using them to promote fake review services. This claim illustrates a tension in the trademark law between what constitutes fair use and what constitutes infringement.
Under a leading Ninth Circuit fair use opinion, New Kids on the Block v. News Am. Publishers, Inc., a company may use a trademark it does not own to refer to the trademark owner or its service where three conditions are met:
The service is not easily identified without the use of the mark; The user employs only so much of the mark as is necessary to identify the service; and The user does nothing to suggest sponsorship by or affiliation with the mark holder.
The Ninth Circuit has referred to these sorts of uses as “nominative fair use.”
As a practical matter, nominative fair use arises in numerous common situations, including where a news entity refers to a service or product by its trademark -- as was the case in New Kids -- or where a competitor identifies a competing product as a part of a comparative advertisement. Indeed, such use of a competitor’s mark is promoted by the Federal Trade Commission.
An analytically similar rule allows manufacturers of replacement parts or compatible products and services to identify their product or services’ compatibility by reference to a third party’s trademark. As is the case with nominative fair use, however, any such compatibility claim must be sure to avoid the suggestion the compatible product or service is sponsored or approved by the mark holder.
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Yelp alleges that the actions of the fake review companies go well beyond what is allowed by these trademark doctrines. Yelp’s complaint alleges that defendants’ advertisements and social media pages include Yelp’s word and design marks in prominent locations, creating the likelihood that consumers will be confused as to Yelp’s affiliation with these fake review companies. Yelp also alleges evidence of actual consumer confusion --in this case, Yelp customers calling Yelp to complain about the fake review companies’ advertisements.
As of this writing, the case has been assigned to Magistrate Judge Paul Singh Grewal.