In Rescuecom Corp v Google Inc  (U.S. Court of Appeals for the Second Circuit), the U.S. Court of Appeals for the Second Circuit overruled a district court decision that Google’s sale of third party trade marks as keywords does not amount to use in commerce for the purposes of trade mark infringement under the Lanham Act.
In addition to displaying a list of links to websites in response to users’ search terms, Google responds to a search request by showing context based advertising. An advertiser’s purchase of a particular term causes the advertiser’s ad to be displayed whenever a purchased term is searched. Controversially, Google’s Keyword Suggestion Tool may suggest to an advertiser that it also purchase a competitor’s trade mark.
Rescuecom sued Google for trade mark infringement, false designation of origin and dilution under the Lanham Act, 15 U.S.C. Sections 1114 and 1125. Rescuecom alleged that the recommendation and sale of its mark to advertisers so as to trigger their advertisements and links misleads the user to believe that the ads that appear on the screen are in fact part of the relevance-based search results.
DISTRICT COURT DECISION
The U.S. District Court dismissed Rescuecom’s action on the grounds that Google did not use Rescuecom’s trade mark in commerce within the meaning of the Lanham Act. The Court read 1-800 Contacts Inc v WhenU.com Inc  414 F.3d 400 (2d Cir.19) to compel the conclusion that this was an internal use and therefore could not be a “use in commerce” under the Act.
COURT OF APPEAL’S DECISION
The Court of Appeals held that the district court misinterpreted the ruling in 1-800. It rejected Google’s submission that 1-800 suggested that the inclusion of a trade mark in an internal computer directory cannot constitute trade mark use. Google’s recommendation and sale of Rescuecom’s mark to its advertising customers were not internal uses. Furthermore, 1- 800 did not imply that use of a trade mark in a software program’s internal directory precluded a finding of trade mark use. The Court also rejected Google’s argument that its use of RESCUECOM was no different from that of a retail vendor who uses “product placement” to allow one trader to benefit from a competitors’ name recognition.
This latest U.S. case doesn’t suggest that confusion between sponsored links and search results is out of the question but appears to refocus the debate on the less clearly delineated sponsored links at the top of the research results list.