• USCA Second Circuit, April 3, 2009

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Second Circuit holds that Google’s recommendation and sale of trademarks as search terms in its AdWords program and Keyword Suggestion Tool constitute a “use in commerce” for purposes of the Lanham Act and vacates district court’s dismissal of plaintiff’s trademark infringement claim

The Second Circuit vacated the district court’s dismissal of plaintiff’s Lanham Act claims arising out of Google’s recommendation and sale of plaintiff’s trademark as search terms or keywords.

Plaintiff, a computer repair company, filed suit against Google for trademark infringement, false designation of origin and dilution under the Lanham Act. The issue before the court was whether Google’s AdWords program and Keyword Suggestion Tool constitute a “use in commerce,” a key element for liability under the Lanham Act. Google’s AdWords program allows advertisers to purchase terms (i.e., keywords) that will trigger the display of the advertiser’s ad (in the form of a link) on the search engine’s results pages. These paid-for ads in the form of links appear at the top of the search results page or along the right margin and are labeled “Sponsored Links.” Google’s Keyword Suggestion Tool is a program that recommends keywords for an advertiser to purchase. Google allows advertisers to purchase keywords that are trademarks, including trademarks owned by competitors.

Rescuecom alleged that its competitors purchased its trademark as a keyword using Google’s AdWords program and Keyword Suggestion Tool, and that consumers were confused when they entered Rescuecom’s trademark as a search term and saw ads for Rescuecom’s competitors at the top of the search results page.

The Lanham Act provides, in part, that “a mark shall be deemed to be in use in commerce . . . (2) on services when it is used or displayed in the sale or advertising of services and the services are rendered in commerce.” 15 U.S.C. § 1127.

The district court dismissed plaintiff’s claims for failure to state a claim, holding that Google’s use of Rescuecom’s trademark was not a “use in commerce” under the Lanham Act. The district court relied on 1-800 Contacts, Inc. v. WhenU.com, Inc., 414 F.3d 400 (2d Cir. 2005), a Second Circuit decision involving pop-up ads triggered by keywords in which the Second Circuit held that WhenU.com’s use of plaintiff’s trademark was not a “use in commerce.”

In this case, the Second Circuit distinguished WhenU.com’s use of trademarks from Google’s use of trademarks: WhenU.com’s software program displayed pop-up ads in response to the website address entered by a user, not a trademark, and WhenU.com’s software program did not suggest keywords that were trademarks – instead, the program sorted search terms into categories and then displayed pop-up ads that related to a specific category.

According to the Second Circuit, the present case contrasts sharply with the 1-800 decision. “First, in contrast to 1-800, where we emphasized that the defendant made no use whatsoever of the plaintiff’s trademark, here what Google is recommending and selling to its advertisers is Rescuecom’s trademark. Second, in contrast with the facts of 1-800 where the defendant did not ‘use or display,’ much less sell, trademarks as search terms to its advertisers, here Google displays, offers, and sells Rescuecom’s mark to Google’s advertising customers when selling its advertising services. In addition, Google encourages the purchase of Rescuecom’s mark through its Keyword Suggestion Tool. Google’s utilization of Rescuecom’s mark fits literally within the terms specified by 15 U.S.C. § 1127.”

The court stated that it did not know whether Rescuecom would be able to show a likelihood of confusion, but it remanded the case back to the district court for further proceedings. The court also attached a lengthy Appendix to its opinion that details the pertinent history of the Lanham Act and the meaning of “use in commerce.”