On April 3, in Rescuecom Corp. v. Google Inc., No. 06-4881 (2d Cir. Apr. 3, 2009), the Second Circuit revived a dismissed trademark infringement lawsuit directed at Google’s “Adwords,” a context based advertising program, and Google’s use of an associated “Keyword Suggestion Tool” program. This decision dismantles a significant legal barrier that previous trial court decisions had erected against all such suits. Those barriers were based, in part, on the mistaken basis that algorithm based computer programs using trademarks to determine search engine results could not constitute sufficient “use in commerce” to create a Lanham Act claim. By rejecting this legal barrier, this decision will likely result in additional lawsuits by trademark owners seeking to stop competitors who purchase trademarks as keywords through Google’s “Adwords,” or similarly functioning search engines.
Google’s Adwords and Keywords Suggestions Tool Programs
Google’s Adwords program allow companies to “buy” keywords, including keywords that are a competitor’s trademarks. Google’s Keywords Suggestions Tool program may even suggest to a purchaser other terms, including competitors’ trademarks, that the purchaser may want to consider buying from Google. Thus, what happens in practice is that when an Internet user searches Google using a keyword that also happens to be a trademark, the user may get a Google search result page displaying a link to the trademark holders’ website and an ad and a link for a competitor’s website. That ad and link are sometimes positioned at the top of the page and listed before the trademark owner’s website. As more and more companies have signed up for such programs, the question on many branding, marketing, and advertising professionals’ minds is: Do such programs constitute trademark infringement under the Lanham Act (15 U.S.C. §§ 1051 - 1127)? While that answer is still undecided, as discussed more fully below, the Second Circuit’s decision in Rescuecom v. Google at least allows the claim to overcome a motion to dismiss.
Legal Requirements for a Lanham Act Trademark Infringement Claim
Two of the main elements that a trademark owner must plead and prove in Lanham Act trademark infringement cases are that (1) the alleged infringer “used” the trademark “in commerce” and (2) the “use” caused a “likelihood of consumer confusion.” Before the U.S. Court of Appeals for the Second Circuit’s April 3 decision in Rescuecom, many lower level trial courts had held in other cases, such as 1-800 Contacts v. WhenU.com, that “use” of a trademark in the internal workings of Internet programs did not constitute a “use in commerce.”1 The trial court in Rescuecom Corp. v. Google Inc., relying on these decisions, had concluded that under such circumstances Google could not be subject to a Lanham Act claim.
Rescuecom Sufficiently Alleges “Use in Commerce” Requirement
The Second Circuit rejected the trial court’s conclusion. It held that Google did “use” Rescuecom’s trademark in commerce but rendered no opinion on whether the “use” caused a “likelihood of consumer confusion.” The Second Circuit’s decision in Rescuecom rejected any legal requirement that Google’s “use” must be visible to the Internet searching consumer. It ruled instead that Rescuecom’s complaint adequately alleged that Google indeed “uses” the mark “in commerce” by displaying it—and even suggesting it as a keyword—to potential purchasers of advertisements through the Google Adwords and Keywords Suggestions Tool programs. The fact that an Internet searching consumer never sees Google’s use of the mark was immaterial once the Court found that the complaint had alleged use by Google at the stage of selling its programs to advertisers.2
Likelihood of Confusion Issue Remains Open
The court carefully noted that its decision did not rule on the ultimate merits of Rescuecom’s claims, only that the district court incorrectly dismissed them out of hand as legally insufficient. In particular, it noted that Rescuecom must, in addition to proving “use in commerce,” prove that the challenged activity is likely to confuse consumers, an issue that the court expressly refused to decide at this early stage. When the trial court does eventually get to the “likelihood of confusion” issue, this case will likely depend on what the challenged ad on Google’s search results page portrays, thus preventing the creation of any uniform single rule of law for these types of cases. Thus, future cases will likely turn on their individual facts.
Another significant issue that the Rescuecom decision did not address is whether Google’s programs by themselves violate the Lanham Act, or whether they merely “contribute to” or “induce” infringement committed by the keyword purchasers. Different legal requirements apply depending on whether a defendant is alleged to be a primary or secondary infringer, and this issue is likely to be shaped by discovery and subsequent motion practice as this case progresses.
More Trademark Suits Likely
Although the Second Circuit carefully limited it decision to overruling the District Court’s “no use in commerce” holding, it is likely that even this limited blessing from a respected appeals court will result in more lawsuits—against both Google and the keyword purchasers—by emboldened trademark owners challenging Google’s sale of their trademarks as keywords for context based advertising programs. Other algorithm search engines that “use” trademarks in a similar way are also likely to face the threat of future litigation.