The extent to which trademarks can be used for keyword advertising was a hot topic in the summer of 2007. State regulation of keyword advertising emerged; one high profile lawsuit in this area fizzled just as another was being filed.

In June, amendments to the Utah state trademark statute became effective that established “a new type of mark, called an electronic registration mark, that may not be used to trigger advertising for a competitor.” S.B. 236 Trademark Protection Act (2007). Several commentators have questioned whether Utah’s new statute is constitutional. A legislative review note from Utah’s own Office of Legislative Research and General Counsel, dated February 14, 2007, stated, “[T]his legislation has a high probability of being held to be unconstitutional.” Internet commentators have also been blunt in stating that the law represents bad policy. In particular, the law’s impact on comparative advertising, generally considered to be a social benefit, has been the target of many commentators’ criticism. Since becoming effective on June 30, there has been no known enforcement of the law and no legal challenges have been reported as of the date of this writing. However, it does seem highly likely that sometime in the near future the policy underlying this law will be put to a test in court.

Separately, a high profile lawsuit against Google about whether current trademark law allows use of trademarked words as keywords was dismissed in early September via a settlement agreement, with Google reportedly neither making any payment nor altering its trademark policies. Headlines following the agreement characterized such lawsuits as a “sucker’s bet.”

At issue in the case was Google’s “AdWords” program, which allows advertisers to pay to have their ads appear as “Sponsored Links” when users search for certain keywords, which can be generic or trademarked terms. This practice by search engines is commonly known as “keyword advertising.” This case began in 2004, when American Blind & Wallpaper Factory objected that competitors’ ads popped up as “Sponsored Links” when a user searched for “American Blind,” one of its trademarks, in Google’s search engine. ABWF sued Google, arguing that the “AdWords” program constituted trademark infringement. To prove trademark infringement, ABWF had to show that it has a valid and legally protectable mark, and that Google used the mark in commerce, “in connection with the sale, offering for sale, distribution, or advertising” of goods/services and in a way likely to confuse consumers.

Google filed a motion for summary judgment, which the court granted in part. The court granted summary judgment against ABWF as to some of its marks, dismissed ABWF’s trademark dilution claims, held that use of trademarks in a keyword advertising context can constitute a “use in commerce,” and found that there were issues of fact surrounding likelihood of confusion. Google, Inc. v. American Blind & Wallpaper Factory, Inc., 2007 U.S. Dist. LEXIS 32450 (N.D. Cal. April 18, 2007).

Shortly before the settlement in the Google v. ABWF case was announced, American Airlines filed an action against Google based on keyword advertising using American Airlines trademarks. Thus, the development of this area of law is likely to continue in coming months.