In an unusually crafted opinion, the Second Circuit on April 3 held that Google Inc.'s ("Google") recommendation and sale of Rescuecom Corp.'s ("Rescuecom") trademark to competing advertisers constituted a "use in commerce" sufficient to survive a motion to dismiss under the Lanham Act.1 The Rescuecom opinion is unusual because it includes a lengthy appendix, which explains in detail the different ways courts can statutorily interpret the term "use in commerce," and concludes by directly stating, "[i]t would be helpful for Congress to study and clear up this ambiguity."2
The underlying issue in Rescuecom is what one court calls "infringement by search engine," or whether the use or sale of keywords to competitors by a search engine can constitute trademark infringement.3 To state a Lanham Act claim of infringement, a plaintiff must allege that its mark was "use[d] in commerce" by the defendant.4 In the past 10 years, courts have developed two distinct approaches to "use" in the online environment, and courts are now split over how to define "use in commerce" as it relates to keyword advertising.
1. Keyword Advertising Sales Are Now a "Use In Commerce" in the Second Circuit.
With the Rescuecom decision, the Second Circuit reversed its position with regard to "use in commerce." In 1-800 Contacts, Inc. v. WhenU.com, Inc., ("1-800") the court found no "use in commerce" where the defendant's software generated pop-up ads based on user-entered search terms.5 In Rescuecom, the court distinguished 1-800 and limited the 1-800 holding to this: use of a Web address that is not a registered trademark, where the plaintiff's trademark is not displayed to consumers, is not "use in commerce" under the Lanham Act.6
This distinction cleared the way for the court to find that Google's use of Rescuecom's registered trademark to sell its keyword search product was "use in commerce." Rescuecom sued Google, claiming trademark misuse. Google provides context-based advertising using at least two related tools: AdWords and Keyword Suggestion Tool.7 AdWords allows advertisers to purchase terms or keywords from Google that place the advertiser's ad in a link on the screen when a user searches the purchased term or keyword.8 Keyword Suggestion Tool recommends keywords to advertisers for purchase.9 The suggested keywords in both of these programs allegedly included registered trademarks.10 In its motion to dismiss, Google asserted that its "inclusion of a trademark in an internal computer directory" was not "use in commerce" under the Lanham Act.11
The Second Circuit was careful to limit its holding in Rescuecom to this: assuming Rescuecom's allegations were true and Google used Rescuecom's registered trademark to recommend and sell AdWords to competing businesses, Google's actions constituted a "use in commerce" of Rescuecom's trademark sufficient to state a Lanham Act claim. Google's conduct here differed from the non-use in 1-800 because, unlike 1-800, Google used the defendant's registered trademark and not just a Web address, and Google, in effect, sold the use of the mark to third-party advertisers.12 The court held that the "sale" of the mark fit within the plain meaning of "use in commerce" under 15 U.S.C. § 1127.
2. The Rescuecom Appendix.
The plain meaning of "use in commerce," however, is not so plain. The appendix addresses the tension between two conflicting Lanham Act sections: 15 U.S.C. § 1127 and 15 U.S.C. § 1125(a).13 In the appendix, the court argues that Congress intended a broad definition of "use in commerce" in 15 U.S.C. § 1127 to apply to bad faith conduct like the infringement proscribed by § 1125(a).14 The court considered and rejected the more restrictive construction, which required a bona fide use.15 In the appendix, the court explored in detail the historical evolution and legislative intent behind the Lanham Act sections and found support for its statutory construction argument.16 However, the court arrived at the conclusion that neither of the two possible statutory constructions of "use in commerce" was "altogether satisfactory."17
3. What's Next?
The appendix may have been an attempt to forestall en banc review or a successful petition for a writ of certiorari by Google. There remains a split in the circuits (see § 4 below). The next move may be up to Congress.
4. Other Opinions Regarding "Use In Commerce":
A. Courts Finding "Use In Commerce":
Boston Duck Tours, LP v. Super Duck Tours, LLC, 527 F. Supp. 2d 205, 207 (D. Mass. 2007) (finding a "use in commerce" where the defendant purchased the plaintiff's trademark as a ‘sponsored link' from Google), rev'd in part on other grounds, 531 F.3d 1 (1st Cir. 2008).
Hearts On Fire Co., LLC, v. Blue Nile, Inc., No. 08cv11053, 2009 WL 794482 (D. Mass. March 27, 2009) (finding "use in commerce" where the defendant purchased the plaintiff's trademark as a keyword).
800-JR Cigar, Inc., v. GoTo.com, Inc., 437 F. Supp. 2d 273, 284-85 (D. N.J. 2006) (finding a "use in commerce" where the defendant's search engine accepted bids for the plaintiff's trademark keyword from the plaintiff's competitors, ranked paid keywords above other search results, and suggested keyword terms including the plaintiff's trademarks to the plaintiff's competitors).
Buying For The Home, LLC v. Humble Abode, LLC, 459 F. Supp. 2d 310, 323 (D. N.J. 2006) (finding "use in commerce" for keyword purchase).
GEICO v. Google, Inc., 330 F. Supp. 2d 700 (E.D. Va. 2004) (finding "use in commerce" where the defendant allowed advertisers to bid on trademarks as search terms and to pay for advertising linked to trademarks).
Edina Realty, Inc. v. TheMLSonline.com, Civ. 04-4371JRTFLN, 2006 WL 737064 (D. Minn. March 20, 2006) (finding "use in commerce" where suit was brought against purchaser of keyword term that was also registered trademark).
Google v. American Blind & Wallpaper Factory, Inc., No. 03-05340, 2005 WL 832398 (N.D. Cal. Mar. 30, 2005) (finding "use in commerce" where Google sold trademark via AdWords, but the court noted the unsettled state of the law with respect to actionable "use" of a trademark in the search engine context).
Soilworks, LLC v. Midwest Indus. Supply, Inc., 575 F. Supp. 2d 1118, 1131 (D. Ariz., 2008) (finding "use in commerce" where the company purchased a keyword consisting of a competitor's trademark from Google).
B. Courts Finding No "Use In Commerce"
1-800 Contacts, Inc. v. WhenU.com, Inc., 414 F.3d 400 (2d Cir. 2005) (see text, above).
Merck & Co. v. Mediplan Health Consulting, 425 F. Supp. 2d 402, 415-16 (S.D.N.Y. 2006) (no "use in commerce" where the defendant was the purchaser of the plaintiff's registered trademark keyword term; arguably this case and 1-800 have been superseded by Rescuecom).
U-Haul Int'l v. WhenU.com, Inc., 279 F. Supp. 2d 723 (E.D. Va. 2003) (finding no "use in commerce" for pop-up software).
Wells Fargo & Co. v. WhenU.com, Inc., 293 F. Supp. 2d 734 (E.D. Mich. 2003) (finding no "use in commerce" for pop-up software).