On April 3, 2009, the Second Circuit decided Rescuecom Corp. v. Google Inc., 2009 WL 875447, breathing new life into claims for trademark infringement based on a search engine's sale of trademarks as advertising keywords. Rescuecom is important for two reasons. First, it highlights that it is possible for companies to mount claims against Google and other search engines for the sale of keywords corresponding to their trademarks, in addition to suing the purchasers of those keywords. Second, the case is an important step in clarifying the statutory confusion over what constitutes "use" of a trademark for purposes of infringement.

Rescuecom complained about two Google advertising programs: AdWords (allowing competitors to purchase trademarks as keywords) and the Keyword Suggestion Tool (suggesting potential keywords including brand names and marks). Rescuecom claimed Google sold the trademark "RESCUECOM" as a keyword to competitors, generating search results including "sponsored links" to the competitors' ads that caused a likelihood of confusion or mistake in violation of the Lanham Act.

The district court dismissed on the grounds that use of a mark as a keyword is not a "trademark use" under 1-800 Contacts, Inc. v. WhenU.com, Inc., 414 F.3d 400 (2d Cir. 2005) because the competitors' ads did not actually display the RESCUECOM mark. In that case, the Second Circuit seemingly took a strict stance that a trademark plaintiff must show "use" as defined in Section 45 of the Lanham Act, which requires placement of the mark on the actual goods, containers, etc., or use or display of the mark in the sale or advertising of services. Indeed, the 1-800 Contacts court stated that this was a threshold requirement before even considering evidence of likely confusion. Many read 1-800 Contacts as creating a new element in any claim of trademark infringement.

The widely held expectation was that the Second Circuit in Rescuecom would build on the "use" requirement, making it more difficult for trademark owners to bring claims of infringement. However, in what may signal either a deeply divided court or a change in its thinking on the issue, the Second Circuit reversed the lower court holding and concluded that Rescuecom's allegations did, indeed, state a claim.

The Second Circuit stated that Google, along with district courts in the Southern and Eastern Districts, "over-read" 1-800 Contacts as suggesting that using a trademark in an internal computer directory cannot constitute actionable use. In Rescuecom, Google's conduct was not limited to internal uses - Google actively traded in keywords, making suggestions based on relevance and offering keywords in exchange for "per click" fees. In contrast, 1-800 Contacts involved software that used an unpublished directory of terms to cause pop-up ads to appear randomly when words in the same category, such as a web address, were entered. Advertisers could not choose to have their ads appear in response to a particular word. While this conduct fell outside the statutory definition of "use in commerce," Google's conduct fell within it, because Google displayed, offered, and sold the RESCUECOM mark when selling its advertising services. Distinguishing 1-800 Contacts, where the web address at issue was not itself claimed as a trademark, the Rescuecom court made clear that internal uses of trademarks in a search engine in ways that cause confusion or deception are not insulated from liability.

In reaching this result, the Second Circuit noted the statutory confusion over whether the definition of "use in commerce" contained in Section 45 of the Lanham Act applies only to registration issues or also in the infringement context, and urged Congress to clarify the issue.

What this means for you: We receive many inquires from clients concerned by their competitors' purchase of keywords from Google corresponding to their trademarks and thus giving their competitors a high search ranking on the "sponsored links" section of the search results. While pursuing such a case would be expensive, this decision does make such a claim more viable.

This case, however, has implications for all of our clients. Trademark owners should take comfort that the Second Circuit has, at least for the moment, backed away from what appeared to be a trend toward limiting the reach of the trademark laws. Nevertheless, clients seeking trademark relief in any case other than a "standard" infringement case should carefully consider whether those claims would be most likely to succeed in this or another circuit.