Rescuecom Corp. v Google Inc., 3 April 2009
The US Court of Appeals for the Second Circuit has allowed an appeal by Rescuecom that Google's use of Rescuecom's trade mark could amount to "use in commerce".
This issue is of great interest to brand owners, as many courts around the world are currently grappling with the issue of whether Google's AdWords program and Keyword Tool constitute infringing "use" of a trade mark.
Google's main source of income is from its AdWords program forming as much as 97% of its turnover. The AdWords program works by advertisers bidding on keywords which, when entered into the Google search engine by internet users, result in short advertisements by that advertiser (sponsored links) and a link to its website appearing either at the top or down the side of the natural search results. Advertisers pay Google for each time a user clicks on the link in the advert, with the fees starting at a few pence and going up to over £20 per click.
Advertisers can either independently choose their own keywords, or use Google's own Keyword Tool, which suggests keywords to the advertiser. Following its change of policy in May 2008 Google does not stop advertisers bidding on the registered trade marks of third parties in the UK and Ireland.
Legal issues in this case
The question before the US Court of Appeals in this case was whether, by allowing such advertising to take place, Google's activities constitutes "use in commerce" under the Lanham Act. The lower court had ruled that it did not constitute such use, basing its ruling on the earlier Court of Appeals decision in 1-800-Contacts v When-U.com.
Google argued that such use was not "use in commerce" as the mark did not appear in the visible wording of the triggered sponsored link rather it was purely "internal" use. The Court of Appeals ruled that Google's recommendation and sale of Rescuecom's trade mark to its customers when selling its advertising services to them was not in fact internal use. Further, the court decided that even internal use may constitute trade mark infringement in some circumstances – otherwise, the court said, "the operators of search engines would be free to use trademarks in ways designed to deceive and cause consumer confusion". The court used the example that if all internal use was not trade mark infringement, "instead of having a separate 'sponsored links' or paid advertisement section, search engines could allow advertisers to pay to appear at the top of the 'relevance' list based on a user entering a competitor's trademark – a functionality that would be highly likely to cause consumer confusion". The court was of the view that such use should not be above judicial review simply because the use of the trade mark was internal.
This case was distinguished from the 1-800 case because there the pop-up advertisement trigger was not the actual mark at all, rather, it was the website address that was entered by the user into his browser that triggered the pop-up. Furthermore "The display of a particular advertisement was controlled by the category associated with the website or keyword, rather than the website or keyword itself...The defendant's program relied upon categorical associations...to select a pop-up ad randomly from a predefined list of ads appropriate to that category...the ad was not based on the defendant's sale or recommendation of a particular trademark [at all]."
The key issue in determining whether infringement has taken place in these circumstances will be whether the use of the trade mark had caused consumer confusion. If an internet user is likely to believe mistakenly that the different name that appears at the top of the search is in some way affiliated with the trade mark owner this would be a step towards an infringement finding and will now have to be decided.
The court therefore remitted the case to the lower court to decide the issue of whether the use by Google had caused confusion.
Although this is a US decision, it is of significance to European readers as well, as a very similar issue has been referred to the European Court of Justice (ECJ) by the French Supreme Court in three AdWords cases also involving Google. The hearing in front of the ECJ took place on 17 March 2009, and the Advocate General's opinion is expected in June. The ECJ's decision should be handed down by September.