In the latest keyword advertising case, the District of Arizona joined the majority of courts in holding that a company's purchase of a search-engine keyword containing a competitor's trademark satisfied the commercial-use requirement for asserting infringement claims under the Lanham Act. In a departure from several other courts, however, the court held that the purchase of the disputed keyword constituted infringement under an initial-interest confusion theory of liability, even though the competitor's trademark did not appear in the Google sponsored link advertisements.
Plaintiff Soilworks, LLC ("Soilworks") and Defendant Midwest Industrial Supply, Inc. ("Midwest") were competitors in the soil erosion and dust-control products field. Midwest's brands included SOIL-SEMENT. Midwest contacted Soilworks expressing concern that Soilworks' products may infringe two patents about to issue to Midwest. Soilworks filed this action seeking a declaratory judgment of patent invalidity and noninfringement, among other claims. Midwest counterclaimed for trademark infringement, false designation of origin, and unfair competition based on Soilworks' use of "soil sement" as a search-engine keyword and in its website metatags. Although the decision does not state whether Soilworks' sponsored link advertisements contained the SOIL-SEMENT mark, a review of the court record revealed that the sponsored links did not contain the SOIL-SEMENT mark. Rather, the sponsored links prominently displayed Soilworks' "Soiltac" trademark in the headline and its www.soiltac.com URL below the ad text. The parties filed cross-motions for partial summary judgment on Midwest's trademark claims, among other claims.
The court first recognized that Midwest's SOIL-SEMENT mark was a valid and protectable trademark. It then addressed whether Soilworks' use of the SOIL-SEMENT mark in metatags and as a keyword constituted commercial use for purposes of the Lanham Act. Citing the Ninth Circuit's decisions in Brookfield and Playboy v. Netscape, the court held that Soilworks made these uses to capitalize on the SOIL-SEMENT trademark to attract customers to its websites, and thus were commercial uses for purposes of the Lanham Act.
The court then analyzed whether Soilworks' use of the SOIL-SEMENT mark was likely to cause initial-interest confusion. It noted that the Ninth Circuit has applied both the traditional Sleekcraft multi-factor test as well as the so-called "Internet trinity" factors in deciding the issue of likelihood of confusion in initial-interest confusion cases. It proceeded to apply both tests. The court initially considered the "Internet trinity" factors because they are the most important factors in the context of the Internet. Specifically, the similarity-of-the-marks factor favored Midwest—Soilworks' keyword "soil sement" was "nearly identical" to Midwest's SOIL-SEMENT mark, and Soilworks' use of the term "sement soil" and the words "sement" and "soil" in close proximity to each other in its metatags was sufficiently "similar" to the SOIL-SEMENT mark in spelling, sound, and meaning. In addition, the relatedness of the parties goods and the marketing channels both favored Midwest because the parties sold competing products and both used the Internet to market their products.
Soilworks did not specifically address these three factors or any of the other Sleekcraft factors. Rather, Soilworks claimed that the "Internet trinity" standard did not apply to metatag/keyword cases and that Midwest had to prove "deception." The court rejected these arguments, pointing out that "the wrong in a metatag initial-interest confusion case is not that the consumer is deceived into believing that he is purchasing the plaintiff's products when in fact he is purchasing defendant's, but instead is the diversion of the consumer's initial attention to the defendant's website using the plaintiff's trademark and goodwill." The court noted that this "wrongful conduct" may involve no consumer deception when keywords or metatags are used.
Soilworks also asserted that Midwest presented no evidence of actual consumer confusion, but the court found that the actual-confusion factor was "less relevant in a metatag initial interest confusion case." Moreover, the court again stated that the wrong here was not actual consumer confusion regarding the source of products, but rather the diversion of potential customers to Soilworks' websites. In any event, even if Midwest had to prove that consumers were actually diverted to Soilworks' websites through confusion, it did so. According to the court, "[a] person typing 'soil sement' into a search engine presumably would be somewhat familiar with Midwest's product and would be looking for the product or its maker, and yet would be directed by keywords and metatags to Soilworks' websites. The confusion—thinking one would be connected to Midwest when in fact Soilworks' websites also appear in the search results—would entirely be caused by Soilworks' use of Midwest's mark."
The court then examined the remaining Sleekcraft factors—the strength of Midwest's mark, the degree of consumer care, and the likelihood of expansion—and each either favored Midwest or were of "little import" in assessing initial-interest confusion. The court concluded that the undisputed evidence established that Soilworks' use of the SOIL-SEMENT mark in keywords and metatags "divert[ed] the initial attention of potential Internet customers to its websites" and granted summary judgment for Midwest on trademark infringement liability.
The court continued the overwhelming trend of courts holding that the purchase of trademark-related keywords constitutes a "use in commerce" or "commercial use" under the Lanham Act. By the author's count, there are seventeen decisions finding such use in commerce and only seven finding no use in commerce. Regarding infringement liability, unlike some other courts, the court here did not factor into its likelihood-of-confusion analysis the fact that Soilworks' sponsored link did not contain Midwest's SOIL-CEMENT mark. For example, the Eastern District of Virginia in Geico v. Google and the Eastern District of Pennsylvania in J.G. Wentworth v. Settlement Funding both found no likelihood of confusion because the sponsored links at issue did not contain the plaintiffs' marks.