Trademark Infringement Claim Rescued by Second Circuit

Keyword advertising involves the use of particular search terms to trigger online advertisements, so that, for example, a user who types “chocolate” in a search engine would see a sponsored link for a company selling chocolate candy. The use of one company’s trademark as a keyword to activate competitors’ ads has been a contentious issue. Trademark owners consider the practice a kind of passing off, in which their marks are used, invisibly, to draw traffic to the competition, while the search engines who provide keyword advertising treat the practice as mere product placement, like a store that might offer to sell shelf space to Cadbury next to Godiva® candy, or vice versa. The crucial question is whether the use of a trademark to trigger ads for similar products or services should be considered a use of the trademark in commerce. If so, it could be subject to a claim of infringement, depending upon whether there is a likelihood of confusion. If not, the question of infringement does not even arise.

In the case of Rescuecom v. Google, 06-4881 (April 3, 2009), the Second Circuit has taken the position that the use of a trademark in keyword advertising constitutes use of the trademark in commerce by Google, which suggested and sold the trademark keyword to competitors of the mark’s owner. This holding all but reverses the Court’s holding in 1-800 Contacts v. WhenU.com, 414 F.3d 400 (2005), where it held that the use of a website address similar to a trademark and used as a trigger for pop-up ads was not trademark use. The Second Circuit’s earlier position was at odds with every other federal circuit Court of Appeals that had considered the issue. Google will now have to defend its sale of trademarks as keywords against a claim of trademark infringement, and address the issue of whether such use creates a likelihood of confusion among consumers.