Inside Rescuecom Corp. v. Google, Inc.: Does Google's Use of Trademarks to Trigger Advertisements from Competitors Violate Federal Trademark Laws?
The point of the spear in digital media law may be turning from copyright to trademark. As website operators take advantage of recent court decisions, such as Perfect 10, to provide access to third party content with less fear of a copyright suit, content providers as looking to other intellectual property laws to protect their work. The Rescuecom v Google (Fn1) case is an example of such an attack regarding Google's use of third party trademarks as keywords in internet searches.
Rescuecom filed suit over Google's use of Rescuecom's trademark in Google's search engine. At the time of suit was filed (Fn2), when a Google user entered an entity's name or trademark, Google provided two types of results. First, it provided a list of links to websites, listed in the order Google's algorithm's deemed to be of descending relevance to the user's search term. (The search results were generally found in a column on the left side of a user's screen). Search results would typically begin by providing a link to a site owned by the trademark holder, followed by a list of other links that Google's algorithm's also deemed relevant to the search term. Second, Google would also provide content-based advertising. These are the "Sponsored Links", which in my experience show up in a narrower column on the right side of a user's screen.
Google used a couple of programs to offer these "context-based" links to advertisers: AdWords and Keyword Suggestion Tool. AdWords permitted an advertiser to purchase keywords. The advertiser's ad would appear in the "Sponsored Links" section on a user screen whenever the purchased keyword was entered as a search term. The advertisers would then pay Google based on the number of times its ad was clicked by users.
Google's Keyword Suggestion Tool would provide hints to advertisers wishing to purchase keywords as to other useful words that they could purchase. If an advertiser X, a furnace repair company, purchased the keyword "furnace repair", the tool might also suggest that it purchase the term "Y" -- the brand name and trademark of a competing furnace repair company. This would permit advertiser's X's ad to appear on Google's website whenever a user searched for company's Y's brand name and trademark.
Rescuecom claimed that through the use of these tools, its competitors' ads would appear when users were searching for "Rescuecom" on Google. It alleged that as a result, users were deceived and diverted from Rescuecom to these other competing firms. Rescuecom sued, claiming that this practice violated the Lanham Act (federal trademark law).
Based on older 2nd Circuit precedent, the District Court dismissed the suit on Google's 12(b)(6) motion. (Fn3) However, on April 3, 2009, over a year after it heard the case, the 2nd Circuit reversed.
Federal trademark laws permit the owner of a trademark to sue if his mark is "used in commerce" in a way that is "likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities." 15 U.S.C. § 1125. The mark is deemed to have been "used in commerce" for services when "it is used or displayed in the sale or advertising of such services and the services as rendered in commerce." 15 U.S.C. § 1127.
The 2nd Circuit found (at least as alleged), that "what Google is recommending and selling to its advertisers is Rescuecom's trademark", that "Google displays, offers and sells Rescuecom's mark to Google's advertising customers when selling its advertising services" and that Google "encourages the purchase of Rescuecom's mark through its Keyword Suggestion Tool." The Court concluded that "Google's utilization of Rescuecom's mark fits literally within the terms specified in 15 U.S.C. § 1127" -- i.e., Google uses and sells Rescuecom's mark "in the sale . . . of [Google's advertising] services . . . rendered to the public."
This finding does not by itself mean that Google is civilly liable to Rescuecom. As the 2nd Circuit pointed out, to prevail, Rescuecom still needs to prove that Google's use of its trademark caused a likelihood of confusion or mistake -- something that the District Court's early dismissal of the case never gave it a chance to do. However, because Rescuecom had adequately pleaded this element, the 2nd Circuit sent the case back to the District Court so that Rescuecom could continue to pursue relief.
The 2nd Circuit's decision in Rescuecom is not the first that has found the potential for a federal civil suit based on an advertiser's use of a competitor's trademark as a Google keyword. In a recent decision in Soilworks, LLC v. Midwest Industrial Supply, Inc. (Fn 4), an Arizona District Court found that an advertiser's use of a competitor's trademark as a keyword and metatag to drive business to its website was a "use in commerce" of the trademark. The Court also found that the defendant's use of the mark as a keyword and in metatags "diverts the initial attention of potential Internet customers" to the defendant's website, thus establishing civil liability for the defendant under the Lanham Act.
It remains to be seen whether the 2nd Circuit will buy into the "initial interest" theory used by the Arizona District Court as basis for finding that the "confusion", "mistake" or "deception" required by 15 U.S.C. § 1125 has occurred. Given the likely significance of this ruling to Google's business model, I would expect Google to continue to vigorously defend the notion that its website created any confusion or deception for users.
David D. Johnson is a business lawyer whose practice focuses on litigation and other issues relating to digital media and consumer electronics companies. David can be contacted at (310) 785-5371 or DJohnson@jmbm.com.
Notes
Fn1 Rescuecom Corp. v. Google (Northern District of New York, Case No. 5:04-cv-01055-NAM-GHL).
Fn2 I include this caveat because Google constantly updates the services provided on its website, and may well have altered the practices at issue in the Rescuecom suit.
Fn3 In particular, 1-800 Contacts, Inc. v. WhenU.com, Inc., 414 F.3d 400 (2d. Cir. 2005).
Fn4 Soilworks, LLC v. Midwest Industrial Supply, Inc., 575 F. Supp.2d 1118, 1129 (D. Ariz. 2008).
