In 2004, Rescuecom, a computer services franchise business which offers repair, consulting, networking, and various internet services, sued Google for selling its trademark as part of the Google AdWords program. The company owns the domain Rescuecom.com, where it conducts a substantial amount of business. Rescuecom registered the trademark “Rescuecom” with the USPTO in 1998. The AdWords program works by having potential advertisers bid on keyword search terms. When an internet user enters one of these search terms into Google’s search engine query, a sponsored link to the advertiser will appear at the top or to the right of the results list. Essentially, an advertiser can bid for any search term in the AdWords program. Additionally, Google recommends search terms based on search promixity to advertisers through it’s Keyword Suggestion Tool.
Some competitors to Rescuecom purchased “rescuecom” as a keyword search term to display sponsored links. Google also recommended the “rescuecom” mark to competitors through the Keyword Suggestion Tool. Rescuecom filed suit in New York challenging Google’s right to sell Rescuecom’s registered trademarks to competitors as search terms. The key principle at stake is whether a competitor should be allowed to purchase a search term, otherwise protected from certain uses under trademark law, for the purpose of triggering the display of their own advertisements on the Google search result page. Until the Second Circuit’s decision, most courts have dismissed such lawsuits.
Before the District Court (N.D.N.Y.), Google filed, and was subsequently granted, a motion to dismiss for failure to state a claim (FRCP 12(b)(6)). The essence of this ruling was based on a precedent from a previous case, 1-800 Contacts v. WhenU.com, 414 F.3d 400 (2d Cir. 2005), involving pop-up advertising software which displays advertisements based on a user’s entry of text strings into an internet browser. In the case, the alleged infringer’s software was triggering pop-up ads featuring competitively priced products when a computer user visiting the 1-800 Contacts website. The court ruled that the use of the trademark terms were “internal” to the alleged infringers advertising software, and therefore not a use in commerce. This rationale stems from the basic tenants of trademark law—to establish infringement under the Lanham Act (15 U.S.C. § 1114), a plaintiff must prove an infringer: (1) used the plaintiff’s valid trademark, or one that is confusingly similar, (2) in commerce, (3) in connection with the offering of goods or services. Google successfully argued in the motion to dismiss that the WhenU.com decision compelled the conclusion that the use of keyword search terms was not a use “in commerce” as required under the Lanham Act, and therefore the elements for an infringement cause of action had not been met.
Rescuecom appealed the N.D.N.Y.’s dismissal of their case to the Second Circuit, which reversed the District Court. The decision issued by the Second Circuit on April 3, 2009, distinguished WhenU.com case, and held that the use of trademarked terms could be a “use in commerce” for the purpose of trademark infringement. The Second Circuit explained that the WhenU.com case relied heavily on the fact that the defendant’s actual use of the trademarks at issue were not displayed to the computer user and the use of the trademarks were limited within the software. In contrast, the Second Circuit declared, “regardless of whether Google’s use of Rescuecom’s mark in its internal search algorithm could constitute an actionable trademark use, Google’s recommendation and sale of Rescuecom’s mark to its advertising customers are not internal uses.” Further, the court noted that, “an alleged infringer’s use of a trademark in an internal software program [does not insulate] the alleged infringer from a charge of infringement.”
Aside from the immediate effects on Rescuecom’s litigation, this decision calls into question several other cases within the Second Circuit’s jurisdiction which cite to the WhenU.com case to support similar conclusions as the N.D.N.Y. court came to. However, this decision is not dispositive on the ultimate issue of whether Google’s actions amount to trademark infringement.
Comments Off Posted in: Analysis on April 9, 2009