Published by LawTechie - March 11, 2011 - LawTechie

Trademark LawEditor’s Note: In light of the 9th Circuit’s recent decision that use of a rival’s trademark to trigger Google Adwords advertising did not constitute trademark infringement, we dug up our senior partner’s prescient 2009 article “Should Trademark Law Be Different for the Internet?” Anthony Handal’s section on “Invisible use” as infringement (e.g., Adwords) and unfair competition as an alternative cause of action to trademark infringement, reprinted below, provides some nice perspective (and a potential solution for trademark owners) with regard to the 9th Circuit decision:

“Invisible” Use as Infringement
A year after1-800 Contacts, in Australian Gold, Inc. v. Hatfield, 436 F.3d 1228 (10th Cir. 2006), the Tenth Circuit considered a case where the defendants used plaintiff’s trademarks as metatags and to obtain a preferred position in search results. The Tenth Circuit went in the direction of the Ninth Circuit, upholding a $5 million jury award for initial interest confusion trademark infringement and related causes of action.

In a similar case, use of a trademark in connection with a sponsored link was found to be trademark use in Buying for the Home, LLC v. Humble Abode, LLC, 459 Fed Supp. 2d 310. In making its decision, the court relied upon a broad reading of 15 USC §1125(a)(1). See also JG Wentworth v. Settlement Funding LLC, 85 USPQ 2d 1780 (DC E.Pa 2007), where the plaintiff’s trademarks being used as metatags and to trigger Google sponsored link advertising were found to be trademark infringement.

In Boston Duck Tours v. Super Duck Tours, 527 Fed Supp. 2d 205 (DC Mass 2007), the court reviewed the various conflicting decisions in the area and decided that the use of a competitor’s trademark for sponsored linking was trademark infringement.

In North American Medical Corporation v. Axiom Worldwide, Inc., 522 F.3d 1211 (11th Cir. 2008), the Eleventh Circuit agreed with the then majority of the circuit courts of appeal that use of a competitor’s trademarks as metatags in the hidden part of a website page was sufficiently used to trigger liability for trademark infringement under the Lanham Act. The Eleventh Circuit explicitly considered and rejected the rationale of the Second Circuit in 1-800 Contacts.

While the decision in RescueCom seeks to dispel any characterization of backpedaling, most agree that the Second Circuit has joined the majority of the circuits in finding that a competitor’s use of a trademark as a tool to trigger search results is trademark use. The justification here is based on the court’s holding that the Lanham Act, though it includes only one definition of use, applies two different meanings to the term use, one of them consistent with the definition of use in the Lanham Act and the other inconsistent with that definition of use. More particularly, the court found that application of the mark to the goods was the use needed to trigger the right to register, but that a more liberal standard, perhaps the one first laid out in Brookfield should apply to determining whether the use is sufficient to support a finding of trademark infringement. The opinion includes a detailed justification for this inconsistent reading of the law based upon the history of the legislation.

Nevertheless, in Rescuecom the Second Circuit did suggest its opinion that the likelihood of confusion second prong of a trademark infringement claimmight not easily be proven.

“Unfair” Despite a Lack of Confusion?
One need only go to any store shelf to see the proximate placement of name brand and generic goods. No doubt, the presence of generic goods diverts business from the name brand manufacturer. Certainly, presentation of competing products on the same page in search engine results could be argued to be analogous. However, might one also argue that given the complete flexibility of the Internet, a higher standard might apply. Internet pages can have a content customized to any standard. Would it be unreasonable for search results to be limited to the name brand searched for?

Consider whether there is anything wrong with a generics-dedicated website having a search engine which has the announced purpose of receiving brand names and outputting links to generic substitutes. However, also consider the trademark owner’s viewpoint that after huge investment in building up a brand into a strong and powerful marketing tool, that tool can be turned against the trademark owner. Would some limitations on the use of a trademark by competitors or search engines be appropriate to encourage brand owners to turn out quality products and develop a reputation that consumers look for and rely upon? Or would that merely assured that a strong marketing position, once established, would have unfair protection against fair competition? Would it be appropriate to require search engines to return only the brand name unless the consumer specifies otherwise, for example with a phrase such as “generic equivalent of” before the brand name? Should search engine operators, upon receiving an inquiry with a brand name, display a window which allows searchers to, brand-name and/or generic hyperlinks?

Unfair Competition as a Broad Cause of Action
In any case, with regard to the current fact that is before the courts, ample case law exists to address the complained of injury. Plaintiffs can avoid the troublesome twin issues of use and likelihood of confusion by proceeding on a broad unfair competition theory. The law here is well-developed and predictable. See for example Roy Export Co. v. Columbia Broadcasting System, Inc., 672 F.2d 1095 (2d Cir. 1982), characterizing unfair competition as a capacious doctrine encompassing any form of commercial immorality or simply “endeavoring to reap where one has not sown”.

See also, BLI Apparel Corp. v. Heritage Quilts, Inc., 210 U.S.P.Q. 1999 (SDNY 1980), where the court explicitly rejected trademark protection for apparel catalog numbers, citing an absence of secondary meaning. However, the court went on to note that the plaintiff might have some relief under a claim for copying and palming off. See also Filmways Pictures, Inc. v. Marks Polarized Corporation, 552 F. Supp. 863 (SDNY 1982), where after dismissing a claim for theft of trade secrets, the court declined to dismiss an unfair competition claim based on the unfair inducement of the disclosure of trade secrets which were subsequently disclosed to and used by a competitor competing with the originator of the trade secret.

Certainly, companies contesting the use of their trademarks by competitors in connection with metatags and sponsored links might well consider a cause of action for unfair competition. It is an open question whether the courts will require a showing of likelihood of confusion, or perhaps only look at likelihood of confusion as a factor in the overall analysis. This may prove to be the most interesting part of the unfolding law in this area.

LawTechie is a blog focusing on trends in tech and digital media. Areas covered include intellectual property, cyberlaw, venture capital, transactions and litigation as they relate to the emerging sectors. The blog is edited by the firm's partner Tim Bukher with contributions from the firm's experts in their respective areas of law.

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