Rescuecom Corp. v. Google, Inc.

googlwAs pointed out at the Technology & Marketing Law Blog (who was nice enough to point to the 1.7mb PDF of the decision), the Northern District of New York granted Google’s 12(b)(6) motion to dismiss the case. The highlights are as follows:

Rescuecom sued Google for selling ad space when people searched for their trademark. For instance, when I searched for Rescuecom the sponsored links included ads from Razorfix, Computer Repair Central, and Kriterium Network Management – all competitors to Rescuecom in some way.

This issue has been percolating since the 2nd Cir. ruling last year in 1-800 Contacts, Inc. v. WhenU.Com, Inc.  414 F.3d 400 (2nd Cir. 2005). In that case the court said that an adware vendor using trademark key-words to determine what ads to show in pop-ups was not a “use in commerce” because they did not sell ads based on the key-words, but only used them as part of their own determination of when to show an ad. In its ruling the court specifically said that the analysis may not necessarily apply to search engines (citing to Government Employees Ins. Co. (GEICO) v. Google, Inc.  330 F.Supp.2d 700 (E.D.Va. 2004)(denying Google’s motion to dismiss because GEICO had alleged specific facts to support a claim that that selling ads based on trademark key-words was a “use in commerce” and caused a likelihood of confusion, but later dismissed after bench trial found no likelihood of confusion).

Earlier this year, 1-800 Contacts was cited as precedent by the 2nd Cir. in Merck & Co. v. Mediplan Health Consulting, Inc., 425 F.Supp.2d 402 (S.D.N.Y. 2006). In that case Merck sued Mediaplan for buying search engine ads for the trademark keyword “Zocor” and then trying to sell generic versions of drugs from Canada. The Merck court said that the purchase of ads based on the “Zocor” was not an infringing “use” of the mark.

Unlike Merck, in which two advertisers were fighting over infringing uses of a mark, in the current case the trademark owner is suing the search engine for selling the ads, not the competitors for buying them. For the first time, a court has specifically said that search engines do not infringe by selling key-word advertising based on a registered mark, and is counter to all previous rulings that have said that search engines selling trademark key-words are a “use in commerce” (GEICO, American Blinds, Edina Realty, and 800-JR Cigar). This was also an issue of first impression in 2nd Cir. The analysis by the court was very clean and succinct.

Defendant’s internal use of plaintiffs trademark to trigger sponsored links is not a use of a trademark . . . , either, because there is no allegation that defendant places plaintiffs trademark on any goods, containers, displays, or advertisements, or that its internal use is visible to the public. . . .  in the absence of allegations that defendant placed plaintiffs trademark on any goods, displays, containers, or advertisements, or used plaintiffs trademark in any way that indicates source or origin, plaintiff can prove no facts in support of its claim which would demonstrate trademark use.

(citing to 1-800-Contacts and Merck I) This is good news for search engines and advertisers for those cases brought in the 2nd Cir., but it is not seen how the other Circuits will react. With luck, we will have a nice clean split in the courts (7th and 9th, you are up) and the Supreme Court will grant cert (I like a good technical argument in front of a bunch of old men who have spent more than 2/3s of their lives without a computer by young attorneys who have never known of any other existence). Under the 2nd Cir. precedent, it seems that the advertisers themselves are also off the hook so long as they keep the mark from appearing in any ad.

Lands’ End, Inc. v. Remy

As Evan Brown points outover at Internetcases, the typosquatting case of Lands’ End, Inc. v. Remyhas survived summary judgment. In the case, Lands’ End claims that the the defendant was attempting to defraud them as part of an affiliate marketing program, and, as part of the scheme, was cybersquatting. Remy was part of the Lands’ End’s affiliate program, earning a percentage of purchases made by customers who were acquired by people clicking though on links from the defendant’s site to landsend.com. By tracking the user’s repeat traffic (presumably through cookies), later sales could be attributed to the original source of acquisition–here the affiliate Remy. Initial source of customer acquisition tracking and first sale attribution, on-line marketing innovations I helped pioneer at Coremetrics (Land End is a Coremetrics Customer), only tells 1/2 the story. Without knowing the number of ad impressions before the initial click-through, and the ad media viewed each time, the data is not as useful. This is why, at the very least, it was important for Lands’ End to know the URL and type of content the affiliate ad was placed on.

The problem–Remy was approved to put links on their website, savingsfinder.com. What they attempted to do, surreptitiously, is also squat on domains similar to landsend.com, ones most likely to be mistyped. The first time a user typed lnadsend.com or landswnd.com into their address bar, Remy would forward them to landsend.com along with the affiliate information, as though the person had clicked on a link at savingsfinder.com. The customer’s source of acquisition would be attributed to Remy in the Lands’ End system, and Remy would get a commission on subsequent purchases. Thereafter, if the same individual mistyped landsend.com in the same way, they would not be forwarded (because there was no need after the first instance), and instead be served a 404 error page (HTTP 404 – File not found). Once Lands’ End figured it out the defendant’s scheme, the filed suit for, among other things, violation of the Anticybersquatting Consumer Protection Act, [15 U.S.C. §1125(d)] (“ACPA”). The defendant moved for summary judgement claiming no bad faith on their part because the traffic was sent to the Lands’ End’s web site (from both a marketing and legal standpoint, this is flawed logic.). The court denied the motion on the ACPA claim saying that the question of bad faith is a question of fact for a jury because Remy earned commissions to which it was not entitled.

Lands’ End, Inc. v. Remy, — F.Supp.2d —-, 2006 WL 2521321 (W.D. Wis., September 1, 2006).

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