As 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.