April 2009
The fundamental premise of trademark law must be that the registration of a trademark confers on the proprietor of the mark the right to the exclusive use of the mark in respect of the goods and services in relation to which the mark had been registered. When Google accordingly started "selling" third party trademarks as part of its AdWords advertising offering, trademark owners across the world had good reason to be concerned.
AdWords
Google's AdWords advertising offering is based on a model in terms of which advertisements of, and links to Google's customers will be "triggered" when particular pre-defined key words are used in internet searches using the Google search engine. The advertiser can "purchase" the keywords it wishes to trigger its advertisement and these keywords can include the trademarks of any third party or specifically - competitors.
In addition to the mere sale of keywords, including trademarks, Google employs a Keyword Suggestion Tool which assists advertising customers by making recommendations of keywords, including trademarks, to be purchased. The purpose of the Keyword Suggestion Tool is to maximise the effectiveness of advertisements by identifying those keywords related to the advertiser's area of business. The maximisation of the efficiency of the advertising is in Google's interest as it is paid on the basis of the number of times users "click" on an advertisement linking the user to the advertising client's website. 1
Rescuecom Corp
Rescuecom is a computer services business, offering computer repair and support services including data recovery, virus removal, networking, wireless services and more.2 According to Rescuecom, many of its competitors have purchased the RESCUECOM trademark3 as a keyword on the recommendation of Google's Keyword Suggestion Tool. Rescuecom maintains that Google's sale of the RESCUECOM trademark to Rescuecom's competitors allow such competitors to deceive customers searching for Rescuecom's website and services.
As a result of Google's "sale" of the RESCUECOM trademark, Rescuecom filed an action against Google in the US District Court for the Northern District of New York based on trademark infringement, false designation of origin and dilution under the Lanham Act.4
Rescuecom Corp v Google Inc. - District Court
In order for an action based on trademark infringement to succeed in the United States, a plaintiff must be able to show the following:
that it is the proprietor of a valid trademark; that the infringing party used the mark; that such use was in commerce in connection with the sale or advertising of goods or services; that such use was without the consent of the proprietor; and that such use is likely to cause consumer confusion.5
In the district court the focus was on the requirement of "use in commerce" defined in §1127 of the Lanham Act as follows:
"[A] mark shall be deemed to be used in commerce on services when it is used or displayed in the sale or advertising of services and those services are rendered in commerce, or the services are rendered in more than one State of the United States and a foreign country and the person rendering the services is engaged in commerce in connection with the services."
Rescuecom's action for trademark infringement was dismissed as the district court found that Google's use of the RESCUECOM trademark did not qualify as "use in commerce". The district court came to this conclusion, based on its interpretation of the Second Circuit's decision in the 1-800 Contacts, Inc v. WhenU.com, Inc., 414 F.3d 400 (hereinafter "1-800") case, which it considered itself compelled to follow.
In order to better understand the Rescuecom case, it is accordingly necessary to gain some understanding of the 1-800 case.
1-800 Contacts, Inc v. WhenU.com, Inc.
In this matter WhenU.com, an internet marking company, provided a proprietary software called SaveNow which monitored a computer user's activity for providing contextual relevant advertising. This software had to be downloaded by an individual user and based on the user's activity it provided the user with random pop-up advertising relevant to that activity. The SaveNow software was based on a directory of website addresses and keywords organised into categories. As a user browses the internet, the software searched for any of the websites or keywords contained in the directory in order to identify context relevant advertisements.
1-800 was a distributor of contact lenses and the proprietor of the trademark 800CONTACTS. 1-800 contended that WhenU.com was infringing its trademark by causing pop-up advertisements of its competitors to appear on the screen of a user when such a user had accessed 1-800's website, www.1800contacts.com.
While 1-800 was initially successful in its action, the Second Circuit reversed that decision finding that:
"WhenU does not "use" 1-800's trademarks within the meaning of the Lanham Act, 15 U.S.C. §1127 when it (1) includes 1-800's website address, which is almost identical to 1-800's trademark, in an unpublished directory of terms that trigger delivery of WhenU's contextual relevant advertising to computer users; or (2) causes separate, branded pop-up ads to appear on a computer user's computer screen either above, below, or along the bottom edge of the 1-800 website window."6
The importance of the 1-800 case is that it appears to have been interpreted as confirmation that the use of third party trademarks in internal systems does not constitute use of a trademark in terms of the Lanham Act. This was expressed by the court in the following way:
"A company's internal utilisation of a trademark in a way that does not communicate it to the public is analogous to a individual's private thoughts about a trademark. Such conduct simply does not violate the Lanham Act, which is concerned with the use of trademarks in connection with the sale of goods or services in a manner likely to lead to consumer confusion as to the source of such goods or services."7
Rescuecom Corp v Google Inc. - Second Circuit
Rescuecom appealed the judgement of the district court and on 3rd April 2009 the Second Circuit found in favour of Rescuecom remanding the case for further hearing.
Google argued that the 1-800 case supports the conclusion that the inclusion of a trademark in an internal computer directory cannot constitute "use in commerce" of that trademark. Accordingly, the use of the RESCUECOM trademark as a trigger for displaying advertising could not qualify as "use" of the mark. In considering these arguments, the Second Circuit found that:
"[R]egardless 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."8
The Second Circuit then continued to make it clear that the judgement in the 1-800 case did not imply "that the use of a trademark in a software program's internal directory precludes a finding of trademark use. Rather, influenced by the fact that the defendant was not using the plaintiff's trademark at all, much less using it as the basis of commercial transaction, the court asserted that the particular use before it did not constitute a use in commerce."9
In considering the matter the Second Circuit differentiated the facts in the 1-800 case from those in the Rescuecom case in two important ways:
1-800 did not allege that WhenU.com actually used, reproduced or displayed its trademark. The search term that triggered the advertising pop-ups was 1-800's website address, which was not used as or claimed to be 1-800's trademark. The transactions related to the use of the website were accordingly not transactions involving 1-800's trademark.
WhenU.com did not disclose or offer for sale the keywords or advertising triggers to advertising customers. Further, the advertising trigger was based on the categorisation of the particular keyword or website address, rather than on the particular keyword or website address.10
The Second Circuit accordingly found that the district court was not compelled to apply the 1-800 case as the cases where factually differentiated, confirming that Google's use of the RESCUECOM trademark constitutes use in commerce. With respect to Google's use of the RESCUECOM mark, it specifically found that:
What Google was recommending its advertising customers to use as an advertising trigger and actually then selling to them, was the RESCUECOM trademark;
In doing the above, Google was displaying, offering for sale and selling the RESCUECOM trademark; and
Google actively encouraged the purchase of the RESCUECOM trademark through its Keyword Suggestion Tool.
The Second Circuit's judgement does not signal the end in the saga between Rescuecom and Google. It has however, opened the door for Rescuecom to continue with its trademark infringement action against Google, with Rescuecom now having to focus on the remaining requirements it has to establish, including whether the use of its trademark by Google has caused consumer confusion.
Conclusion
While the most recent chapter in the Rescuecom v Google AdWare saga does not bring a conclusion to the matter, it is very important with respect to the use of third party trademarks in online advertising services. The case provides a more nuanced interpretation of the 1-800 case, as well as a warning to those interpreting the 1-800 case as a free pass to use third party trademarks in internal software systems in any way they may please.
The fundamental premise of trademark law must be that the registration of a trademark confers on the proprietor of the mark the right to the exclusive use of the mark in respect of the goods and services in relation to which the mark had been registered. When Google accordingly started "selling" third party trademarks as part of its AdWords advertising offering, trademark owners across the world had good reason to be concerned.
AdWords
Google's AdWords advertising offering is based on a model in terms of which advertisements of, and links to Google's customers will be "triggered" when particular pre-defined key words are used in internet searches using the Google search engine. The advertiser can "purchase" the keywords it wishes to trigger its advertisement and these keywords can include the trademarks of any third party or specifically - competitors.
In addition to the mere sale of keywords, including trademarks, Google employs a Keyword Suggestion Tool which assists advertising customers by making recommendations of keywords, including trademarks, to be purchased. The purpose of the Keyword Suggestion Tool is to maximise the effectiveness of advertisements by identifying those keywords related to the advertiser's area of business. The maximisation of the efficiency of the advertising is in Google's interest as it is paid on the basis of the number of times users "click" on an advertisement linking the user to the advertising client's website. 1
Rescuecom Corp
Rescuecom is a computer services business, offering computer repair and support services including data recovery, virus removal, networking, wireless services and more.2 According to Rescuecom, many of its competitors have purchased the RESCUECOM trademark3 as a keyword on the recommendation of Google's Keyword Suggestion Tool. Rescuecom maintains that Google's sale of the RESCUECOM trademark to Rescuecom's competitors allow such competitors to deceive customers searching for Rescuecom's website and services.
As a result of Google's "sale" of the RESCUECOM trademark, Rescuecom filed an action against Google in the US District Court for the Northern District of New York based on trademark infringement, false designation of origin and dilution under the Lanham Act.4
Rescuecom Corp v Google Inc. - District Court
In order for an action based on trademark infringement to succeed in the United States, a plaintiff must be able to show the following:
that it is the proprietor of a valid trademark; that the infringing party used the mark; that such use was in commerce in connection with the sale or advertising of goods or services; that such use was without the consent of the proprietor; and that such use is likely to cause consumer confusion.5
In the district court the focus was on the requirement of "use in commerce" defined in §1127 of the Lanham Act as follows:
"[A] mark shall be deemed to be used in commerce on services when it is used or displayed in the sale or advertising of services and those services are rendered in commerce, or the services are rendered in more than one State of the United States and a foreign country and the person rendering the services is engaged in commerce in connection with the services."
Rescuecom's action for trademark infringement was dismissed as the district court found that Google's use of the RESCUECOM trademark did not qualify as "use in commerce". The district court came to this conclusion, based on its interpretation of the Second Circuit's decision in the 1-800 Contacts, Inc v. WhenU.com, Inc., 414 F.3d 400 (hereinafter "1-800") case, which it considered itself compelled to follow.
In order to better understand the Rescuecom case, it is accordingly necessary to gain some understanding of the 1-800 case.
1-800 Contacts, Inc v. WhenU.com, Inc.
In this matter WhenU.com, an internet marking company, provided a proprietary software called SaveNow which monitored a computer user's activity for providing contextual relevant advertising. This software had to be downloaded by an individual user and based on the user's activity it provided the user with random pop-up advertising relevant to that activity. The SaveNow software was based on a directory of website addresses and keywords organised into categories. As a user browses the internet, the software searched for any of the websites or keywords contained in the directory in order to identify context relevant advertisements.
1-800 was a distributor of contact lenses and the proprietor of the trademark 800CONTACTS. 1-800 contended that WhenU.com was infringing its trademark by causing pop-up advertisements of its competitors to appear on the screen of a user when such a user had accessed 1-800's website, www.1800contacts.com.
While 1-800 was initially successful in its action, the Second Circuit reversed that decision finding that:
"WhenU does not "use" 1-800's trademarks within the meaning of the Lanham Act, 15 U.S.C. §1127 when it (1) includes 1-800's website address, which is almost identical to 1-800's trademark, in an unpublished directory of terms that trigger delivery of WhenU's contextual relevant advertising to computer users; or (2) causes separate, branded pop-up ads to appear on a computer user's computer screen either above, below, or along the bottom edge of the 1-800 website window."6
The importance of the 1-800 case is that it appears to have been interpreted as confirmation that the use of third party trademarks in internal systems does not constitute use of a trademark in terms of the Lanham Act. This was expressed by the court in the following way:
"A company's internal utilisation of a trademark in a way that does not communicate it to the public is analogous to a individual's private thoughts about a trademark. Such conduct simply does not violate the Lanham Act, which is concerned with the use of trademarks in connection with the sale of goods or services in a manner likely to lead to consumer confusion as to the source of such goods or services."7
Rescuecom Corp v Google Inc. - Second Circuit
Rescuecom appealed the judgement of the district court and on 3rd April 2009 the Second Circuit found in favour of Rescuecom remanding the case for further hearing.
Google argued that the 1-800 case supports the conclusion that the inclusion of a trademark in an internal computer directory cannot constitute "use in commerce" of that trademark. Accordingly, the use of the RESCUECOM trademark as a trigger for displaying advertising could not qualify as "use" of the mark. In considering these arguments, the Second Circuit found that:
"[R]egardless 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."8
The Second Circuit then continued to make it clear that the judgement in the 1-800 case did not imply "that the use of a trademark in a software program's internal directory precludes a finding of trademark use. Rather, influenced by the fact that the defendant was not using the plaintiff's trademark at all, much less using it as the basis of commercial transaction, the court asserted that the particular use before it did not constitute a use in commerce."9
In considering the matter the Second Circuit differentiated the facts in the 1-800 case from those in the Rescuecom case in two important ways:
1-800 did not allege that WhenU.com actually used, reproduced or displayed its trademark. The search term that triggered the advertising pop-ups was 1-800's website address, which was not used as or claimed to be 1-800's trademark. The transactions related to the use of the website were accordingly not transactions involving 1-800's trademark.
WhenU.com did not disclose or offer for sale the keywords or advertising triggers to advertising customers. Further, the advertising trigger was based on the categorisation of the particular keyword or website address, rather than on the particular keyword or website address.10
The Second Circuit accordingly found that the district court was not compelled to apply the 1-800 case as the cases where factually differentiated, confirming that Google's use of the RESCUECOM trademark constitutes use in commerce. With respect to Google's use of the RESCUECOM mark, it specifically found that:
What Google was recommending its advertising customers to use as an advertising trigger and actually then selling to them, was the RESCUECOM trademark;
In doing the above, Google was displaying, offering for sale and selling the RESCUECOM trademark; and
Google actively encouraged the purchase of the RESCUECOM trademark through its Keyword Suggestion Tool.
The Second Circuit's judgement does not signal the end in the saga between Rescuecom and Google. It has however, opened the door for Rescuecom to continue with its trademark infringement action against Google, with Rescuecom now having to focus on the remaining requirements it has to establish, including whether the use of its trademark by Google has caused consumer confusion.
Conclusion
While the most recent chapter in the Rescuecom v Google AdWare saga does not bring a conclusion to the matter, it is very important with respect to the use of third party trademarks in online advertising services. The case provides a more nuanced interpretation of the 1-800 case, as well as a warning to those interpreting the 1-800 case as a free pass to use third party trademarks in internal software systems in any way they may please.
© Al Tamimi & Company 2009
