Key Word Advertising – Google in the Hot Seat
By: CYNTHIA A. MOYER
May 2009
In a decision that came out in April 2009, the United States Court of Appeals for the Second Circuit concluded that Google could not easily dispose of a lawsuit that challenged Google’s practice of selling words to trigger ads in its search results. Google’s key word program is called AdWords and is found on a link to its advertising programs.
Recall that in September 2008, I wrote an article about the practice of search engines (including Google) selling words, including registered trademarks. (See Take Care When Choosing Words for Sponsored Links, in the September 2008 issue of Trademark Topics.SM)
That is, when an Internet user types a word into a search engine like Google, the search engine will provide links to websites that either (1) use that word (organic search results) or (2) have paid to sponsor that word (sponsored search results). Sponsored links usually appear along the top or side of the screen showing the search results.
In 2006, Google was sued by Rescuecom over Google’s practice of selling key words, including Google’s sale of “Rescuecom” to one of Rescuecom’s competitors.
Google defended the case, saying its sale of the word could not constitute trademark infringement, and the district court agreed when it dismissed the case. Google argued and the district court agreed that its use of “Rescuecom” was internal only and so could not constitute trademark infringement because Google was not using the mark “in commerce,” which is required in order to demonstrate trademark infringement. On appeal, the Second Circuit reversed, contending that Google’s “recommendation and sale of Rescuecom’s mark to [Google’s] advertising customers are not internal uses.” That means the case is back to the district court and the case continues.
The ruling is significant because every district court outside the Second Circuit to have looked at the issue of key word advertising has found that at least a threshold claim is stated. Now the district courts in the Second Circuit will be in alignment with the district courts in other circuits.
What does all this mean? It means that the advice we gave in the September 2008 article still stands – the purchase of keywords to direct internet traffic to your company’s website may sound like a good idea, but as your lawyer, we urge caution and say, “Not so fast.” This area of the law is still evolving, and given the current state of the law, an early exit from any lawsuit alleging trademark infringement based on the unauthorized use of key words is not likely. You may not be automatically liable for infringement – a plaintiff still has to prove that your use of key words leads to consumer confusion – but you are a step closer than you probably want to be.