In the most recent US case over AdWords, the US Court of Appeals has left open the possibility of Rescuecom succeeding in its claim of trademark infringement against Google for selling the Rescuecom brand as a link to competitors’ advertising. Samantha Rice investigates.
Topic: Online advertising
Who: Rescuecom Corporation and Google
When: April 2009
Where: United States
Law stated as at: 27 April 2009
What happened:
In a blow to Google, the US Court of Appeals has revived an action for trade mark infringement brought against the search engine by Rescuecom Corporation by concluding that the District Court was wrong to summarily dismiss the case back in 2006 (Rescuecom Corp. v Google, Inc., 456 F.Supp.2d 393 (N.D.N.Y., September 28, 2006)). Rescuecom Corp v Google will now be returned to the lower court and both parties' arguments will be reconsidered.
This is the latest US case on whether the sale and/or recommendation of so-called AdWords by search engines to third parties can constitute trade mark infringement. The question has been hotly debated in recent years not just by courts in the US but also in the UK and across Europe with a number of cases being brought against internet search engines for selling, or against third parties for purchasing, valuable AdWords.
Rescuecom alleges that Google's sale of the keyword "Rescuecom" to third parties to generate those parties' sponsored links in search results is an infringement of their trade mark. It also argues that its trade mark is infringed by Google's keyword suggestion tool which actively suggests "Rescuecom" as a keyword that third parties might want to buy. Notably, Rescuecom is being allowed to bring its infringement claim despite admitting that neither Google nor any of the third party advertisers actually displays the Rescuecom mark.
Trade mark infringement in the US
The US Court of Appeals has ruled that Rescuecom have an arguable and properly formulated case for trade mark infringement against Google, although it did not give an opinion on whether their claim should ultimately succeed.
To successfully plead its case for trade mark infringement in the US, Rescuecom will have to prove that there has been (1) a use of their mark, (2) without consent, (3) in commerce and (4) in connection with the sale or advertising of goods or services. Crucially, Rescuecom also need to show that the use of their mark is likely to cause confusion as to the origin of the goods or services in question (Lanham (Trademark) Act (15 U.S.C.)).
The elements required for a finding of trade mark infringement in the US are broadly similar to those found in trade mark legislation in the UK and Europe. For example in the UK, the Trade Marks Act 1994 requires the use of a mark in the course of trade and in certain circumstances also requires the likelihood of confusion (Section 10, Trade Marks Act 1994). For this reason, some arguments raised in Rescuecom Corp v Google case may prove relevant to parties involved in similar disputes outside of the United States.
Is Google using the Rescuecom mark in commerce?
Previous AdWord cases in the US have tended to focus on whether the defendant has made "use of the mark in commerce" by buying or selling the plaintiff's trade mark as an AdWord. In 1-800 Contacts Inc. v WhenU.com (1-800 Contacts Inc. v WhenU.com, 414 F.3d 400 (2d Cir. 2005) (10 ECLR 678, 7/13/05)) the court found the use of a trade mark as an AdWord to generate pop-up advertisements was a purely internal use comparable to a person thinking about a trade mark in their own mind, and therefore was not a use in commerce. The District Court in the first Rescuecom case followed this reasoning and concluded that Google's use of the Rescuecom mark could not be a use in commerce because the mark is not placed on goods or adverts and is not visible to the internet user but is instead used internally by the search engine to generate certain results.
But is Google's sale and actual suggestion of AdWords to generate advertising revenue really an internal use? The Court of Appeals in the second Rescuecom case did not accept the internal use argument and indeed other US cases have found a use in commerce in exactly these circumstances. For example in the 800-JR Cigar (800-JR-Cigar, Inc. v. GoTo.com, Inc., — F.Supp.2d —-, 2006 WL 1971659 (D.N.J. July 13, 2006)) case the search engine Go To had made money from selling "JR Cigar" as an AdWord. In contrast to the first Rescuecom case, the court found that Go To had made use of the mark in commerce in three separate ways: (1) by trading on the value of the mark, (2) by placing advertisers ahead of natural search results and (3) through the keyword suggestion tool which identified JR Cigar's marks and marketed these to its competitors.
A further argument that the sale of AdWords is not a use in commerce is that the use of an AdWord to generate certain results is akin to product placement in a physical shop. This argument was successful in the Merck case (Merck & Co., Inc., et al. v. Mediplan Health Consulting, Inc., d/b/a RxNorth.com, 425 F.Supp.2d 402 (S.D.N.Y., March 30, 2006)) which found that the appearance of sponsored links next to natural search results was the electronic equivalent of product placement and consequently not the use of a trade mark. However, in the second Rescuecom case the Court of Appeals said that product placement will not be allowed to be a "magic shield" to protect even deceptive plans which are designed to confuse customers. The court refused to create "a license to cause confusion" by focusing on the use in commerce requirement, and it is therefore increasingly likely that the Rescuecom case will ultimately be determined on the question of whether there is a likelihood of confusion.
Likelihood of confusion
Likelihood of confusion requires that an "appreciable number of ordinarily prudent purchasers are likely to be misled or confused as to the source of the goods in question". Confusion must relate to the origin or association of the product and this must be distinguished from any confusion the consumer may experience simply by being faced with a number of different options.
The ordinary internet user is probably used to a search engine retrieving a number of irrelevant hits, including advertisements and sponsored links. It is therefore difficult to see how a court could find there is a likelihood of confusion as to origin in the circumstances of the Rescuecom case where the trade mark is not used in the heading or text of the advertisement or sponsored link. Nevertheless, the court has left the question of confusion open and the outcome of the case will depend on the evidence submitted by Rescuecom and Google.
Why this matters:
The law in this area remains unsettled not only in the US but worldwide and is proving a fertile ground for litigation. The outcome of an AdWords case can have huge implications for advertisers, search engines and those trying to protect their brands. The courts are likely to have difficulty in applying the laws of trade mark infringement to the questions thrown up by AdWord cases as the issues would not have been foreseen by the legislators at the time.
By referring Rescuecom Corp v Google back to the District Court, the US Court of Appeals has reversed what had been a decisive victory for Google. Since 2004 Google's policy in the US has been to allow any party to bid on an AdWord regardless of whether it is a trade mark, and in May 2008 this policy was extended to the UK. The eventual outcome of the Rescuecom case could force Google to revise its AdWords policy in the US and perhaps elsewhere.
