Can Google Sell Trademarks As Keywords To Trigger Advertising?

If I search for “Delta Airlines” on Google so I can book my flight to Washington D.C. to see the cherry blossoms, can Google sell American Airlines the “Delta” trademark as a keyword to ensure that American’s advertisement appears with my search results?  It does not appear that American Airlines does this, but other companies do and litigation ensues.

The Second Circuit waited until the American Bar Association’sIntellectual Property conference and the bloom of the cherry trees to release its long-awaited decision in Rescuecom Corp. v. Google Inc.  — the first circuit court to directly address the issue of keyword advertising.

For the uninitiated, Google sells keywords to advertisers — including the trademarks of an advertiser’s competitors — which it calls contextual advertising so that when a user types a keyword into a Google search, the advertiser’s link will appear in an area above or to the right of the natural search results labeled “Sponsored Links.”  So a business could “buy” its competitor’s trademark as a keyword to trigger its own advertising in the Sponsor Links section.

One of Rescuecom’s competitors paid Google the right to use the RESCUECOM trademark as a keyword to trigger its advertising. Rescuecom sued Google for trademark infringement, dilution and other claims.  The district court ruled in Google’s favor as had every other district court in the Second Circuit.  The court held that there is no cause of action because, in part,  the user never sees the RESCUECOM trademark — the Google results do not show the trademark in the Sponsored Links section.  But, decisions outside of the Second Circuit held that selling a trademark as a keyword to trigger advertising does state a cause of action for trademark infringement.  For those of you who are a glutton for punishment, you can find the main briefs filed with the circuit court at Professor Eric Goldman’s blog, Technology & Marketing Law Blog.

Apparently, the Second Circuit put a lot of thought in its decision as it took exactly one year to the day from the time it was argued for the court to release its decision.  The decision reversed the district court and held that Rescuecom did state a cause of action and could proceed with proving the rest of the requirements to establish trademark infringement.  Professor Goldman provides one early analysis of the decision.  As the Wall Street Journal noted, however, the Second Circuit decision only allows the case to go forward.

Rescuecom still has to prove the rest of its case before it can declare victory which the Progress & Freedom Foundation (which Google appears to be a member of), does not believe is likely.  Regardless, the decision is noteworthy as the first circuit court to weigh in on whether selling a competitor’s keyword to trigger advertising can be the basis for a trademark infringement lawsuit.  I suspect it will also initiate a new round of litigation against Google in an effort to claim some of the advertising revenue Google receives under this program.

One curious part of the thirty-four page decision is that on page fifteen, the Second Circuit concludes its analysis.   To what do we owe these extra nineteen pages? An Appendix.  Usually, an appendix is the place to dump graphs, pictures and incomprehensible data.  But in this case, the court examines the real nut of the advertising keyword debate. After an exhaustive examination of the statute and legislative history, the court concludes that it can’t reach a conclusion because the statute, the Lanham Act, and its history are just too ambiguous to reach a conclusion!

The court, in the Appendix, then calls on Congress to fix the problem.  Given that Congress is preoccupied with the economic crisis, two wars and a handful of other social issues, I wouldn’t hold my breath while waiting for that to happen.  Perhaps someone at the court decided that the research that they did on the issue should not be buried somewhere never to be seen again, but the Appendix still strikes me as odd.

While we wait for Congress, I suspect that someone in Las Vegas would be willing to take a bet as to which circuit court will be the next one to weigh in on this issue.  My money is on the Ninth Circuit.  What’s your bet?

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About Dave Rein

Dave Rein focuses on and will continue to focus on copyright, trademark and patent litigation until the National Geographic adds him to its staff of photographers. In addition to counseling and litigating on behalf of the firm’s clients, he also helps clients through the Kansas City Volunteer Lawyers and Accountants for the Arts where he also serves as a board member. Prior to representing clients, Dave clerked for a federal district court judge who kindly provided invaluable advice and mentorship
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