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Generally speaking, to prevail on a claim of trademark infringement under the federal Lanham Act, a plaintiff must establish that it has a valid trademark that is entitled to protection and that the defendant used the mark in commerce, in connection with the sale or advertising of goods or services without the plaintiff's consent.1
The "use in commerce" requirement has frequently been litigated and examined in the bricks-and-mortar business context. However, courts in a number of recent cases have considered whether a defendant has used a plaintiff's trademark "in commerce" in a new context, involving search engines. Interestingly, federal courts in New York and courts in other circuits across the country have reached significantly different conclusions on this issue.
Consider, for example, last October's decision by the U.S. District Court for the District of New Jersey in Buying for the Home v. Humble Abode.2 The parties in this case were competitors in the business of online furniture retailing, with the plaintiff operating totalbedroom.com and the defendant operating humbleabode.com. The plaintiff alleged violations of §43(a) of the Lanham Act,3 claiming the defendant had misappropriated its trademark TOTAL BEDROOM by causing an ad and a link for the defendant's Web site to appear on the Google search engine when the search phrase "total bedroom" was entered by a user. The defendant argued that the plaintiff's "infringement by search engine" claim had to fail, and the parties moved for summary judgment.
In its decision, the court noted that Google and other search engines sell advertising linked to search terms, so when a consumer enters a particular term, the results page displays not only a list of sites generated by the search engine program using neutral and objective criteria but also links to sites of paid advertisers (so-called "sponsored links").4 The court pointed out that the ad and link to the defendant's site appeared on the far right of the user's screen, separate and apart from the search results list, under a "sponsored links" heading, and that the defendant's ad did not display the mark TOTAL BEDROOM.
The court then stated it was mindful of the challenges that sometime arise in applying existing legal principles in the context of newer technologies, declaring that the defendant's alleged use of the plaintiff's mark was certainly not a traditional "use in commerce." Nonetheless, the court found that the plaintiff had satisfied the "use" requirement of the Lanham Act.
First, it stated, the alleged purchase of the keyword was a commercial transaction that occurred "in commerce," trading on the value of the plaintiff's mark. Second, the court continued, the defendant's alleged use was both "in commerce" and "in connection with any goods or services" in that the plaintiff's mark was allegedly used to trigger commercial advertising that included a link to the defendant's furniture retailing site.
Therefore, the court ruled, not only was the alleged use of the plaintiff's mark tied to the promotion of the defendant's goods and retail services, but the mark was used to provide a computer user with direct access (i.e., a link) to the defendant's site through which the user could make furniture purchases. The court found these allegations "clearly" satisfied the act's use requirement.
Another district court addressing similar claims on similar facts reached the same conclusion. In Edina Realty, Inc. v. Themlsonline.com,5 the defendant, a direct competitor of the plaintiff, had purchased from Google and Yahoo! search terms that were identical or similar to the plaintiff's EDINA REALTY trademark.
In denying the defendant's motion for summary judgment, the court found that its use of the mark constituted a "use in commerce" under the Lanham Act, holding that the defendant used the Edina Realty mark commercially in that it purchased search terms that included the Edina Realty mark to generate its sponsored link advertisement.
Claims that use of another company's registered trademark in metadata or as part of a sponsored search constitutes use of a trademark in commerce under the Lanham Act have generally been sustained by courts outside the Second Circuit.6
However, a recent decision by the U.S. District Court for Eastern District of New York, in Fragrancenet.com, Inc. v. Fragrancex.com, Inc.,7 illustrates the New York courts' rationale and analysis.
The Fragrancenet decision was issued after the plaintiff sought leave to file an amended complaint to add claims based on the defendant's alleged misuse of the plaintiff's trademark as a keyword to prompt the defendant's appearance as a sponsored link in Google's search engine and by inclusion of the plaintiff's trademark in the defendant's Web site metatags.8 The defendant opposed the amendment on futility grounds, arguing that the allegations could not survive a motion to dismiss. The court agreed with the defendant.
The Fragrancenet court began its analysis with the decision by the U.S. Court of Appeals for the Second Circuit in 1-800 Contacts, Inc. v. WhenU.com, Inc.9 In that case, the circuit addressed whether 1-800 Contacts, Inc.'s trademark was infringed in violation of the Lanham Act where the defendant caused pop-up ads of 1-800's competitors to appear on the desktops of users who downloaded the defendant's software when those computer users accessed 1-800's site.
The circuit reversed the district court's entry of a preliminary injunction and remanded for dismissal of the plaintiff's trademark infringement claim, holding that the plaintiff could not establish that its trademarks were "used" within the meaning of the Lanham Act. It noted that the defendant had placed 1-800's Web address, not its trademark, in the directory that triggered the delivery of the pop-up ads. The circuit explained that a company's internal utilization of a trademark in a way that did not communicate it to the public did "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."
NO 'USE' EXISTED
The Fragrancenet court then found that the reasoning of 1-800 Contacts supported the conclusion that no Lanham Act "use" existed for the use of a trademark in a keyword or metatag. As the court explained, it would be inconsistent with the reasoning set forth in 1-800 Contacts to conclude that the use of trademarks in keywords and metags constituted Lanham Act "use" where the defendant did not place the trademark on any product, good, or service and it was not used in any way that would indicate source or origin.
The court concluded that the use of the plaintiff's trademark in this case was "strictly internal" and, because the use was not communicated to the public, it did not indicate source or origin of the mark and did not amount to a "use in commerce."
Other federal courts in New York have also relied on the Second Circuit's decision in 1-800 Contacts to hold that the utilization of a trademark with respect to a "sponsored link" was not "use" within the meaning of the Lanham Act.
In Merck & Co., Inc. v. Mediplan Health Consulting, Inc.,10 the court held that the trademark ZOCOR was not "used in commerce" when it was purchased by the defendants, Canadian online pharmacies, as a keyword for sponsored links from internet search engines Yahoo! and Google.
Specifically, the court found that the use at issue in the search engine context - that is, the use of the trademark to trigger defendants' Web sites as sponsored links - did not involve "placement" of the trademark "on any goods or containers or displays or associated documents" or use "to indicate source or sponsorship" and thus was "not use of the mark in a trademark sense."
As the court explained, the defendants did not "place" the ZOCOR marks on goods, containers, displays, or associated documents, nor did they use the marks to indicate source or sponsorship. Rather, the court said, the marks were used only in the sense that a search of the keyword "Zocor" would trigger the display of sponsored links to the defendants' sites. This internal use of the keyword "Zocor" was not use of the mark in the trademark sense; instead, the court concluded, this use was more akin to the product placement marketing strategy employed in retail stores, where, for example, a drug store places its generic products alongside similar national brand products to capitalize on the latter's name recognition.
SIMILAR CASES
Similarly, in Rescuecom Corp. v. Google, Inc.,11 the court held that the use of a trademark as a keyword was not "use" within the meaning of the Lanham Act. Specifically, the court concluded that, "in the absence of allegations that defendant placed plaintiff's trademark on any goods, displays, containers, or advertisements, or used plaintiff's trademark in any way that indicates source or origin, plaintiff can prove no facts in support of its claim which demonstrate trademark use."
Then, in Site Pro-1, Inc. v. Better Metal,12 the court held that the use of a plaintiff's trademark as a metatag and the purchase of plaintiff's trademark for a Yahoo! search algorithm were not "uses" within the meaning of the Lanham Act and granted defendant's motion to dismiss plaintiff's claims of trademark infringement, unfair competition and dilution under the Lanham Act, and common law unfair competition.
In so holding, the court observed that "courts in other circuits have generally sustained such claims," but recognized that "courts in this [c]ircuit . . . have largely rejected such claims." Persuaded by the reasoning in Merck & Co. and Rescuecom, as well as by the underlying rationale of 1-800 Contacts, the court determined that "[t]he key question is whether the defendant placed plaintiff's trademark on any goods, displays, containers, or advertisements, or used plaintiff's trademark in any way that indicates source or origin." Because the complaint contained no such allegation, the court held that Lanham Act "use" was not alleged.13
CONCLUSION
Under Second Circuit case law, utilization of a trademark in a way that does not communicate the trademark to the public does not violate the Lanham Act. Accordingly, at least in this circuit, one company's use of another's trademark as a keyword in a search engine or as a metatag on its Web site does not violate the act.
Although some courts elsewhere disagree, New York courts find that search engine trademark infringement does not occur in these situations because there is no use of the plaintiff's trademark on any goods, displays, containers, advertisements, or elsewhere to indicate source or origin.
Shari Claire Lewis, a partner at Rivkin Radler in Uniondale, specializes in litigation in the areas of Internet, domain name, and computer law as well as professional liability and medical device and product liability. She can be reached at shari.lewis@rivkin.com.
Endnotes:
1. See, e.g., 1-800 Contacts, Inc. v. WhenU.com, Inc., 414 F.3d 400 (2d Cir. 2005), cert denied, 546 U.S. 1033 (2005).
2. 459 F. Supp. 2d 310 (D.N.J. 2006).
3. 15 U.S.C. §1125(a).
4. See, e.g., Gov't Employees Ins. Co. v. Google, Inc., 330 F. Supp. 2d 700 (E.D. Va. 2004).
5. 2006 U.S. Dist. Lexis 13775 (D. Minn. March 20, 2006).
6. See, e.g., Australian Gold Inc. v. Hatfield, 436 F.3d 1228 (10th Cir. 2006); Brookfield Communications v. West Coast Entertainment Corp., 174 F.3d 1036 (9th Cir. 1999); J.G. Wentworth, S.S.C. Ltd. P'ship v. Settlement Funding LLC, 2007 U.S. Dist. Lexis 288 (E.D. Pa. Jan. 4, 2007); Google Inc. v. Am. Blind & Wallpaper Factory, Inc., 2005 U.S. Dist. Lexis 6228 (N.D. Cal. March 30, 2005); Gov't Emples. Ins. Co. v. Google, Inc., 330 F. Supp. 2d 700 (E.D. Va. 2004).
7. 493 F. Supp. 2d 545 (E.D.N.Y. 2007).
8. Metatags are codes that provide search engines with information about the content of a site, which provides the basis for ranking and displaying the site in the results of a search conducted for a word or term contained in a metatag.
9. 414 F.3d 400, supra.
10. 425 F. Supp. 2d 402 (S.D.N.Y. 2006).
11. 456 F. Supp. 2d 393 (N.D.N.Y. 2006).
12. 2007 U.S. Dist. Lexis 34107 (E.D.N.Y. May 9, 2007).
13. Cf. Hamzik v. Zale Corp./Delaware, 2007 U.S. Dist. Lexis 28981 (N.D.N.Y. April 19, 2007) (court agreed with reasoning in Rescuecom and Merck but denied motion to dismiss because a search of plaintiff's trademark not only returned defendant's site among the search results but plaintiff's trademark also appeared next to defendant's name, demonstrating that plaintiff's trademark could be displayed in a way indicating an association with defendant).
