IP book. Keyword Advertising. the. Chapter 12. Christopher R. Sullivan Mark R. Privratsky Lindquist & Vennum P.L.L.P.

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1 The IP Book 2011 the IP book Chapter 12 Keyword Advertising Christopher R. Sullivan Mark R. Privratsky Lindquist & Vennum P.L.L.P. If any aspect of trademark infringement has come to dominate the current crop of keyword advertising cases, it is the analysis of whether the purchase of certain keyword search terms is likely to confuse consumers. Within the past few years the earlier legal issue of whether the purchase of such keyword search terms constitutes use in commerce for the purposes of trademark infringement seems to have been answered almost unanimously as yes. With that legal hurdle mostly out of the way, cases have proceeded to the more fact-specific inquiry of likelihood of confusion. The year in keyword advertising cases has been marked by a small number of significant cases along with additional cases dealing with the issue of likelihood of confusion. These likelihood of confusion cases present a caution for practitioners to treat keyword advertising litigation like trademark infringement cases that do not involve the Internet. Evidence of consumer confusion seems to be an increasingly important factor when courts analyze keyword advertising claims. 149

2 Chapter 12 Keyword Advertising I. Major Developments A. Network Automation Probably the most important case to weigh in on issues affecting the legal analysis of keyword advertising is Network Automation, Inc. v. Advanced Systems Concepts, Inc., 638 F.3d 1137 (9th Cir. 2011), where the Ninth Circuit reversed the district court s grant of an injunction because the keywords were not likely to cause initial interest confusion. The parties in Network Automation are competitors in the field of job scheduling and management software. Network Automation sells a software product called AutoMate, while Advanced Systems sells its competing software product under the name ActiveBatch. Network Automation purchased ActiveBatch as a keyword search term from Google s AdWords program and on Microsoft s Bing search engine. After receiving a cease and desist letter from Advanced Systems, Network Automation filed an action seeking a declaratory judgment of non-infringement. Advanced Systems counterclaimed for infringement and sought a preliminary injunction. The district court found that Advanced Systems was likely to prevail on the merits of its trademark infringement claim and granted the preliminary injunction. On appeal, however, the Ninth Circuit concluded that use of the mark was not likely to cause initial interest confusion. The court of appeals agreed with the district court that the keyword purchases of Advanced System s trademark satisfied the use in commerce requirement. The focus then turned to whether Network Automation s use of the ActiveBatch keyword was likely to cause consumer confusion. The court of appeals examined eight factors to determine whether consumers likely would be confused by the related goods. As a threshold matter, however, the court of appeals examined its earlier Internet cases that had emphasized the importance of three likelihood of confusion factors in cases addressing trademark infringement on the Internet. In Brookfield Communications, Inc. v. West Coast Entertainment Corp., 174 F.3d 1036 (9th Cir. 1999), the court of appeals emphasized the similarity of the marks, the relatedness of the goods or services, and the simultaneous use of the Internet as a marketing channel. Here, however, the Ninth Circuit clarified that this troika of factors was most appropriate for domain name disputes. The court went on to reiterate that the eight trademark infringement factors were non-exhaustive and should be applied flexibly, particularly in matters of Internet commerce. Moving on to the factors, the court of appeals concluded that ACTIVEBATCH is an inherently distinctive suggestive mark. Thus, consumers depending on their sophistication are likely to be searching for a particular product by means of the keyword search, rather than a category of goods or services. The appeals court found that the products at issue were virtually interchangeable, but balked at weighing this factor in isolation without an examination of the appearance 150

3 The IP Book 2011 of the ads and the degree of care exercised by consumers of such products. The court of appeals disagreed with the district court and concluded that consumers searching for expensive products online would be more sophisticated than the average consumer. The Ninth Circuit discounted the importance of evidence of actual confusion because neither party introduced evidence one way or the other. Accordingly, the court of appeals gave this factor no weight. The court also minimized the importance of the marketing channels factor because an Internet presence and Internet marketing are commonplace these days. As for Network Automation s intent, the court of appeals disagreed with the district court s consideration of this factor in isolation without first determining whether the plaintiff s intent was to deceive or to compare its product to that of the plaintiff. Finally, the court of appeals created an additional factor to be considered in keyword advertising cases. This factor probes the surrounding context and position of the ads, including the manner in which they are labeled on a user s computer screen and the segregation of the sponsored links into a separately labeled section. Using a more flexible approach in arranging and weighing the factors, the court of appeals concluded that the district court erred by relying too heavily on the Internet troika of cases related to domain names. Likely consumer confusion, the court concluded, was the linchpin of trademark infringement without which Advanced Systems was not likely to prevail. PRACTICE TIP Likely consumer confusion is the sine qua non of trademark infringement. B. Jurin With greater initial success than his initial complaint, see Jurin v. Google, Inc., 2010 WL (E.D. Cal. Sept. 8, 2010) (granting dismissal of claims with leave to amend) and Jurin v. Google, Inc., 695 F. Supp. 2d 1117 (E.D. Cal. 2010) (same), plaintiff Daniel Jurin filed another lawsuit against Google alleging trademark violations arising from Google s AdWords program. In Jurin v. Google, Inc., 2011 WL (E.D. Cal. Feb. 15, 2011), the district court permitted Jurin s claims for false association and false advertising to proceed while dismissing his claim for breach of contract. Jurin s case stands out as one of the few cases allowed to proceed against Google as a defendant in a keyword advertising case. Jurin s complaint centers around Google s keyword advertising suggestion tool, which identifies commonly searched terms and suggests them to bidders as part of the AdWords program. Here, Jurin owns a company that markets and sells certain building materials under the trade- 151

4 Chapter 12 Keyword Advertising mark STYROTRIM. According to Jurin s complaint, Google AdWords suggested Styrotrim as a keyword to potential bidders. For its part, Google has a policy to investigate complaints by trademark holders for trademarks appearing in the text of web ads, not the keyword bidding process. Jurin sued Google alleging that the AdWords suggestion tool and resulting sponsored links were misappropriations of the STYROTRIM mark for Google s profit. Jurin first alleged that the AdWords suggestion tool constituted a false association under 15 U.S.C. 1125(a)(1)(A) by claiming that Google s use of the AdWords program and the keyword suggestion tool created a false association between the keyword Styrotrim and building materials offered for sale by Jurin s competitors. The confusion, as argued by Jurin, is that consumers searching Styrotrim on Google may be confused by the sponsored links included in the results as to whether those competitors produce or are associated with the makers of Styrotrim. Google, on the other hand, argued that because it was not a producer of building material, section 1125(a)(1)(A) does not provide a basis for a claim against Google. The district court rejected Google s narrow reading of the statutory provision because subsection (A) does not require Google to be a direct competitor of Jurin. The court concluded that section 43(a) of the Lanham Act does not require Google to be the producer of goods in order for Jurin to bring a claim of false association. Having allowed the claim for false association to proceed, the district court quickly dealt with Google s motion to dismiss Jurin s false advertising claim. The court noted that because Jurin had brought his claim under 15 U.S.C. 1125(a), which protects against both false association (section 1125(a)(1)(A)) and false advertising (section 1125(a)(1)(B)), and because Jurin had stated a claim for false association, the court declined to address whether Jurin and Google were direct competitors for the purposes of the false advertising claim. Finally, Jurin also brought a claim for breach of contract based on breach of an express contractual provision and breach of the implied covenant of good faith and fair dealing. Jurin pointed to Google s policies regarding the AdWords program as a contract between Jurin and Google. The court reasoned that Jurin had not alleged any facts supporting the position that the AdWords policy was, in fact, a contract. The court further noted that Jurin s complaint contained facts that demonstrated Google had not violated its stated AdWords policy. The court also foreclosed Jurin s allegation of a violation of the implied covenant of good faith and fair dealing. Jurin argued that Google breached the implied covenant of good faith and fair dealing by investigating only those trademark violations that appear in the sponsored ads and not in the keywords themselves. This policy, Jurin alleged, fostered misuse of trademarks via the AdWords program and the keyword suggestion tool. The court saw it differently; Google 152

5 The IP Book 2011 followed the terms of its policy, thus satisfying good faith. The court declined to allow Jurin to use the implied covenant of good faith and fair dealing to override express provisions of Google s policies, especially where those policies do not constitute a contract between Jurin and Google. The court dismissed the contract claims and permitted Jurin s Lanham Act claims to proceed. PRACTICE TIP Lawsuits against Google for its AdWords program have not been as prevalent as suits against competitors for their keyword search term purchases. The case of Rosetta Stone v. Google, 97 U.S.P.Q.2d 1855 (E.D.Va 2010) (discussed last year) is currently on appeal. The outcome of that case may affect future litigation against search engines. C. Habush Not content following the slowly growing list of keyword advertising cases brought under theories of trademark infringement and unfair competition, the plaintiffs in the recently decided case of Habush v. Cannon, No. 09-CV (Wis. Cir. Ct. June 8, 2011), attempted to take their keyword advertising case in a new direction based on an invasion of privacy theory. The plaintiffs in the case are personal injury lawyers at a law firm with offices throughout Wisconsin. The defendants are also personal injury lawyers. The defendants purchased the terms Habush and Rottier as search engine keywords from Google, Yahoo!, and Bing. As a result of these purchases, sponsored links to the defendants competing law firm appeared above the organic results. Asserting a property interest in their respective names, the plaintiffs sought to enjoin the defendants from continued use of the sponsored links as a violation of their individual rights of publicity. Wisconsin Statutes section (2)(b) defines an invasion of privacy in relevant part as the use of a living person s name for advertising purposes or for purposes of trade without the person s written consent. Given the specialized nature of the claim, the court had to reconcile a number of competing issues and interests. The court s analysis began with the defendants affirmative defenses of First Amendment protection and unclean hands. On the first contention, the court concluded that the computerized process for generating the sponsored links was not speech. Specifically, the generation of search results from entry of a keyword into a search engine is not a message that has content entitling it to First Amendment protection. 153

6 Chapter 12 Keyword Advertising The defendants asserted that because the plaintiffs had engaged in a similar Internet strategy to generate web traffic, the doctrine of unclean hands barred the plaintiffs from the equitable relief that they sought. The plaintiffs apparently had advertised on various Internet directory sites such as Anywho, Yellowpages, and 411Search. Those ads, however, were not triggered off particular keywords. Instead, they were subject-based ads for categories such as attorneys or personal injury attorneys. Evidence also suggested that the directory services may have created the link between the defendants names and the plaintiffs ads. Thus, the court reasoned that the defense of unclean hands was unavailable to the defendants. The district court next turned to the application of the privacy statute to the facts presented by the parties. Similar to the use in commerce prong of trademark infringement analysis, the district court concluded that the defendants purchase of the keywords constituted use for the purposes of the privacy statute. The court rejected the defendants assertion that some form of open display of the names was required. The court relied on a broad interpretation of the term use and applied that interpretation to the defendants purchase of the names as search engine keywords. Other aspects of the statutory application equally favored the plaintiffs. The court concluded that the sponsored ads were indeed used for advertising or for the purpose of trade despite the fact that the plaintiffs names do not appear in the sponsored links. The fact that the keywords represented the plaintiffs names was not in dispute. And neither plaintiff gave the defendants written consent to use their names for any purpose. (The court rejected the defendants attempt to argue that plaintiffs agreements with Google, Bing, and Yahoo! effectively granted consent to the defendants to use their names as keywords.) The plaintiffs therefore established that their privacy had been invaded. Unfortunately for them, the court also had to analyze whether the invasion was done unreasonably. The determination of reasonableness, the court reasoned, requires the weighing and balancing of several factors, including historic methods of competition, the integration between the individual and the law firm, user confusion, developments in the arena of Internet advertising, business practices, and attorney ethics. Although the court made its way through each of these factors, certain facts seemed to tip the balance in favor of a finding of reasonableness. First, the plaintiffs names were both part of the name of the law firm, Habush Habush & Rottier, S.C. This, the court noted, implied that the plaintiffs had used their names and reputations to endorse their law firm. Second, the court took an extremely positive view of Internet users and consumers, who, the court noted, have learned to be skeptical about the first impression they may receive from a web page or commercial advertisement. The court added that people are capable of scanning, comparing, and contrast- 154

7 The IP Book 2011 ing search results. Finally, the court struggled with the nature of search engines and sponsored links generally. According to the court, the nature of the Internet seems to make such keyword purchase reasonable for the purposes of an invasion of privacy lawsuit. Taken together and balanced against each other, the court concluded that the defendants purchase of the plaintiffs names as search engine keywords was not unreasonable. Accordingly, the district court granted summary judgment for the defendants. Predictably, and because this is a district court opinion, the plaintiffs indicated they will appeal the decision. D Contacts The retailer Contacts is no stranger to keyword advertising litigation. The company was a party to the pivotal case, Contacts, Inc. v. WhenU.com, Inc., 414 F.3d 400 (2d Cir. 2005), which analyzed the issue of use in commerce in trademark infringement litigation involving pop-up ads triggered by an internal look-up table of web addresses. Recently, Contacts has been a party to two more keyword advertising cases that have resulted in relevant court opinions. In the first, Contacts, Inc. v. Memorial Eye, P.A., 2010 WL (D. Utah Dec. 13, 2010), the defendant asserted an unclean hands affirmative defense based on the assertion that Contacts buys competitor keywords as search terms. The court rejected the defense because Contacts purported inequitable conduct was not directed towards the public or at the defendant and thus not related to Contacts cause of action as required by Worthington v. Anderson, 386 F. 3d 1314 (10th Cir. 2004) and Utah Lighthouse Ministry, Inc. v. Discovery Computing, Inc., 2005 WL (D. Utah Dec. 1, 2005). The court also granted Contacts summary judgment on trademark misuse under the same theory. The second case, Contacts, Inc. v. Lens.com, Inc., 755 F. Supp. 2d 1151 (D. Utah 2010), involved a more extensive analysis of keyword ad search terms and trademark infringement. The parties are competitors in the contact lens replacement industry. Plaintiff owns the registered service mark 1800CONTACTS, while the defendant owns the service mark GET-LENS. The court noted that both parties purchased thousands of keywords for Internet marketing purposes. Among the defendant s purchases were nine keywords that involved variations of the plaintiff s service mark. Those nine keywords apparently generated only $20.51 in profits for the defendant. The plaintiff, on the other hand, earned approximately $219,314 in profits from 13 keywords that included variations of the defendant s service mark. On cross motions for summary judgment, the district court concluded that there was insufficient evidence for a jury to conclude that the defendant infringed the plaintiff s service mark. First and foremost, the court reached the standard conclusion that keywords that resemble the plaintiff s service mark used to trigger sponsored links constitute use in commerce for the 155

8 Chapter 12 Keyword Advertising purposes of the Lanham Act. The analysis then turned to an extensive examination of the various factors contributing to likelihood of confusion. For the ads promoted by the defendant, the court concluded that although certain factors such as similarity of the products, similarity in the manner of marketing, and degree of care exercised by consumers (low) weighed in favor of the plaintiff, other, more important factors weighed in favor of the defendant. The court found that (1) the defendant had a neutral intent in its marketing methods and ad copy; (2) there was an overwhelming dissimilarity between the plaintiff s service mark and the defendant s advertisements; and (3) there was a general lack of likelihood of confusion and a lack of encroachment by the defendant s ads. The court also examined the issue of secondary infringement by the defendant arising from the defendant s network of more than 10,000 affiliate marketers. Under its affiliate marketing program, the defendant could set terms and conditions of click-through marketing that affiliates must follow. Certain affiliates used the defendant s service mark in their advertisements. But the court concluded that there was no degree of agency relationship between the defendant and the affiliates such that vicarious liability for the defendant would be proper. Moreover, there was no evidence that the defendant intentionally induced any of its affiliates to infringe the plaintiff s service mark or that the defendant failed to take corrective action to stop publication of such ads. In short, the defendant s affiliate marketing program did not create secondary liability for the defendant. PRACTICE TIP When advising a client in this area, determine early on whether the client is participating in a keyword advertising program and what keyword search terms are being purchased. A defendant may have a possible counterclaim for trademark infringement or an affirmative defense of unclean hands. II. Additional Likelihood of Confusion Cases A. Binder Given that keyword advertising cases are still newcomers on the trademark infringement scene, trials on the merits are relatively rare. One recent decision, Binder v. Disability Group, Inc., 2011 WL (C.D. Cal. Jan. 25, 2011), followed a bench trial and highlights the importance of evidence supporting the alleged likelihood of confusion or actual confusion. In Binder, a large group of plaintiffs pursued claims for trademark infringement, false representation, and common law unfair competition against the Disability Group. For a seven-month period in 2006, the Dis- 156

9 The IP Book 2011 ability group used the plaintiff s BINDER AND BINDER trademark as purchased keywords on Google. Not surprisingly, the court found that the purchase of the Binder and Binder keywords constituted use in commerce. With respect to likelihood of confusion, the district court found that the plaintiffs had established strong likelihood of confusion. In particular, the court identified evidence of actual confusion entered into the record via a survey expert and deposition testimony of website users. The survey and the deposition testimony demonstrated that users clicking on search results were confused and thought they were visiting the plaintiffs website rather than that of the Disability Group. This evidence, although not the only evidence submitted on the issue at trial, weighed in favor of finding likely consumer confusion. From this conclusion, it was short work for the court to find in favor of the plaintiffs on all three causes of action. B. Montana Camo Proof of likelihood of confusion also featured significantly in Montana Camo, Inc. v. Cabela s, Inc., 2011 WL (D. Mont. Feb 23, 2011). Montana Camo sued Cabela s for various trademark infringement claims under the Lanham Act. Cabela s moved for summary judgment on those claims. In relevant part, the district court examined the effect of Cabela s purchase of a sponsored link triggered off of the search term Montana Camo on Montana Camo s false advertising and unfair competition claims. In the first instance, the court held that the purchase of a sponsored link by means of keywords is not a statement of fact in support of a false advertising claim. Moreover, the court noted that Montana Camo products were, in fact, sold on the Cabela s web site. As to Montana Camo s unfair competition claim pursuant to 15 U.S.C. 1125(a)(1)(A), the court rejected the claim because Montana Camo had failed to allege that consumer confusion was caused by Cabela s purchase of the Montana Camo keyword. Specifically, Montana Camo alleged and provided support for its assertion that there was ongoing confusion regarding its products as distinguished from similar products sold by Cabela s. But while Montana Camo did identify confusion between its products and those of Cabela s, it failed to provide evidentiary support for the assertion that Cabela s purchase of the Montana Camo keyword phrase caused the confusion. Accordingly, the district court granted Cabela s summary judgment on the claim. 157

10 Chapter 12 Keyword Advertising PRACTICE TIP Do not assume that a case for trademark infringement by keyword advertising search terms is not going to require full development of discovery and evidence, particularly in the area of consumer confusion. C. Starsurgical Failure to demonstrate how use of a trademark as a keyword confuses consumers also tripped up the plaintiff in Starsurgical, Inc. v. Aperta, LLC, 2011 WL (E.D. Wis. May 24, 2011). Although Starsurgical successfully obtained a preliminary injunction against the defendants for their use of the registered mark WITTMAN PATCH on products sold to relevant customers, the district court rejected Starsurgical s claim that the purchase of Wittman Patch as a search engine keyword demonstrated the requisite likelihood of confusion. Instead, the court noted that Starsurgical had made no effort to explain how the keyword purchase or the resulting sponsored link confused consumers. D. SnoWizard In a recent decision involving metatags, the United States District Court for the Eastern District of Louisiana rejected the assertion that mere use of a metatag was sufficient to establish as a matter of law likelihood of confusion due to initial interest confusion on the part of consumers. In Southern Snow Manufacturing Co. v. Sno Wizard Holdings, Inc., 2011 WL (E.D. La. Feb. 16, 2011), SnoWizard as owner of the federally registered SNOWIZARD mark sued thirdparty defendant Parasol for trademark infringement for its use of the phrase snow wizard as a metatag on the Parasol website. Parasol moved for summary judgment, arguing that the metatag use did not constitute use in commerce and that SnoWizard lacked any evidence of actual or likely confusion and damages. The court began its analysis with a look at whether Parasol was entitled to judgment as a matter of law on the issue of likelihood of confusion. SnoWizard, relying on Brookfield Communication, Inc. v. West Coast Entertainment Corp., 174 F.3d 1036 (9th Cir. 1999), argued that likelihood of confusion was established as a matter of law because use of the metatag on the Parasol website gave rise to initial interest confusion. The court acknowledged that earlier cases in the metatag arena supported the assertion that initial interest confusion is possible when a trademark is used as an unauthorized metatag. But the court rejected the contention that unauthorized use of a metatag automatically gives rise to initial interest confusion as a matter of law. The court noted that under 158

11 The IP Book 2011 SnoWizard s proposed analysis, a plaintiff s burden to establish likelihood of confusion would be lessened when a metatag was involved. The court further concluded that SnoWizard had not presented any evidence regarding the effect of the use of the snow wizard metatag on search engines or consumers. The court distinguished the snow wizard metatag from the SNOWIZARD mark and indicated that SnoWizard had failed to introduce evidence whether the two phrases are synonymous to search engines reading the metatag. In the absence of such evidence, the court concluded that SnoWizard could not meet its burden on the issue of likelihood of confusion. Accordingly, the court granted Parasol s motion for summary judgment. PRACTICE TIP Metatag cases have become less frequent because search engines have modified their algorithms to ignore or minimize the effect of metatags in favor of more complex ranking systems for search engine results. 159

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