The Keyword Plot Thickens as the Internet Troika Suffers Its Demise at the Hands of the Sleekcraft Factors: Ninth Circuit Addresses Confusion and Keywords

It is not too early to wax nostalgic about the Internet and trademark infringement. It seems so long ago that the Ninth Circuit, in discussing metatags and initial interest confusion, said:

Using another's trademark in one's metatags is much like posting a sign with another's trademark in front of one's store. Suppose West Coast's competitor (let's call it "Blockbuster") puts up a billboard on a highway reading - "West Coast Video: 2 miles ahead at Exit 7" - where West Coast is really located at Exit 8 but Blockbuster is located at Exit 7. Customers looking for West Coast's store will pull off at Exit 7 and drive around looking for it. Unable to locate West Coast, but seeing the Blockbuster store right by the highway entrance, they may simply rent there. Even consumers who prefer West Coast may find it not worth the trouble to continue searching for West Coast since there is a Blockbuster right there. Customers are not confused in the narrow sense: they are fully aware that they are purchasing from Blockbuster and they have no reason to believe that Blockbuster is related to, or in any way sponsored by, West Coast. Nevertheless, the fact that there is only initial consumer confusion does not alter the fact that Blockbuster would be misappropriating West Coast's acquired goodwill.

Brookfield Communs. v. W. Coast Entm't Corp., 174 F.3d 1036 (9th Cir. Cal. 1999) [enhanced version available to lexis.com subscribers]

Fast forward to the new millennium, and confusion sets in, especially when discussing the infringability of keywords. Since Brookfield, several analogies have been offered to illustrate keywords in the context of initial interest confusion. A few include:

For example, consider the following scenario: I walk into Macy's and ask for the Calvin Klein section and am directed upstairs to the second floor. Once I get to the second floor, on my way to the Calvin Klein section, I notice a more prominently displayed line of Charter Club clothes, Macy's own brand, designed to appeal to the same people attracted by the style of Calvin Klein's latest line of clothes. Let's say I get diverted from my goal of reaching the Calvin Klein section, the Charter Club stuff looks good enough to me, and I purchase some Charter Club shirts instead. Has Charter Club or Macy's infringed Calvin Klein's trademark, simply by having another product more prominently displayed before one reaches the Klein line?  Certainly not.

Playboy Enters. v. Netscape Communs. Corp., 354 F.3d 1020 (9th Cir. Cal. 2004) (Berzon, Circuit Judge, concurring) [enhanced version / unenhanced version available from lexisONE Free Case Law]

keyword purchasing may, in many cases, be analogized to a drug store that "typically places its own store-brand generic products next to the trademarked products they emulate in order to induce a customer who has specifically sought out the trademarked product to consider the store's less-expensive alternative." The generic product capitalizes on the recognizable brand name but the consumer benefits by being offered a lower-cost product. At no point is the consumer confused about the alternatives presented to her. The goodwill invested in the protected mark remains undisturbed while the consumer reaps the benefit of competing goods. Trademark infringement would seem to be unsupportable in this scenario. Mere diversion, without any hint of confusion, is not enough.

Hearts on Fire Co., LLC v. Blue Nile, Inc., 603 F. Supp. 2d 274 (D. Mass. 2009) [enhanced version] (citing 1-800 Contacts, Inc. v. WhenU.com, Inc., 414 F.3d 400 (2d Cir. N.Y. 2005) [enhanced version / unenhanced version] and refusing to dismiss plaintiff's keyword infringement claim)

Here, Plaintiff contends Lens.com advertisements constitute a similar "bait and switch" that spawns confusion. Plaintiff asserts that whenever a Lens.com advertisement appears when a consumer enters the search term "1800Contacts," it is akin to a consumer asking a pharmacist for Advil and the pharmacist handing the consumer Tylenol. This analogy mischaracterizes how search engines function. A more correct analogy is that when a consumer asks a pharmacist for Advil, the pharmacist directs the consumer to an aisle where the consumer is presented with any number of different pain relievers, including Tylenol. If a consumer truly wants Advil, he or she will not be confused by the fact that a bottle of Tylenol is on a shelf next to Advil because of their different appearances.

1-800 Contacts, Inc. v. Lens.com, Inc., 2010 U.S. Dist. LEXIS 132389 (D. Utah Dec. 14, 2010) [enhanced version] (holding that "the mere purchase of a trademark as a keyword cannot alone result in consumer confusion")

The aforementioned examples appear to point to keywords as non-infringing, but analogies do not necessarily make the law. However, the Ninth Circuit recently addressed the issue, and instead of presenting another analogy, the court presented specifics regarding keyword infringement.

Last week's decision in Network Automation, Inc. v. Advanced Sys. Concepts, 2011 U.S. App. LEXIS 4488 (9th Cir. Cal. Mar. 8, 2011) [enhanced version / unenhanced version] is important for several reasons. At the outset, the Ninth Circuit aligned itself with Rescuecom Corp. v. Google, Inc., 562 F.3d 123 (2d Cir. N.Y. 2009) [enhanced version / unenhanced version] by holding that:

Previously we have assumed, without expressly deciding, that the use of a trademark as a search engine keyword that triggers the display of a competitor's advertisement is a "use in commerce" under the Lanham Act. We now agree with the Second Circuit that such use is a "use in commerce" under the Lanham Act.

The court then held that in resolving the question of infringement, the test in AMF, Inc. v. Sleekcraft Boats, 599 F.2d 341 (9th Cir. Cal. 1979) [enhanced version] had to be applied in a flexible manner, keeping in mind that the eight factors it recited were not exhaustive, and that only some of them were relevant to determining whether confusion was likely in the case at hand. The Sleekcraft factors include:

[1] strength of the mark;

[2] proximity/relatedness of the goods;

[3] similarity of the marks;

[4] evidence of actual confusion;

[5] marketing channels used;

[6] type of goods and the degree of care likely to be exercised by the purchaser;

[7] defendant's intent in selecting the mark; and

[8] likelihood of expansion of the product lines.

In finding the Sleekcraft factors to be a nonexhaustive list of factors relevant to determining the likelihood of consumer confusion, the court reigned in Brookfield's "Internet trinity" or "Internet troika," refusing to enshrine (1) similarity of the marks, (2) relatedness of the goods or services, and (3) simultaneous use of the Web as a marketing channel, as the three most important factors for trademark infringement on the Internet. The court held that:

Depending on the facts of each specific case arising on the Internet, other factors may emerge as more illuminating on the question of consumer confusion. In Brookfield, we used the "troika" factors to analyze the risk of source confusion generated by similar domain names, but we did not wholesale adopt them in the metatag analysis. Subsequent courts similarly have found the "troika" helpful to resolve disputes involving websites with similar names or appearances. ...

Given the multifaceted nature of the Internet and the ever-expanding ways in which we all use the technology, however, it makes no sense to prioritize the same three factors for every type of potential online commercial activity. The "troika" is a particularly poor fit for the question presented here. The potential infringement in this context arises from the risk that while using Systems' mark to search for information about its product, a consumer might be confused by a results page that shows a competitor's advertisement on the same screen, when that advertisement does not clearly identify the source or its product.

In determining the proper inquiry for this particular trademark infringement claim, we adhere to two long stated principles: the Sleekcraft factors (1) are non-exhaustive, and (2) should be applied flexibly, particularly in the context of Internet commerce. Finally, because the sine qua non of trademark infringement is consumer confusion, when we examine initial interest confusion, the owner of the mark must demonstrate likely confusion, not mere diversion.

The court then went on to examine the eight Sleekcraft factors, and of particular interest, the court, in examining the purchasers' degree of care, pondered a default standard of greater care. The court stated:

We have recently acknowledged that the default degree of consumer care is becoming more heightened as the novelty of the Internet evaporates and online commerce becomes commonplace.  ...

We further explained that we expect consumers searching for expensive products online to be even more sophisticated.

Therefore the district court improperly concluded that this factor weighed in Systems'  favor based on a conclusion reached by our court more than a decade ago in Brookfield and GoTo.com [v. Walt Disney Co., 202 F.3d 1199 (9th Cir. Cal. 2000)] [enhanced version] that Internet users on the whole exercise a low degree of care. While the statement may have been accurate then, we suspect that there are many contexts in which it no longer holds true.

Moreover, in adhering to the non-exhaustiveness of the Sleekcraft factors, the court expanded its examination of keyword infringement by looking beyond Sleekcraft to include "Other Relevant Factors." These other factors were listed as:

In the keyword advertising context the "likelihood of confusion will ultimately turn on what the consumer saw on the screen and reasonably believed, given the context." In Playboy, we found it important that the consumers saw banner  advertisements that were "confusingly labeled or not labeled at all." We noted that clear labeling "might eliminate the likelihood of initial interest confusion that exists in this case."

The appearance of the advertisements and their surrounding context on the user's screen are similarly important here.  ... Google and Bing have partitioned their search results pages so that the advertisements appear in separately labeled sections for "sponsored" links. The labeling and appearance of the advertisements as they appear on the results page includes more than the text of the advertisement, and must be considered as a whole.

For a better understanding of these issues, read:

2-7A Gilson on Trademarks § 7A.09 Banner Ad and Sponsored Link Confusion: Keywords or "Keying" (Non-subscribers can purchase Gilson on Trademarks at the LexisNexis Bookstore)

Internet users conduct searches on search engines by entering various terms, like "children's toys" or "Tiger Woods" or "minivan," and the search engines provide a list of web sites that allegedly contain and therefore have a relationship to the terms entered by the Internet users. Many search engines, which are typically free to Internet users, sell banner advertisements ....

Google Set To Change Its Trademark Policy Throughout Canada And Most Of Europe

On September 14, 2010, Google is set to change its controversial AdWords policy for Canada, the United Kingdom, Ireland and most of the rest of Europe.1 In recent years, Google has systematically altered its AdWords trademark policy - both geographically and in substance - with a tendency toward expanding the circumstances in which an online advertiser is allowed to utilize an unrelated party's trademark.

Up in the Air of Cyberspace - Keyword Advertising and Trademark Infringement

Is the use of your trademark as a keyword in online advertising an infringement on your trademark?

The issue of whether the search engine provider that sells the keyword is liable for trademark infringement is still up in the air in the United States.  In Rescuecom Corp. v. Google Inc. the Court of Appeals for the Second Circuit recently ruled that the sale by Google of a keyword is "use in commerce" of a trademark. 

Anne Gilson LaLonde on Rescuecom v. Google and the Meaning of "Use in Commerce"

In Rescuecom Corp. v. Google, Inc., 562 F.3d 123 (2d Cir. N.Y. 2009), the Second Circuit held that Google had used Rescuecom's trademark in commerce when it recommended and sold the mark as a keyword to Rescuecom's competitors. In this Commentary, Anne Gilson LaLonde explains the facts and holding of Rescuecom in the context of other keyword buy cases, discusses the legal issues underlying such cases, and explores definitions of "use in commerce." She writes:

Gold on Designer Skin, LLC v. S & L Vitamins, Inc., 560 F. Supp. 2d 811 (D. Az. 2008)

S & L Vitamins, an internet reseller, used the trademarks of Designer Skin, a manufacturer, in the metatags of its website and as search engine keywords. S & L also displayed thumbnail images of Designer Skin's products on its websites. Consequently, Designer Skin filed a trademark action against S & L. In this Commentary, Andrew Gold analyzes Designer Skin, LLC v. S & L Vitamins, Inc., 560 F. Supp. 2d 811 (D. Az. 2008), which granted S & L summary judgment, and discusses the element of initial interest confusion. He writes

Gold on First Sale Doctrine, Disclaimers and Metatags: Standard Process, Inc. v. Banks

In Standard Process, Inc. v. Banks, 2008 U.S. Dist. LEXIS 31993 (E.D. Wisc. 2008), a chiropractor bought dietary supplements from a manufacturer and sold them on his website, despite the fact that he had agreed not to sell the products on the internet. The manufacturer terminated the chiropractor's account. When the manufacturer sued for trademark infringement and false designation of origin, the chiropractor won. How did this happen? Andrew M. Gold, a partner in the firm of Bogatin, Corman & Gold, analyzes the case and discusses the First Sale Doctrine. He writes:

Andrew J. Reitz on The Use of a Trademark in Metatags in a Descriptive Manner

The United States District Court for the District of Minnesota recently denied a party's motion for injunctive relief concerning the use of a party's registered trademark and trade name, noting that Plaintiff's changes to his website comport with the guidelines found to be appropriate concerning the use of metatags. In exploring the ramifications of Gregerson v. Vilana Fin., Inc., No. 06-1164 ADM/AJB, 2006 U.S. Dist. LEXIS 81731 (D. Minn. Nov. 7, 2006), and offering guidelines for practitioners concerning the potential liability associated with metatags, Andrew J. Reitz writes:

Joseph N. Welch II on Google v. American Blind & Wallpaper; Settled Case Doesn't End National Keyword Debate

On April 3rd, 2008, the Second Circuit is scheduled to hear oral argument in Rescuecom v. Google (docket no. 06-4881-cv), which is another step in litigation over whether the sale of keywords is actionable under the Lanham Act.  Last year, Google, Inc. and American Blind & Wallpaper Factory, Inc. settled Google's Northern District of California suit (docket no. 5:03-cv-05340-JF) in which Google sought a declaratory judgment that Google's sale of American Blind's trademarks as keywords was not trademark infringement. This commentary by Joseph N. Welch II examines the state of the law following the American Blind settlement and discusses the impact of the favorable settlement for Google. Mr. Welch writes: