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Sections 32 and 43 of the Lanham Act impose liability for unpermitted "use in commerce" of another's mark which is likely to cause confusion, or to cause mistake, or to deceive, as to the affiliation or as to the origin, sponsorship or approval of his or her goods or services by another person. The definition of the term "use in commerce" provided in section 45 provides in part that a mark shall be deemed to be in use in commerce on services when it is used or displayed in the sale or advertising of services and the services are rendered in commerce.
Google operates a popular search engine under www.google.com. Through the website, Google’s proprietary system responds to search request by: 1) provides a list of links to websites, ordered in what Google deems to be of descending relevance to the user's search terms; and 2) by showing advertisements on the user's screen from advertiser’s which are likely to be of interest to a searcher who enters the particular term. The ad includes a link to the advertiser's website, so that in response to such an ad, if the searcher clicks on the link, he will open the advertiser's website, which offers not only additional information about the advertiser, but also perhaps the option to purchase the goods and services of the advertiser over the Internet. Rescuecom filed an action against Google for trademark infringement, false designation of origin, and dilution under the Lanham Act. Rescuecom alleged that Google has recommended the Rescuecom trademark to Rescuecom's competitors as a search term to be purchased. Rescuecom's competitors, some responding to Google's recommendation, have purchased Rescuecom's trademark as a keyword in Google's program, so that whenever a user launches a search for the term "Rescuecom," seeking to be connected to Rescuecom's website, the competitors' advertisement and link will appear on the searcher's screen. This practice allegedly allows Rescuecom's competitors to deceive and divert users searching for Rescuecom's website into thinking that a competitor's advertisement (and website link) is sponsored by, endorsed by, approved by, or affiliated with Rescuecom. The district court dismissed the action based on the court’s holding in 1-800 Contacts, Inc. v. WhenU.com, Inc., 414 F.3d 400 (2d Cir. 2005) ("1-800”). According to the district court's understanding of that opinion, Rescuecom failed to allege that Google's use of its mark was a "use in commerce" within the meaning of § 45 of the Lanham Act.
Is a mark deemed to be in use in commerce on services when it is used or displayed in the sale or advertising of services and the services are rendered in commerce?
The appellate court concluded that the district court was mistaken in believing that its precedent in 1-800 required dismissal. In 1-800, the Second Circuit ruled that a complaint failed to state a claim under the Lanham Act unless it alleged that the defendant had made "use in commerce" of the plaintiff's trademark as the term "use in commerce" was defined in 15 U.S.C.S. § 1127. The district court believed that the instant case was on all fours with 1-800. The appellate court believed that the cases were materially different. The appellate court held that plaintiff's complaint adequately pled that defendant's use of plaintiff's mark was a "use in commerce." The practices attributed to defendant by the complaint were significantly different from benign product placement that did not violate the Lanham Act.