Brief Fact Summary. Rescuecom Corp (Plaintiff) argued that Google, Inc.’s (Defendant) use of Rescuecom’s trademark was a use in commerce and infringed its trademark through Google’s (Defendant) recommendation and sale of Rescuecom’s (Plaintiff) mark to Google’s (Defendant) advertisers, including Plaintiff’s competitors, so as to trigger the appearance of their advertisements and links in a manner likely to cause confusion for the consumer when a Google (Defendant) user initiated a search of the term “Rescuecom.â€
Synopsis of Rule of Law. A trademark owner states a cause of action for trademark infringement by claiming that the owner of an Internet search engine has recommended and sold the trademark to advertisers, including the trademark owner’s competitors, in order to trigger the appearance of their advertisements and links in a way that is likely to cause confusion for consumers when a user launches a search using the trademark as a keyword.
Facts. Rescuecom Corp. (Plaintiff) is a national computer service franchising company that conducts a substantial amount of business over the Internet. “Rescuecom†is a registered federal trademark. Google, Inc. (Defendant) operates an Internet search engine that helps users locate information on the Internet. If a user is looking for information about a provider’s products and services, Google (Defendant) will direct the user, who types the name of the provider into Defendant’s search engine, to the provider’s website and to information about the provider. Plus, Defendant may display context-based advertising along with the other search results if an advertiser, having determined that its ad is likely to be of interest to a searcher who enters the particular term, has bought from Defendant the placement of its ad on the screen of the searcher who enters the particular term, has purchased from Defendant the placement of its ad on the screen of the searcher who entered that search term. Ads such as this contain a link to the website of the advertiser, and if the user links to this website, the user may be offered information about the advertiser, as well as the opportunity to purchase products or services from the advertiser. Google (Defendant) uses at least two programs to offer context-based links such as: AdWords and Keyword Suggestion Tool. AdWords is a Google (Defendant) program through which advertisers purchase terms (or keywords). When entered as a search term, the keyword triggers the appearance of the advertiser’s ad and link on the user’s screen. Keyword Suggestion Tool is a different Defendant program that recommends keywords to advertisers to be purchased for use in AdWords. Defendant allegedly makes 97 percent of its revenue from selling advertisements through its AdWords program, and therefore has an economic incentive to increase the number of advertisements and links that appear for every term entered into its search engine. Through its Keyword Suggestion Tool, Defendant recommended the Rescuecom trademark to Rescuecom’s (Plaintiff) competitors as a search term to be purchased through AdWords, so that whenever a user launches a search for the term “Rescuecom,†seeking to be connected to Rescuecom’s (Plaintiff) website, the competitors’ advertisement and link will appear on the searcher’s screen. Plaintiff brought suit for trademark infringement, claiming that this practice made it possible for Plaintiff’s competitors to deceive and divert users searching for Plaintiff’s website by causing the searcher to believe mistakenly that a competitor’s advertisement and website link was sponsored by, endorsed by, approved by, or affiliated with Rescuecom (Plaintiff). The district court dismissed the action, finding that Defendant’s use of the Rescuecom trademark was not made in commerce, which is a required element of a trademark infringement claim under the Lanham Act, because the competitors’ advertisements triggered by Defendant’s programs did not exhibit Plaintiff’s trademark. The court rejected the argument that Defendant “used†Plaintiff’s mark in recommending and selling it as a keyword to trigger competitor’s advertisements because the court read the decision in 1-800 Contacts, Inc. v. WhenU.com, Inc. 414 F.3d 400 (2d Cir. 2005) (1-800) to compel the conclusion that this was an internal use and therefore could not be a “use in commerce†under the Lanham Act. The court of appeals granted review.
Issue. Does a trademark owner state a cause of action for trademark infringement by claiming that the owner of an Internet search engine has recommended and sold the trademark to advertisers, including the trademark owner’s competitors, in order to trigger the appearance of their advertisements and links in a way that is likely to cause confusion for consumers when a user launches a search using the trademark as a keyword?
Held. (Leval, J.) Yes. A trademark owner states a cause of action for trademark infringement by claiming that the owner of an Internet search engine has recommended and sold the trademark to advertisers, including the trademark owner’s competitors, in order to trigger the appearance of their advertisements and links in a way that is likely to cause confusion for consumers when a user launches a search using the trademark as a keyword. In this case, contrary to the district court’s determination, which relied on the court’s interpretation of 1-800, Google (Defendant) used Rescuecom’s (Plaintiff) trademark in commerce. There are two important ways that the case at bar is distinguishable from 1-800. First, in 1-800, the defendant did not use, reproduce, or display the plaintiff’s mark at all. In contrast here, Defendant recommended and sold Plaintiff’s trademark to trigger the appearance of advertisements. Second, in 1-800, under the defendant’s program, advertisers could not request or buy keywords to trigger their ads. Even if an advertiser wanted to display its advertisement to a searcher using the plaintiff’s trademark as a search term, the defendant’s program did not offer this possibility. In stark contrast here, Defendant encouraged advertisers to buy Plaintiff’s trademark. Such use clearly is “in commerce.â€Â Google (Defendant) responds to this conclusion by arguing that the inclusion of a trademark in an internal computer directory cannot constitute trademark use.  While several courts in this Circuit have reached that conclusion, regardless of whether Defendant’s use of Plaintiff’s mark in its internal search algorithm could constitute an actionable trademark use, Google’s (Defendant) recommendation and sale of Plaintiff’s mark to its advertising customers are not internal uses. Simply using a trademark in an internal software program does not insulate an alleged infringer from a charge of infringement. To hold otherwise would be to give search engine operators free rein to use trademarks in ways designed to deceive and cause confusion among consumers. Defendant also argues that its use is like “product placement†in a store, where a store-brand generic product is placed next to a trademarked product to induce a customer who specifically sought out the trademarked product to consider the typically less expensive, generic brand as an alternative. However, benign product placement does not cause consumer confusion. If retail product placement was performed in a deceptive manner meant to cause confusion so that a consumer seeking to purchase a famous brand would receive the off-brand, believing she had gotten the brand she was seeking, that practice would not avoid liability just because it could claim the mantle of “product placement†Google’s (Defendant) alleged practices are considerably different from benign product placement that does not violate the Lanham Act. To succeed on its claim, Plaintiff will need to provide that Defendant’s use of the Rescuecom trademark indeed caused the likelihood of confusion or mistake Plaintiff claims. However, at this stage of the proceedings, Rescuecom’s (Plaintiff) claim must be permitted to proceed, and should not have been dismissed. Vacated and remanded.
Discussion. The court rejected the trademark use doctrine in this case, and in an appendix to the case explains its position that the Lanham Act’s language does not support it. The court indicates that the definition of “use in commerce†according to § 1127 was meant to apply to the Act’s use of that term in defining favored conduct, which qualifies to receive the protection of the Act, instead of applying to the specification of conduct by an alleged infringer, which causes imposition of liability. Some leading commentators approve of such a position, finding that the Act’s language does not support a trademark use requirement and also observing that imposing such a requirement unreasonably limits appropriate common law development of trademark law. Others, in disagreement, support the trademark use doctrine, finding that, for various related reasons, it should shield defendants from even potential liability for certain types of commercial uses of marks, especially in connection with online contextual advertising and that the threat of contributory infringement liability is enough to regulate such uses. The commentators are split on this issue, as well as the courts.