Kiplinger;

Search engine providers (such as Yahoo!, Microsoft and market leader Google) offer Internet advertisers exceptional targeting capabilities through the sale of advertising space linked to “keywords.” An advertiser that purchases keyword-linked ad space gets to display its advertisements adjacent to the results the search engine generates when a consumer searches for a particular keyword.

For example, an auto manufacturer might purchase advertising space linked to the keyword “car” in the hope that consumers looking for information about cars will be influenced by the advertising, or click on a link provided in the advertisement rather than one of the “organic results” the search engine culls from the Internet. While this circumstance is not particularly objectionable, what happens when a rival auto manufacturer purchases the keyword “Chevrolet,” and arranges to display advertisements for competitive products (or links to competitive businesses) to users searching for “Chevrolet”?

Whether such action comprises trademark infringement is the $10,000 question (or more accurately, $10 billion dollar question) facing search engine providers.

Trademark Infringement on the Internet

At its most basic level, trademark law seeks to guard against consumer confusion. A plaintiff alleging trademark infringement must prove two main elements: the use of a mark by the defendant “in commerce” and that such use is “likely to cause confusion, or to cause mistake, or to deceive.”

The explosion of the Internet raised novel questions about whether certain actions comprised a “use in commerce” from a trademark infringement perspective. In groundbreaking cases, the U.S. Court of Appeals for the Ninth Circuit sought to analogize Internet-related trademark conflicts to “real world” cases and to apply existing precedent to those conflicts. In Brookfield Communications, Inc. v. W. Coast Entertainment Corp., the court held that using a competitor’s trademark in a Web site’s metatags (the data which search engines review when searching for relevant hits) comprised an actionable and illegal “use in commerce.”

Sale of Trademarks as Keywords and Resulting Fallout

In Government Employees Insurance Co. (GEICO) v. Google, Inc., GEICO alleged that Google violated the law by selling advertising space triggered when users entered the GEICO trademark into Google’s engine. The Eastern District of Virginia denied a Motion to Dismiss by Google, premised on the contention that sale of advertising “triggered” through the use of GEICO’s mark did not comprise a “use in commerce.” In a subsequent proceeding, the court found that some of the sponsored links were likely to cause confusion. Thereafter the parties settled the litigation.

In the wake of GEICO, numerous courts have considered trademark infringement suits relating to search engine companies’ sale of trademarks as keywords. In the past year, the U.S. District Court for the District of New Jersey has twice refused to dismiss on summary judgment suits alleging trademark infringement as a result of sale of a company’s trademark as a keyword. The District Court for the Northern District of Illinois recently granted a temporary restraining order barring a company from “using terms trademarked by [their competitor], as keywords for any Internet advertising service, including services run by Google or Yahoo!.”

Though a significant number of decisions have cut against their business model, Google has continued to vigorously defend trademark infringement suits relating to its sale of trademarks as keywords, and has refused to curtail the practice.

Rather than forbid the sale of trademarks as keywords, the company has instead barred advertisers from using the trademarks themselves in the text of sponsored links. So, a used car dealership not affiliated with Chevrolet may purchase the keyword “Chevrolet” and display advertising for its business along with search results for that trademark, so long as the advertisement itself does not include the Chevrolet trademark. Google’s strategy is premised on the idea that even if a mark is used in commerce, infringement does not result absent a likelihood of confusion.

In this vein, Google successfully won a motion to dismiss a trademark infringement suit in the Northern District of New York last fall. The court in that case found that the “use” of the trademark to trigger the complained-of advertisements did not comprise an unlawful “trademark use in commerce,” and that the advertisements themselves did not feature plaintiff’s trademarks and were unlikely to cause confusion.

Similarly, in dismissing a trademark infringement suit premised on purchase of a competitor’s trademark as a keyword trigger for search engine advertising, the Eastern District of Pennsylvania recently found that despite “use” of plaintiff’s mark, no likelihood of confusion could be shown.

Practical Advice

In light of recent decisions, and pending state legislation, purchase of a trademark as a keyword to trigger search engine advertising is a risky proposition. Though courts have not agreed in all cases as to whether such registration must always comprise trademark infringement, the practice obviously subjects the buyer (and search engine company) to a risk of claim for trademark infringement. Companies making such purchases must be aware of this risk and prepared to face such challenges.