Second Circuit Rules Sale of Google Keyword Advertisements May Be a Use in Commerce Under Lanham Act


A trademark infringement lawsuit against Google may go forward despite a related ruling by the same court, the Second Circuit Court of Appeal ruled April 3. In Rescuecom v. Google, No. 06-4881-cv (2nd Cir. April 3, 2009), the appeals court ruled that its own previous ruling in 1-800 Contacts, Inc. v., Inc., 414 F.3d 400 (2d Cir. 2005), which held that an online advertiser was not using the plaintiff’s trademark in commerce, did not apply. The court made no determination as to whether Google’s use of Rescuecom’s trademark was a use in commerce, as required by the Lanham Act to show infringement. Rather, it said Rescuecom should have a chance to present its evidence, and sent the case back to trial court.

The case is one of multiple lawsuits against Google alleging that the search engine giant infringes trademarks by selling them as keywords. When a Google user searches for these trademarked keywords, the competitor’s advertisements appear as “Sponsored Links.” Rescuecom (and plaintiffs in other suits) claimed that this created a likelihood of confusion among consumers searching for its own Web site. Rescuecom also alleged that Google’s Keyword Suggestion Tool, which automatically generates keywords for potential advertisers, infringed its trademark by suggesting the trademark to competitors. It sued Google on multiple grounds, but Google succeeded on a motion to dismiss some trademark claims for failure to state a claim (Rule 12(b)(6)), because the use of Rescuecom’s trademark was not a use in commerce under 1-800-Contacts.Rescuecom appealed.

In a ruling that will be important for Illinois online trademark infringement attorneys like us, the Second Circuit overturned that decision. It said 1-800-Contacts was not binding because it had material differences from this case. In that case, the defendant distributed free software displaying popups that were clearly advertisements and clearly indicated that the defendant, rather than the trademark holder, was responsible for them. This was not a “use in commerce” under the meaning of the Lanham Act, the court wrote, and thus the defendant was not liable for the trademark claims. (The court went into detail about the weighty issue of “use in commerce” in an appendix.) Furthermore, the defendant in 1-800-Contacts did not display the plaintiff’s trademark or sell it as a keyword.

Neither of those was true in Rescuecom, the Second Circuit wrote. Unlike in the previous case, in which competitors’ ads would pop up after a search for a broad product category like “eye care,” Google was actively using the plaintiff’s trademark as a keyword for sale and putting it s on display. Furthermore, the court said, Google was using the trademark as a suggestion for potential advertising customers using the Keyword Suggestion Tool. Google’s argument that placing the advertisements next to “organic” search results was similar to placing competing brands next to each other on a store’s shelf failed, the court said, because its Sponsored Links could be deceptive to consumers. The court emphasized that it made no ruling on whether this was likely to be confusing — necessary for proving a trademark infringement claim — but said Rescuecom should have a chance to make that case in trial court. Thus, it reversed and remanded the Rule 12(b)(6) decision.

Lubin Austermuehle is already using this important decision in our own matters, to argue that use of our clients’ trademarks violates the Lanham Act. Our Chicago Internet trademark infringement lawyers defend the trademarks and the good reputations of clients who are the targets of deceptive online advertising, false disparagement of their products and services and other forms of unfair and illegal competition on the Internet. Our Wheaton, Ill. trademark litigation attorneys also handle defense of these claims for businesses of all sizes, including family-owned and closely held businesses as well as corporations and partnerships. Based in Chicago and Oakbrook Terrace, near Naperville, Wheaton, Wilmette, Northbrook and Highland Park and the North Shore of Chicago, we represent clients throughout Illinois in Cook, DuPage, Lake and Will Counties and in the Midwest and United States.

If your business is under fire because of online trademark infringement or trade libel and you’d like to fight back, Lubin Austermuehle can help. To set up a consultation with our experienced business litigators, please contact us through the Internet or call toll-free at 630-333-0333.

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