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Rescuecom Corp. v. Google, Inc., 2009 WL 875447 (2d Cir. Apr. 3, 2009)

Various courts have grappled with the issue of whether a search engine’s promotion/sale, or a competitor’ purchase, of a plaintiff’s trademark as a keyword ad trigger qualifies as a “use in commerce” under the Lanham Act. The vast majority of courts facing this issue have found such conduct constitutes “use in commerce.” Many had considered the Second Circuit to be the lone hold-out on the “use in commerce” debate based upon its 2005 decision in the 1-800 Contracts v. WhenU.com, Inc. 414 F.3d 400 (2d Cir. 2005) pop-up advertising case. In its recent decision in Rescuecom, however, the Second Circuit reversed the Rule 12(b)(6) dismissal on the “use in commerce” issue and found Rescuecom’s allegations of keyword infringement sufficient to move forward.

In its 2005 decision in 1-800 Contacts,the Second Circuit found that WhenU’s use of URLs (web addresses) comprising a trademark in proprietary software was purely internal and thus did not constitute a trademark use. Despite this finding, it declined to rule on the keyword issue. Subsequently, several district courts in the Second Circuit relied on the pop-up ruling to find that purchasing trademarks as keyword ad triggers is not a use in commerce, contrary to the trend in most of the rest of the nation.

In finally deciding the keyword issue in Rescuecom, the Second Circuit took pains to distinguish, but not overrule, its prior decision in 1-800 Contacts. The court noted that Rescuecom alleges use of its trademark independent of a URL whereas 1-800 Contacts merely alleged use of a URL containing its trademark. Some courts have likened URLs to electronic street addresses simply used to specify a location. More significantly, the court contrasted the limited internal use by WhenU with Google’s alleged suggestion and sale of the plaintiff’s trademark as a keyword. The court found that Google’s practices clearly involve the “display” of a mark.

Of interest, the Second Circuit brushed aside the oft-asserted “product placement” theory that many search engines, keyword purchasers, and law professors advance as a shield against liability, stating that consumer trickery can still arise in a product placement situation. Product placement only escapes liability if it is a benign practice which does not cause a likelihood of consumer confusion. On remand, therefore, the court will need to determine whether Google’s use of Rescuecom’s trademark causes a likelihood of confusion or mistake and whether Google’s actual practices are benign or actionable. Undoubtedly this inquiry will involve expert testimony on the sophistication of web users and the manner in which search results are displayed.

The clear lessons of Rescuecom are: (1) 1-800 Contacts is still good law, although limited to the now-fading pop-up scenario; (2) internal use does not automatically insulate users from liability; and (3) keyword advertising may constitute use in commerce in the Second Circuit. Rescuecom and similar cases finding “use in commerce” do not hand trademark owners a litigation win but, rather, allow them to cross the threshold necessary to proceed to the fact-intensive likelihood of confusion inquiry. This is a significant sea change in what has previously been considered a pro-defendant haven for keyword litigation.

Perhaps responding to criticism on the very narrow ruling in the 1-800 Contacts v. WhenU case, the Second Circuit’s Rescuecom opinion includes a lengthy appendix on the ambiguous “use” provisions in the Lanham Act, calling on Congress to clarify same. The statutory review in the appendix is a bit esoteric, but presents the “use” language in historical context and explains why various courts may have had trouble determining what is, and is not, an actionable trademark use.


» Read the Summary | PDF

» View Keyword Circuit Map  | PDF

Submitted by:
Joan K. Archer
Lathrop & Gage, L.C.

Kristin L.C. Haugen
Briggs and Morgan, P.A.

Mary Margaret L. O’Donnell
Rader Fishman & Grauer PLLC