A new decision may change Google's ad sales model.
The Second Circuit dealt a blow last week to Google's approach to selling advertisements that appear with search results.
Rescuecom Corp., the plaintiff, accused Google of infringing the Rescuecom trademark. Google did so, the complaint said, by offering the trademark to Rescuecom's competitors as a "keyword". Once a potential customer entered "Rescuecom" in a search request, Google's search algorithm displayed not only the search results but also ads by the competitors. The searcher/potential customer, thinking that the link led to the Rescuecom website, might then click on a link to a competitor's online encampment. The resulting consumer confusion, according to the complaint, would permit the Rescuecom competitor to capitalize deceptively on the Rescuecom trademark.
The district court granted Google's motion to dismiss on the ground that Google didn't "use" Rescuecom's trademark "in commerce". It relied heavily on the Second Circuit's decision in 1-800 Contacts, Inc. v. WhenU.com, Inc., 414 F.3d 400 (2d Cir. 2005). The court in 1-800 held that no "use in commerce" occurred when a computer program triggered pop-up ads in response to search terms (including trademarks) that the advertiser had no role in selecting. Google, by contrast, actually promoted, suggested, and sold to advertisers keywords that consist of (or include) trademarks belonging to the advertisers' competitors. That, the court held, constitutes "use in commerce" under the Lanham Act. Rescuecom Corp. v. Google, Inc., No. 06-4881-cv (2d Cir. Apr. 3, 2009).
Blawgletter suspects that the decision will prompt other trademark owners to consider whether Google's practices — including its AdWords and Keyword Selection Tool features — likewise infringe their marks. An important part of the analysis will examine whether or not Google's exploitation of their trademarks to sell advertisements satisfies the "likelihood of confusion" element of an infringement claim — an issue the Second Circuit left open as subject to proof.
We also imagine that Google will look at revamping its ad sales model. With the Second Circuit's decision, selling trademarks as keywords has become a lot riskier.
