Sunday, July 08, 2007

Stealth Trademarks: Ad Keywords

Finally, the situation which is the goldmine (actually it is more like a copper mine, as in, it generates a few pennies every day) for small publishers like Cybertelecom: advertising generated by search engine companies based on keywords. The search engine company will let an advertiser bid on trigger-terms – any trigger-terms. The advertiser’s ads can appear in one of two ways: First, when those trigger-terms are typed into the search engine, the ads can appear on the search engine results page, normally designated as paid-for search results. Second, when a third-party website has embedded advertisements from the search engine and is somehow related to a trigger-term, an advertiser’s ad can appear in a little advertisement box (see the Google Ads on the left column of this blog).

Neat! So if an individual is searching for the AcmeNetLaw website and types that trigger-term into a search engine, I could use Acme’s trademark as a trigger-term to get an ad for Cybertelecom to appear! If the individual visit’s the AcmeNetLaw website, and the AcmeNetLaw website has those embedded search ads, my Cybertelecom advertisement could appear (well not really, Google Ads provides a tool to block advertisements from competitors appearing on my website – If AcmeNetLaw fears Cybertelecom, it can block CT). Does this opportunity stumble over trademark law?

Before we go forward, let’s go backwards to the video tape. What constitutes a Lanham Act trademark violation? To prevail on a trademark infringement claim for a registered trademark, a Plaintiff must establish that:

(1) he has a valid mark that is entitled to protection under the Lanham Act;

(2) defendant used the mark;

(3) in commerce;

(4) in connection with the sale or advertising of goods or services; and

(5) without plaintiff's consent.

Okay, you metaphysicians, if the use of the trigger-term is stealth – is it “used in commerce”? Trademark law is all about consumer protection. We want to prevent consumers from being confused about products and services. When a consumer has come to expect a lousy burger and fries from ACME Burger Joint, we want the consumer to always get that same lousy burger and fries wherever they see the ACME Burger Joint trademark. There would be a conundrum if ZETA Veggie Burger Joint used the ACME trademark and slipped people nutritious delicious tofu burgers. The key to trademark violations is the visible identification of the trademark with an imposter’s product or service. So, like the fallen tree, if a trademark is used in the forest and no one is there to visually identify it, is it “in use”? If not, the trademark violation claim fails. A lot of the cases turn on this metaphysical point, and as with the previous cases we have reviewed, the courts are not at all settled on how they want to come out on this one. Let’s look at two recent cases, one where the court finds that the trademark is used in commerce, and one where the court does not so find.

The first case from this year is quite interesting because, while it does in fact find that the trademark is in use in commerce, it still, nevertheless, finds for the defendant. JG Wentworth SSC Ltd v Settlement Funding LLC, No 06-0597 (EDPa Jan 4 2007). In this case, Plaintiff Wentworth is a finance company that provides cash now in exchange for something of value in the future – like if you win the lottery and would get it in 10 payments over the next 10 years – Wentworth would give you cash now for that future value. Defendant Settlement Funding apparent does pretty much the same thing. Both parties have websites and, according to the allegations, Defendant used Plaintiff’s trademark “JG Wentworth” as a trigger term for Google Ads (there is also a metatag argument in this case, but we dealt with metatags in the first article in this series). Claiming that Defendant was taking unfair advantage of the value Plaintiff had bestowed in its trademark, Plaintiff sued.

The court is not perfectly clear why it comes down in favor of “in use.” It reviews a bunch of non-binding cases from other jurisdictions that conclude that stealth trademarks are not in use - brought up by defendant - and some conflicting non binding cases that conclude that they are. And the court basically brushes it all aside stating that defendant is unpersuasive. The court simply lines up on the side of the “in use” cases, stating

But like [those cases], I recognize that defendant’s use of plaintiff’s marks to trigger internet advertisements for itself is the type of use consistent with the language in the Lanham Act which makes it a violation to use “in commerce” protected marks “in connection with the sale, offering for sale, distribution, or advertising of any goods or services,” or “in connection with any goods or services.”

Okay, why? The court acknowledges that it lines up with those cases, but it doesn’t really specify why that line of cases is more persuasive.

The court is more articulate on the next criteria, whether there is any “confusion.” Now, it is important to understand what is going on here. This is not a bait-and-switch thing where the consumer is asking for an ACME Lousy Burger and getting a ZETA Tofu Burger instead. This is a computer user typing “JG Wentworth” into Google, and getting a result page where “JG Wentworth” is likely the top result – go ahead and see what the results page would look like by clicking here (but promise to come on back). In addition to Plaintiff’s link, a whole bunch of other stuff comes up too. But it’s all there. Consumer is not getting one product in place of another – consumer is getting what they asked for… and some other stuff too.

Think about it differently. You go to a grocery store. You ask the clerk for ACME Lousy Frozen Burgers. And when you go to the shelf, there are the ACME Burgers along with ZETA Tofu Burgers. Has ZETA committed a trademark violation for being on the same shelf as ACME. No. So if you see a Google results page that has the ACME Burgers, and a listing for ZETA burgers right next to it, would you be any more confused?

At no point are potential consumers “taken by a search engine” to defendant’s website due to defendant’s use of plaintiff’s marks in meta tags. Rather, as in the present case, a link to defendant’s website appears on the search results page as one of many choices for the potential consumer to investigate. As stated above, the links to defendant’s website always appear as independent and distinct links on the search result pages regardless of whether they are generated through Google’s AdWords program or search of the keyword meta tags of defendant’s website.

Wentworth at 14.

It seems like the court wants to dodge the “in use” question for the “confusion” question. The “in use” analysis is a muffled flip-of the coin – on the one hand here is a bunch of cases, on the other hand here are some different cases and (flip), ah, I chose the former over the later. Where the court is persuasive is the critique of confusion. Whatever it is that is going on, the consumer is getting what they are asking for. The defendant is not engaged in counterfeiting; the defendant is not engaged in bait-and-switch. The defendant’s listing is simply listed on the result page as a “sponsored link” off on the side, or in a shaded box, where plaintiff’s link is front and center. Only a fool (or a lawyer, ah but I repeat myself) would be confused in this situation.

A more recent case Site Pro-1 v Better Metal, Inc., 06-CV-6508 (ILG) (RER) (EDNY May 9th, 2007), returned to the issue of “in use.” This case involved two parties that (according to the court decision) were involved in the sale of equipment used to construct wireless telecom towers. Plaintiff complained that defendant had placed “site” “pro” and “1” in metatags on its website, and purchased a sponsored search at Yahoo! based on those terms. Defendant responded, “yeah, so?! We aint ‘used’ the your trademark.” The court did a nice review of precedent and stated “The key question is whether the defendant placed plaintiff’s trademark on any goods, displays, containers, or advertisements, or used plaintiff’s trademark in any way that indicates source or origin. In other words, does the consumer perceive the trademark and is the consumer thereby confused. It was undisputed that the use of the trigger-terms was entirely stealth – that the terms did not appear on defendant’s products or website in any way. As such, the court ruled, plaintiff’s claim that defendant is up to bad things fails.

Ah, but wait! Before I could finish this post, yet another case crosses my desk:, Inc. v, Inc., No. 06-CV-2225 (JFB) (AKT) (EDNY June 12, 2007). This case is so much like all the others that I will not bother to hit the auto-replay button for you. The decision is very well written and reviews most of the recent precedent. But the judge takes the analysis one step further. Plaintiff tries to make a fuss based on a New York theory of Passing Off. The court pummels this attempt, stating that this is not a case of Defendant trying to pass off its products as plaintiffs. Rather, this is a case where a consumer uses a trigger-term, and is presented with what the consumer is asking for, along with alternatives, and in a competitive capitalistic market, we like alternatives and choice!

In the world outside the Internet, individuals in search of a company or product are not blinded to competitive products. In other words, it is not unlawful to strategically place billboards or even store locations next to billboards or store locations of competitors. For example, an individual in search of a McDonald’s restaurant will often be confronted with a Burger King restaurant. As long as Burger King did not mislead the consumer under false pretenses to its location, the mere fact that it decided to place itself in close proximity to a McDonald’s, in an effort to potentially draw customers in search of fast food, is not “passing off.”

Slip p. 7. If you ask for a Coke, and are told you can have a Coke, a Pepsi, a rootbeer, or an iced tea, the court approvingly says, this is not confusion, this is the presentation of alternatives. Likewise the use of trigger-terms that produce desired results in search engines along with choices is not confusion - it is the presentation of alternatives.

The outcome of this line of cases if obviously very important. Currently search engines advertising companies can sell any trigger-word available, whether it is someone’s trademark or not. If this type of stealth trademark usage violates the Lanham Act, what type of liability would search engine companies have in these situations and what measures would they be forced to take in order to avoid this liability? It could create a substantial challenge for them to know that a trigger-term is a trademark, especially since pursuant to trademark law, the use of the term in one context could pose a violation where the use of the term in another context might not.

Personally I sort of agree with the Wentworth court here in rejecting the if-you-cant-see-it-its-not-in-use court decisions. The rule appears to be (a) for a trademark to be “in use,” it must be perceived, and (b) to be perceived means visually to see the mark. But seeing a trademark with one’s eyeballs is not the only way to perceive a trademark. I can perceive a trademark by hearing it. I can perceive a trademark by feeling it (particularly if I am blind and am reading Braille). In order to perceive it, I may require the use of some artificial device such as glasses, a hearing aid, or a camera. So why cant I “perceive” a trademark through the means of a computer? Has not a computer become an extension of my mental abilities akin to the primitive glasses and hearing aids? In an attempt to find a thing, I can look for it, I can feel for it, I can listen for it, or, perhaps, I can use my computer. The courts struggle with this line of cases and rightly so. A disruptive technology is taking old law to an entirely new place and the judges lack a solid footing on which to stand. The archaic suggestion that data in the virtual world is beyond human perception, if taken to be true, would fundamentally disorient and divorce the virtual world from the legacy world. We must reconceive our notions of perception and comprehend to degree to which computational power is becoming an amplification and extension of our abilities. To request that a computer find a trigger-term, and to have the computer present results means the computer as our agent perceived that trigger-term somehow associated with those results. We have perceived it.

However, Wentworth is right that this is not the end of the analysis. Getting beyond the metaphysics of perception is the obvious question of confusion; no one is confused here. As the court in indicates, the presentation of alternatives is not confusion. As individuals’ general online experience matures, individuals’ know that search engines presents, if they are lucky, the trigger-term desired, and anything else associated with that trigger term. We may not know exactly what caused the paid-for ads to appear; we don’t care. We know there is a clear difference between the top results which hopefully contain our target, and the promises of fame and fortune in the advertisers box. We are not confused.


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