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 Trademarks as keywords not permissible in the USA?

German courts are still split on the question whether the use of trademarks as keywords that trigger the display of ads are permissible. So are courts in the USA. According to the latest decision Buying for the Home, LLC v. Humble Abode, LLC, 03-CV-2783 (JAP) (D.N.J. Oct. 20, 2006) buying keywords constitutes trademark use.

Are advertisers making a trademark use in commerce when they buy keyword advertising.?The court summarized the latest court decisions in the USA as follows:

"Plaintiff alleges Defendants purchased advertising linked to the search term TOTAL BEDROOM from the search engine company Google. Google, as well as other search engines, “sell[s] advertising linked to search terms, so that when a consumer enters a particular search term, the results page displays not only a list of Websites generated by the search engine program using neutral and objective criteria, but also links to Websites of paid advertisers (listed as ‘Sponsored Links’).” Gov't Employees Ins. Co. v. Google, Inc., 330 F. Supp. 2d 700, 702 (E.D. Va. 2004). The advertisement and link to Humble Abode’s website appeared on the far right of the screen, separate and apart from the search results list, under the heading “Sponsored Links.” Humble’s advertisement does not display the mark TOTAL BEDROOM.
To be actionable under § 43(a) of the Lanham Act, a defendant’s “use” of a plaintiff’s mark must be “in commerce” and “on or in connection with any goods or services, or any container for goods.” 15 U.S.C. 1125(a). In this regard, courts presented with claims similar to  those in the present case involving the purchase or sale of trademarks as search engine keywords generally have examined whether the defendant’s alleged “use” of the mark constituted a “trademark use” generally, i.e., commercial use of the mark as a trademark, e.g., 800-JR Cigar, Inc., v., Inc., Civil Action No. 00-3179, 2006 WL 1971659, *6-8 (D.N.J. July 13, 2006), or have examined “use” by looking more specifically at the definition of “use in commerce” under the Lanham Act, e.g., Merck & Co. v. MSD Technology, L.P., 425 F. Supp. 2d 402, 415-16 (S.D.N.Y. 2006). The Third Circuit has not spoken on the issue of whether the purchase and/or sale of keywords that trigger advertising constitutes the type of “use”
contemplated by the Lanham Act, and decisions from other courts that have addressed the issue are conflicting. In a recent decision in the Southern District of New York, Merck & Co. v. MSD Technology, plaintiff drug company brought an action against various Canadian entities that operated online pharmacies alleging, inter alia, unfair competition and trademark infringement under federal and state law. The Canadian entities had purchased from the Internet search engine companies Google and Yahoo! the right to have links to their website displayed as “Sponsored Links” when a computed user conducted a search using plaintiff’s mark ZOCOR. The court, in granting defendant’s motion to dismiss, found that

in the search engine context, defendants to do not ‘place’ the ZOCOR marks on any goods or containers or displays or associated documents, nor do they use them in any way to indicate source or sponsorship. Rather, the ZOCOR mark is “used” only in the sense that the computer user’s search of the keyword “Zocor” will trigger the display of the sponsored links to defendants’ websites. This internal use of the mark “Zocor” as a key word to trigger the display of sponsored links is not use of the mark in a trademark sense.
Merck & Co., 425 F. Supp. 2d at 415.

Another district court addressing similar claims on similar facts found differently. In Edina Realty, Inc. v. The, Civ. 04-4371JRTFLN, 2006 WL 737064 (D. Minn. March 20, 2006), the defendant, a direct competitor of plaintiff, had purchased from Google and Yahoo! search terms that were identical or similar to plaintiff’s EDINA REALTY trademark. In denying the defendant’s motion for summary judgment, the Court found defendants use of the mark constituted a “use in commerce” under the Lanham Act, holding:

While not a conventional “use in commerce,” defendant nevertheless uses the Edina Realty mark commercially. Defendant purchases search terms that include the Edina Realty mark to generate its sponsored link advertisement. See Brookfield Communs., Inc. v. W. Coast Entm't Corp., 174 F.3d 1036, 1064 (9th Cir.1999) (finding Internet metatags to be a use in commerce). Based on the plain
meaning of the Lanham Act, the purchase of search terms is a use in commerce.

Edina Realty, 2006 WL 737064 at *3.

Similar actions brought against defendants who engage in the sale of the search terms, as opposed to the purchasers of those terms, have likewise reached differing conclusions concerning “use.” Compare Rescuecom Corp. v. Google, Inc., No. 5:04-cv-1055, 2006 WL 2811711 (Sept. 28, 2006) (granting Google’s motion to dismiss finding that “in the absence of allegations that 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, plaintiff can prove no facts in support of its claim which would demonstrate trademark use”) with 800-JR Cigar, Inc., v., Inc., Civil Action No. 00-3179, 2006 WL 1971659, *8 (D.N.J. July 13, 2006) (denying summary judgment and finding sufficient evidence to support claim that defendant made “trademark use” of plaintiff’s mark where defendant (1) accepted bids on the plaintiff's trademark from the plaintiff's competitors, thereby trading on the value of the marks; (2) ranked paid advertisers before “natural” listings among the search results, thereby acting as a conduit to steer competitors away from plaintiff; and (3) suggested search terms including the plaintiff's trademarks to the plaintiff's competitors); Google v. American Blind & Wallpaper Factory, Inc., No. 03-05340, 2005 WL 832398 (N.D. Cal. Mar. 30, 2005) (denying motion to dismiss in light
of the unsettled state of the law with respect to actionable “use” of a trademark in the search engine context); GEICO v. Google, Inc., 330 F. Supp. 2d 700 (E.D. Va. 2004) (denying motion to dismiss finding allegations that defendant allowed advertisers to bid on trademarks as search terms and to pay for advertising linked to trademarks were sufficient to establish trademark use). The Court is mindful of the challenges that sometime arise in applying existing legal principles in the context of newer technologies. As expressed by the Edina Realty court, supra, Defendants’ alleged use of Plaintiff’s mark is certainly not a traditional “use in commerce.” 2006 WL 737064 at *3. Nonetheless, the Court finds Plaintiff has satisfied the “use” requirement of the Lanham Act in that Defendants’ alleged use was “in commerce” and was “in connection with any goods or services.” 15 U.S.C. 1125(a)(1). First, the alleged purchase of the keyword was a commercial transaction that occurred “in commerce,” trading on the value of Plaintiff’s mark. Second, Defendants’ alleged use was both “in commerce” and “in connection with any goods or services” in that Plaintiff’s mark was allegedly used to trigger commercial advertising which included a link to Defendants’ furniture retailing website. Therefore, not only was the alleged use of Plaintiff’s mark tied to the promotion of Defendants’ goods and retail services, but the mark was used to provide a computer user with direct access (i.e., a link) to Defendants’ website through which the user could make furniture purchases. The Court finds that these allegations clearly satisfy the Lanham Act’s “use” requirement.

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