Friday, the Second Circuit issued an opinion reversing the district court’s granting of Google’s 12(b)(6) motion to dismiss a complaint which alleges that Google’s use of Rescuecom’s mark constitutes infringement, false designation of origin, and dilution under the Lanham Act.
The complaint emerges from Google’s alleged use of Rescuecom’s mark as part of its AdWords and Keyword Suggestion Tool programs. A user who executes a Google search, in addition to receiving the company’s acclaimed proprietary algorithm results, is potentially confronted with what Google terms “Sponsored Links.” These links can appear at the top of the page—above the relevancy results—or in the right hand margin. In either case these “Sponsored” results are marked as such.
The following search performed on “Nike” is illustrative.
Utilizing Google’s AdWords program, a user can purchase keywords. When a search is performed on a purchased keyword, Google’s site will display the user’s advertisement under one of its “Sponsored Link” sections. Thus, in the above example, Nike might purchase the keyword shoe—allowing it to achieve targeted marketing to Google users who are interested in shoes. To assist users in determining appropriate search terms, Google’s Keyword Suggestion Tool provides a list of other keywords that a user might be interested in purchasing. In Nike’s case, perhaps the tool would suggest “athletic gear.”
Rescuecom takes issue with the possibility that its competitors are able to purchase Rescuecom’s mark and associate it with their own advertisements and accompanying links. Moreover, Rescuecom alleges, Google’s Keyword Suggestion Tool—by providing its trademark as a suggestion—actually encourages such purchases.
Relying on the Second Circuit’s 2005 decision in 1-800 Contacts, Inc. v. When U.com, Inc., the district court had dismissed Rescuecom’s complaint for failing to allege Google’s use was a “use in commerce”; as required by § 45 of the Lanham Act. The district court reasoned Google’s use of the mark was internal and that by failing to display Rescuecom’s mark to users, Google’s use was necessarily outside the statute’s proscription.
In reinstating the action, the Second Circuit found the pop-up ads at issue in 1-800 Contacts distinguishable because they were based not on the claimed mark, but rather on the mark holder’s website address. Additionally, the court found Google’s use differed, because its users, unlike those at issue in 1-800 Contacts, were able to actually purchase the mark itself; stating: “Google’s utilization of Rescuecom’s mark fits literally within the terms specified by [the Act].”
The court further rejected Google and its amici’s argument that its use was akin to “product placement.” Relying on Rescuecom’s allegations, the panel found the more appropriate analogy a scenario in which “a retail seller were to be paid by an off-brand purveyor to arrange product display and delivery in such a way that customers seeking to purchase a famous brand would receive the off-brand, believing they had gotten the brand they were seeking….”
In reinstating the complaint, the panel expressed no opinion as to whether Rescuecom would be able to establish the further required elements of likelihood of confusion or mistake. For its part, Google remains confident that it will be able to defend the claims.
Law.com quotes Ian Ballon, an attorney with Greenberg Traurig, as remarking that the decision brings the Second Circuit into accord with other jurisdictions which have addressed the issue.
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