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Google's trademark keyword sale kyboshed by Appeals Court

'Use in commerce' ruling overturns earlier judgement

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A US court was wrong when it ruled that Google's selling of a trade marked term to a competing company to be used as a trigger for advertising was not 'use in commerce'. The appeals court has said that the use could infringe the trade mark.

Google sells advertising space beside its search engine results. The adverts are chosen according to the search terms typed in by the user. Google allows one company to place advertising when another company is searched for, even if the term is a registered trade mark of that other company.

The terms are called keywords and Google's keyword advertising facility is called AdWords. The fact that trade marks can be purchased as keywords by people other than their owners has long been controversial. Google applies this policy only in the US, Canada, the UK and Ireland.

Computer repair business Rescuecom sued Google, claiming that when Google sold Rescuecom's name to competitors as a trigger it engaged in trade mark infringement.

A US district court had said that the practice was not unlawful because the use of the term as a trigger was not 'use in commerce'. The US Court of Appeals for the Second Circuit has ruled that position untenable, though.

"What Google is recommending and selling to its advertisers is Rescuecom’s trademark," said the Court's ruling. "Google displays, offers, and sells Rescuecom’s mark to Google’s advertising customers when selling its advertising services."

Rescuecom also argued that Google infringed when it proactively made suggestions of relevant or useful terms to its advertisers through its 'keyword suggestion tool'.

Rescuecom said that the appearance of other people's brands when the term 'Rescuecom' is searched for will cause consumers confusion. It said that this was the case especially when advertising results are displayed at the top of the page. Googe displays paid-for search results at the side and/or on top of the natural results.

The Court agreed that confusion was a possibility.

"If the searcher sees a different brand name as the top entry in response to the search for 'Rescuecom,' the searcher is likely to believe mistakenly that the different name which appears is affiliated with the brand name sought in the search and will not suspect, because the fact is not adequately signaled by Google’s presentation, that this is not the most relevant response to the search," said the ruling. "Whether Google’s actual practice is in fact benign or confusing is not for us to judge at this time."

The Court of Appeal had previously ruled in a case involving web advertising software company 1-800 Contacts. It had found that 1-800's use of trade marks inside its system for triggering pop-up ads did not count as 'use in commerce'.

The district court in the Google case said that the 1-800 precedent meant that it had to declare Google's use acceptable as well. The Court of Appeal disagreed.

"In contrast to 1-800, where we emphasized that the defendant made no use whatsoever of the plaintiff’s trademark, here what Google is recommending and selling to its advertisers is Rescuecom’s trademark," said the ruling. "Second, in contrast with the facts of 1-800 where the defendant did not 'use or display,' much less sell, trademarks as search terms to its advertisers, here Google displays, offers, and sells Rescuecom’s mark to Google’s advertising customers when selling its advertising services."

"In addition, Google encourages the purchase of Rescuecom’s mark through its Keyword Suggestion Tool," it said.

The case will go back to the lower court to be heard fully.

Google's policy is to respond to complaints about the use of trade marks in the text of adverts in all countries. But controversially the company extended its US and Canada policy for the choice of keywords to the UK and Ireland last year. That means that brand holders in the UK and Ireland must bid with rivals for the right to have their trade marks trigger their own ads.

Google's policy for all other countries is to respond to complaints about keywords that correspond to trade marks. Notwithstanding, the company was fined by a French court in February for selling trademarked terms as keywords. Google has argued that generic terms should not be eligible for protection under its trade mark policy. German courts are awaiting help from the European Court of Justice on where the law stands on keyword advertising and trade marks.

The ruling can be found here, and an analysis can be read here.

Copyright © 2009, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

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