March 06, 2008

Trademark owners appear to have won additional victories in the ongoing legal battleground over online advertisers and search engines’ controversial practice of keyword-triggered advertising. The U.S. District Courts for the District of Massachusetts and Kentucky both joined a growing majority of federal trial courts in holding that the purchase of a competitor’s trademark as a keyword to trigger sponsored advertisements through an online search engines’ advertising program constitutes “use” in commerce under the Lanham Act.  Boston Duck Tours, LP v. Super Duck Tours, LLC, Civ. A. No. 07-11222-NMG (D. Mass. Dec. 5, 2007); T.D.I. International, Inc. v. Golf Preservations, Inc., Civ. A. No. 6:07-313-DCR (E.D. Ky., Jan. 31, 2008).

In Boston Duck Tours, the plaintiff operated a sightseeing tour service in Boston. It had previously obtained a preliminary injunction barring the defendant from using the phrase duck tours as a trademark in connection with its competing services in the greater Boston area. 

Nonetheless, the defendant purchased the term “boston duck tours” as a keyword to trigger sponsored links through Google’s AdWords program. The plaintiff filed a motion requesting the court to determine whether the defendant’s purchase of the term violated the Lanham Act or was otherwise prohibited by the preliminary injunction.

The federal court in Massachusetts acknowledged that the issue of whether purchasing a keyword containing another’s trademark constituted use under the Lanham Act – trademark use being an essential element in a successful action under the statute – had not been addressed by a court within the 1st Circuit, and that courts elsewhere were split. Indeed, several federal courts in New York had answered this question in the negative. In Merck & Co, Inc. v. Mediplan Health Consulting, Inc., 425 F. Supp. 2d 402 (S.D.N.Y. 2006), for example, the court reasoned that the use of a trademark in keyword advertising is entirely internal, analogous to an individual’s private thoughts about the trademark. On the other hand, federal district courts in Pennsylvania, New Jersey and Virginia had reached the contrary conclusion on the grounds that “the mark was used to provide a computer user with direct access (i.e., a link) to defendant’s website.”  See, e.g., J.G. Wentworth, S.S.C. Ltd. P’ship v. Settlement Funding LLC, 2007 WL 30115 (E.D. Pa. 2007), Buying for the Home, LLC v. Humble Abode, LLC, 459 F. Supp. 2d 310 (D.N.J. 2006), Gov’t Employees Inc. Co. v. Google, Inc., 330 F. Supp. 2d 700 (E.D. Va. 2004).

The Boston Duck Tours court adopted the latter view and held that purchasing a keyword does constitute use. The court reasoned that this emerging view outside the 2nd Circuit is “in accord with the plain language of the statute.”  The court further stated, “[b]ecause sponsored linking necessarily entails the ‘use’ of the plaintiff’s mark as part of the mechanism of advertising, it is ‘use’ for Lanham Act purposes.”

The court ultimately ruled in favor of the defendant, however, because the content of the disputed advertisement clearly distinguished itself from plaintiff’s services and therefore mitigated any potential consumer confusion. The court observed that the defendant had adopted a new trademark - “Super Duck Excursions” in place of “Super Duck Tours.” In light of this fact, and the fact that the content of the advertisement at issue otherwise served to distinguish the parties’ services, the court found that consumer confusion was unlikely. The court found this advertising was aggressive, but fair under the Lanham Act. Accordingly, it concluded that sponsored links did not violate trademark law or the court’s prior preliminary injunction.

T.D.I. International involved various claims brought by plaintiffs against a former employee who started a competing business providing subsurface drainage systems for golf courses. The employee had allegedly purchased plaintiffs’ mark “XGD” as a search engine keyword and “otherwise used the XGD trademarks in a manner that violate[d] the Lanham Act.” The defendants moved for dismissal on the basis that they had not used the mark in commerce.

In denying defendants’ motion, the U.S. District Court for the Eastern District of Kentucky reasoned that given the uncertain state of the law, dismissal was not warranted at that early stage of the proceedings. It concluded that the plaintiffs had alleged facts sufficient to state a claim to relief that was plausible on its face – in other words, that the purchase of another’s trademark as a keyword could constitute trademark use sufficient to trigger a violation under the Lanham Act.

Although this area of the law remains uncertain, the decisions in Boston Duck Tours and T.D.I. International suggests a growing trend among courts toward finding trademark use in keyword-triggered advertisements cases. With this decision, the U.S. District Court for the District of Massachusetts (which sits in the 1st Circuit) and the U.S. District Court for the District of Eastern Kentucky (which sits in the 6th Circuit) now join federal trial courts in the 3rd, 4th, 7th, 8th and 9th Circuits in reaching this conclusion, leaving the 2nd Circuit as the sole circuit on the other side of the issue. This trend should benefit trademark owners, who may now be better able to enforce its trademark rights against competitors who attempt to use their marks as keywords in online advertising.

Elizabeth H. Cohen
[email protected]
202.857.6166

Henry Huffnagle
[email protected]
202.857.6302