May 29, 2008

Key Cases Pending Regarding Trademark Law and Internet Advertising

Internet advertising through programs such as Google's AdWords and AdSense has given rise to new issues relating to the application of traditional trademark law. AdWords -- better known as keyword advertising -- allows advertisers to purchase or bid on certain keywords. When a user searches for those words, links to the advertiser's websites appear in the Sponsored Links section of the search results. Google's AdSense program provides a way to generate advertising revenue from residual traffic associated with an inactive or parked domain name. Google's program analyzes a domain and automatically generates conceptually related advertising. Such related advertising is then displayed on a parked page or advertising page via website links. When the keywords or domain names used in these programs incorporate a trademark, trademark owners understandably believe the goodwill associated with their mark is being improperly used to direct traffic to a competitor's website. Whether such internet advertising programs violate trademark rights remains an ongoing debate. Two cases currently are pending that may provide greater clarity as to whether these programs run afoul of trademark law. First, Rescuecomm Corp. v. Google, Inc. is currently on appeal in the Second Circuit. To date, district courts within the Second Circuit have uniformly rejected trademark infringement claims based on keyword advertising, finding that the use of trademarks in such advertising does not constitute use in commerce as required by the Lanham Act. Those decisions have been based on the ruling in 1-800 Contacts, Inc. v. WhenU.com, Inc., 414 F.3d 400 (2d Cir. 2005), which held that when the subject mark was not actually displayed to consumers and third parties, the defendants could not be deemed to have used the mark in commerce as that term is defined in the Lanham Act. 1-800 Contacts, however, involved pop up adds, rather than keyword advertising. The Second Circuit heard oral arguments in Rescuecomm on April 3, 2008 and will have an

opportunity to address whether courts have been correct in extending its analysis in 1-800 Contacts dealing with pop-up ads to keyword advertising. With respect to parked pages advertising, there have been a number of UDRP decisions that have addressed the validity of domains incorporating another's trademark being utilized for parked pages. There have, however, been few court decisions addressing the application of trademark law to parked page advertising. Currently pending is a potentially groundbreaking class action in the Northern District of Illinois involving this form of advertising. The action was brought by Vulcan Golf and others against Google and several parking companies alleging trademark infringement. The court recently denied defendants' motions to dismiss certain of the infringement claims based on arguments that the domains were not being used in commerce and/or did not create the requisite likelihood of confusion. Vulcan Golf, LLC v. Google, Inc., No. 07CV3371 (N.D. Ill, March 20, 2008). The ultimate resolution of this case should be instructive regarding the applicability of trademark infringement claims to this form of advertising