Trademark suit could curtail online advertising

A recently filed trademark suit could potentially curtail online advertisers from using other companies’ trademarks to trigger web advertisements for their company.
This occurs when an advertiser pays a search engine, such as Google, to have links to its company’s website appear in search results when an Internet user searches for another related company’s trademark.
In the latest example, 1-800-Contacts has filed suit against Lens World, claiming the company violated its trademark when it purchased links triggered by the search terms “1-800-Contacts.” The company, based in Draper, Utah, has brought similar cases, some of which have settled.
The suit claims that this type of advertising could mislead consumers into thinking there is an affiliation between the trademark holder and the advertiser.
If the latest case proceeds to trial and Lens World loses, it has the potential to grind the search term marketing field to a halt, said Eric Goldman, director of the High Tech Law Institute at Santa Clara University who writes a technology and marketing blog.
“That would change the status quo,” he said. “We might have a significant and potentially immediate reduction in the keyword advertising industry.”
The biggest impact would be on “sites like Google who could have to police better the use of keywords on their system,” said trademark law expert Doug Wolf, a partner at Wolf Greenfield in Boston.
That also means Google and other search engines that sell key words – and that stand to lose a lot of money if they can’t – might try to work out arrangements with companies to allow this type of marketing to continue, Goldman said.
“Google would likely say, ‘We’ll give you a cut of the profits,’” he predicted.
Companies have lost trademark infringement cases against Google over its search term marketing service, Google Adwords. However, American Airlines sued Google last year and that case is proceeding to trial.
The first question in a case like this, said Goldman, is whether the use of the other company’s trademark to trigger an online ad is a “use in commerce.”
He said that all courts in the 2nd Circuit that have confronted this question have ruled in favor of the trademark holder, saying such a use of a trademark isn’t a “use in commerce.” However, all other courts across the county that have considered the issue ruled just the opposite, Goldman said.
Most recently, a U.S. District Court in Kentucky held that keyword advertising is a use in commerce, allowing a case to proceed to trial. (T.D.I. International, Inc. v. Golf Preservations, Inc. (No. 6:07-313-DCR, E.D. Ky., Jan. 31, 2008.)
The centerpiece question at trial – in that case and in the 1-800-Contacts case if it moves forward – is whether a consumer likely would be confused that the trademark holder and the advertiser are affiliated.
In January 2007, a U.S. District Court in Pennsylvania ruled that this type of advertising isn’t likely to confuse consumers. (J.G. Wentworth, S.S.C. Limited Partnership v. Settlement Funding LLC, No. 06-0597, E.D. Penn. Jan 4, 2007.)
There has yet to be a jury verdict on this issue – and there is no guarantee that there will be one any time soon.
“We are unlikely to see a lot of cases reach that final round of review because the numbers simply don’t support such expensive litigation,” Goldman predicted.