April 2009 Issue
Hearts on Fire Co., LLC v. Blue Nile, Inc.,
2009 WL 794482 (D. Mass. Mar. 27, 2009)
The District of Massachusetts denied defendant’s motion to dismiss trademark infringement claims related to its purchase of search engine keywords. The court determined that such purchases constituted a use in commerce under the Lanham Act based on the broad definition of “use” in the civil remedies section of the Act. Additionally, the plaintiff alleged facts sufficient to support its claims that defendant’s keyword-triggered sponsored ads, even those not containing plaintiff’s mark, caused initial-interest confusion. Finally, the court articulated a multifactor test to supplement the traditional likelihood-of-confusion for assessing likelihood of confusion test in the context of sponsored ads.
Plaintiff Hearts on Fire Company (“Hearts on Fire”), a wholesaler of diamonds that sold only to authorized dealers, owned the federally registered HEARTS ON FIRE mark. Hearts on Fire advertised via its heartsonfire.com website at which it promoted its diamonds and directed customers to its authorized resellers. Defendant Blue Nile, an online diamond and jewelry retailer, was not an authorized reseller of plaintiff’s diamonds. Blue Nile purchased the HEARTS ON FIRE mark as a search engine keyword to trigger the display of sponsored advertisements that linked to Blue Nile’s website. Some of these sponsored ads contained the HEARTS ON FIRE mark in the ad text, while others did not. Hearts on Fire further alleged that Blue Nile’s own website search functionality returned a list of Blue Nile web pages when the phrase “HEARTS ON FIRE” was searched. These returned pages, however, featured combinations of the words “hearts” and “on fire,” but did not display the exact phrase “HEARTS ON FIRE.” Hearts on Fire sued for trademark infringement and unfair competition, among other claims. Blue Nile moved to dismiss those claims based on its purchase of HEARTS ON FIRE as a keyword and on the search results using the Blue Nile website’s search functionality. Blue Nile did not seek to dismiss plaintiff’s claims regarding the appearance of its sponsored ads.
The court denied Blue Nile’s motion to dismiss. It first addressed whether Blue Nile’s purchase of the HEARTS ON FIRE mark as a keyword to trigger sponsored ads constituted a “use in commerce,” noting the existence of a circuit split on this issue. The court discussed the Second Circuit’s holding in 1-800 Contacts that the defendant’s advertising program using an “internal” database of URLs to trigger sponsored pop-up ads did not constitute a use in commerce,** and the fact that lower courts in the Second Circuit have extended this ruling to keyword purchases. In finding no use in commerce, these courts relied on the Lanham Act’s definition of “use in commerce” in Section 45 requiring that the mark be placed on goods or associated “displays” or “displayed” in the sale or advertising of services. It then discussed decisions from other courts holding that the purchase of trademarks as keyword triggers constituted a use in commerce. Those courts relied on the broader “use” definition in Section 32 of the Lanham Act regarding civil remedies, which penalizes the “use in commerce” of “any reproduction . . . of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods or services.” Based on this definition, the court here found that the purchase of trademarks as keyword triggers “is precisely such a use in commerce, even if the trademark is never affixed to the goods themselves.” It held that “[t]he Lanham Act’s use requirement is not so narrow or cramped” that it would not encompass a company “rel[ying] on its competitor’s trademark to place advertisements for its own products in front of consumers searching for that exact mark.”
Turning to likelihood of confusion, the court analyzed Hearts on Fire’s allegations of initial-interest confusion. It noted that the First Circuit had not “fully explored or addressed” the subject of initial-interest confusion and then considered decisions of other courts involving initial-interest confusion in both the bricks-and-mortar world and cyberspace. The court concluded that initial-interest confusion could support a Lanham Act claim “but only where the plaintiff has plausibly alleged that consumers were confused, not simply diverted.” In the context of the Internet and sponsored links, the court determined that the “crucial question... is one of degree: Whether the consumer is likely confused in some sustained fashion by the sponsored link and the defendant’s website, or whether the link serves instead as a benign and even beneficial form of comparison shopping.” To prevail, the confusion “must be more than momentary and more than a ‘mere possibility.’”
Some of Blue Nile’s keyword-triggered sponsored ads featured the HEARTS ON FIRE mark in the ad text, while others did not. Blue Nile did not contest that ads containing the HEARTS ON FIRE mark stated a claim for trademark infringement, so the issue was whether Blue Nile’s use of the trademark as a keyword trigger for sponsored links not containing plaintiff’s trademark stated a claim. The court determined that Hearts on Fire had alleged enough to defeat Blue Nile’s motion to dismiss, finding that even if the ads did not display the mark, “the surrounding context supplie[d] a sufficient basis to support allegations of consumer confusion at this early stage of the litigation.” According to the court, a consumer who had just entered a search for HEARTS ON FIRE diamonds “might easily believe” that Blue Nile was an authorized Hearts on Fire diamond retailer when presented with the sponsored link, even if the ad did not contain the HEARTS ON FIRE mark. Further, if the consumer clicked on the ad link to Blue Nile’s website expecting to find HEARTS ON FIRE diamonds there, plaintiff alleged that “nothing there would immediately alert him to his mistake.”
The court joined a growing list of courts holding that the purchase of a trademark as a search-engine keyword to trigger sponsored ads constitutes a Lanham Act use in commerce. Unlike other courts, however, the court here appears to be the first to articulate a specific test or special factors to assess Internet-based likelihood-of-confusion claims relating to keyword-triggered sponsored ads.