Internet Trademark Case Summaries
Google Inc. v. American Blind and Wallpaper Factory, Inc.
74 U.S.P.Q. 2d 1385 (N.D. Cal. 2007) (Google’s motion to dismiss); U.S. Dist. LEXIS 32450 (N.D. Cal. Apr. 18, 2007) (Cross-motion for summary judgment)
Plaintiff sued defendant retailer of home decorating products and services for declaratory relief seeking a judicial determination that its “AdWords” advertising program does not infringe defendant’s trademarks AMERICAN BLIND and AMERICAN BLINDS. Defendant does the majority of its business through its website “www.americanblinds.com.” Defendant counterclaimed claiming infringement, false representation, and dilution, as well as contributory infringement and dilution. Plaintiff’s search engine uses keywords to produce search results and sells keyword-triggered ads allowing advertisers to purchase the right to have plaintiff display links (known as “Sponsored Links”) above and alongside the user’s requested results. Plaintiff sold defendant’s competitors such keywords as “American Blind,” “American Blinds,” and “Americanblinds.com” despite defendant’s objections. The effect is that users who search for defendant’s company also view advertisements appearing as links which direct those users to competitors’ websites. Defendant alleged that plaintiff’s intention was to divert customers from its website to third party competitors’ sites. Plaintiff had a policy that it would refrain from selling keywords to trademarked terms but abandoned that policy after defendant sued plaintiff in the Southern District of New York in January of 2004. In this case, plaintiff moved to dismiss defendant’s counterclaims which the court denied, expressing no opinion as to which party will ultimately prevail, instead, the court wanted to consider the relevant facts and law in “the context of a fuller record.” Plaintiff argued, primarily, that defendant was not engaged in the requisite ‘use’ of a trademark because it did not use “the mark to identify the source of its own goods or services.”(emphasis in original) Therefore, plaintiff contended that it did not use defendant’s “marks to identify the source of their own search engines or advertising products.” (emphasis in original) The court cited Playboy v. Netscape and concluded that the “uncertain state of the law” precluded dismissal at this stage. Plaintiff countered that, unlike the banner ads in Playboy, its “Sponsored Links” clearly identify the sources of the ads and therefore cannot cause confusion. The court, however, stated that this argument required a finding of fact and law which was inappropriate under a FRCP 12(b)(6) motion. The court ultimately denied plaintiff’s motion to dismiss it its entirety, citing the same reasoning for the contributory claims as those of the direct claims.
Google later moved for summary judgment asking the court to declare that its sales of trademarked keywords did not constitute a use in commerce under the Lanham Act, that defendant’s marks were not protectable, that there was no likelihood of confusion and thus no infringement, and that defendant’s marks were not famous and thus not entitled to dilution protection. Google relied in part on the intervening decisions in Merck and Rescucom, both of which held that Google’s sale of keywords was an “internal” use that did not constitute a trademark use. The court noted, however, that other courts reached contrary decisions, namely, Geico, 800-JR Cigar, Buying for the Home, Edina Realty, and J.G. Wentworth. Moreover, the court continued to believe that the Ninth Circuit’s decisions in Playboy v. Netscape and Brookfield suggest that the Ninth Circuit would also assume a “use in commerce” here. Accordingly, the court denied Google’s motion for summary judgment based on an alleged absence of “trademark use.” The court did grant summary judgment in favor of Google on all claims to the extent they were based on the alleged mark AMERICAN BLIND(S) because that mark was merely descriptive and defendant failed to submit sufficient evidence to create a genuine issue as to whether its mark had acquired secondary meaning. Regarding likelihood of confusion, the court held that defendant produced sufficient evidence under the Sleekcraft factors to withstand summary judgment as to the remaining marks at issue—AMERICAN BLIND FACTORY, AMERICAN BLIND & WALLPAPER FACTORY, and DECORATETODAY. This evidence included the close proximity of defendant’s products and those advertised in Google’s Sponsored Links; the keywords sold by Google were identical to defendant’s marks; a low degree of consumer care was expected of Internet consumers; and Google used defendant’s marks “with the intent to maximize its own profit.” In addition, defendant submitted a survey in which 29% of the respondents shown a Google search results page for “AMERICAN BLINDS” thought that the Sponsored Links appearing on that page were affiliated with defendant. Although the survey was flawed in several respects—it had no control group and it tested only the mark AMERICAN BLINDS that the court ruled unprotectable—these flaws went only to the weight of the survey and not its admissibility, and evidence of confusion resulting from Google’s use of AMERICAN BLINDS “has at least some relevance” to whether there is confusion based on Google’s use of AMERICAN BLIND FACTORY and AMERICAN BLIND & WALLPAPER FACTORY. The court also commented that “the future application of the initial interest confusion doctrine to identified, sponsored links is an unsettled question in the Ninth Circuit.” According to the court, Judge Berzon’s concurrence in Playboy v. Netscape would reach such cases and criticized such a result. However, even if it treated Judge Berzon’s concurrence as controlling law, it would have to determine whether a consumer “knows or should know, from the outset” that the Sponsored Link is not related to defendant. Here, although there was no dispute that Google labeled the paid listings tied to the keywords as “Sponsored Links,” the court believed that “the reasonable response of a consumer to these links remains a disputed issue of fact.” The court next granted summary judgment to Google on defendant’s federal and state dilution claims as to all marks because defendant did not submit sufficient evidence of fame. Finally, the court held that Google’s defense of unclean hands—based on defendant’s purchase of its competitors’ trademarks as keywords from Google—failed for two reasons: (1) defendant indicated its willingness to refrain from such conduct, and (2) “a significant public interest exists in determining whether [Google’s] AdWords program violates trademark law.”