Internet Trademark Case Summaries

Storus Corp. v. Aroa Mktg., Inc.

2008 U.S. Dist. LEXIS 11698 (N.D. Cal. Feb. 15, 2008)

Plaintiff marketed and sold a money clip under the federally registered mark SMART MONEY CLIP since 1997.  Defendant Aroa sold its own money clip products under the mark STEINHAUSEN, as well as plaintiff’s Smart Money Clip pursuant to an agreement with plaintiff, on its website at "steinhausenonline.com."  To promote its website, defendant purchased several keywords, including "smart money clip," from Google’s AdWords program.  When Internet users entered the term into Google’s search engine, defendant’s advertisement prominently displaying the phrase "Smart Money Clip" in its heading appeared as a "sponsored link" on the search results page.  The term "Smart Money Clip" was underlined and in a font size larger than the rest of the wording in the ad.  Users clicking on this ad were taken to Aroa’s website.  Over a period of eleven months, Aroa’s advertisement appeared 36,164 times in response to a search for "smart money clip," and Internet users clicked on the ad 1,374 times.  Defendant Skymall sold a wide range of products, including Aroa’s "Gadget Universe" money clips, on its website at "skymall.com."  Internet users entering "smart money clip" into Skymall’s catalog search engine returned Aroa’s money clip with a product description that included the phrase "Smart Money Clip."  Plaintiff sued both defendants for trademark infringement, and moved for partial summary judgment on its trademark infringement claims.  The court first found that plaintiff’s mark was valid and protectable, rejecting defendants’ claim that the mark was merely descriptive.  "Smart" did not describe any of the clip’s functions.  Further, even if the mark was descriptive, because it was registered by the PTO, it was presumed that the PTO found that the mark had acquired secondary meaning.  The court next addressed plaintiff’s claim against Aroa and found that its use of plaintiff’s mark as a search engine keyword created a likelihood of initial-interest confusion.  It first found that the "Internet trilogy" of Sleekcraft factors favored plaintiff as its entire mark appeared on Aroa’s advertisement, the products were identical, and both parties marketed their products over the Internet.  Even though customers might not be confused about the source of the products once they reached Aroa’s website, the court noted that under a theory of initial-interest confusion, "source confusion need not occur; rather, in the [I]nternet context, the wrongful act is the defendant’s use of the plaintiff’s mark to divert consumers to a website that ‘consumers know’ is not [plaintiff’s] website."  The court distinguished Playboy, where defendant’s keyword-generated banner ad was clearly labeled as an ad for defendant, because here the largest words in the sponsored link advertisement consisted of plaintiff’s mark.  Further, the court found 1,374 instances of actual initial-interest confusion in which Internet users searched for SMART MONEY CLIP and were diverted to Aroa’s website.  Finally, the court weighed all of the remaining Sleekcraft factors either against Aroa or as irrelevant.  The court thus granted plaintiff’s motion for summary judgment against Aroa.  The court next addressed plaintiff’s claim against Skymall, which also relied on a theory of initial-interest confusion based on Skymall’s use of plaintiff’s mark in an internal catalog search feature that allegedly diverted customers to a webpage that sold Aroa’s products with plaintiff’s mark in its description.  However, the court found that plaintiff failed to present sufficient evidence to show that there was no material issue of fact as to whether Skymall’s search engine directed customers who entered the phrase "smart money clip" to a webpage that displayed that phrase, which was required to show trademark use of the mark.  The court thus denied plaintiff’s motion for summary judgment against Skymall.