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NO CDA IMMUNITY WHEN YAHOO! CREATES CONTENT; KEYWORD ADVERTISING MAY VIOLATE TRADEMARK ... OR MAYBE NOT!
July 18, 2006
NO CDA IMMUNITY WHEN YAHOO! CREATES CONTENT
A federal court in California recently ruled that Yahoo cannot rely on the immunity provided by the Communications Decency Act (CDA) to fend off a claim that it fraudulently created user profiles in its online dating service and misrepresented expired users as still available for dates.
According to the court, the plaintiff is seeking to hold Yahoo! liable for its own content- namely, fictitious users and false statements about others. That conduct is not covered by the CDA immunity.
Robert Anthony, the plaintiff, alleged that Yahoo! deliberately and intentionally created false and/or nonexistent profiles of other users and distributed them as "potential 'new matches' " for the plaintiff and others. The plaintiff also alleged that Yahoo! circulated profiles of dating service users whose memberships had expired, representing that they remained available for dates.
Yahoo! sought to dismiss the complaint, arguing that the CDA provides immunity to the provider or user of an "interactive computer service" for liability arising from content supplied by a third-party "information content provider." For CDA purposes, an "information content provider" is "any person or entity that is responsible, in whole or in part, for the creation or development of information provided through the Internet or any other interactive computer service."
The court rejected Yahoo!'s motion. The court noted that the CDA only immunizes information provided by another information content provider. In this case, the court found that Yahoo! itself was the "information content provider" with respect to the content that the plaintiff alleged is unlawful.
Yahoo! also could not assert immunity in defense of the allegations that Yahoo! sent profiles of former subscribers. "[The CDA] does not absolve Yahoo! from liability for any accompanying misrepresentations," the court said. "Because Anthony posits that Yahoo!'s manner of presenting the profiles--not the underlying profiles themselves--constitute fraud, the CDA does not apply."
The CDA immunity gives ISP's broad freedom. But as this case illustrates, it's not unlimited.
The hot issue in trademark law currently is whether the use of a trademarked term to trigger keyword advertising for a competitor of a the trademark owner constitutes a "use in commerce" for purposes of a trademark infringement claim. A federal court in New York recently followed precedent from the Second Circuit Court of Appeals in determining that such a practice is not trademark infringement.
The New York case arose when Merck & Co. filed six lawsuits against online pharmacies in Canada that were offering for sale generic versions of the plaintiff's cholesterol medication, Zocor. Merck owns a federal trademark registration for the term ZOCOR and a stylized design mark for the Zocor logo. The defendants, all except one, identified their products as "generic ZOCOR" or some variation of this phrase.
Several of the defendants also purchased "sponsored" links from search engine operators Google Inc. and Yahoo! Inc. When Internet users search for the word "Zocor", these search engines return prominent hyperlinks to the defendants' Web sites. All but one of the defendants used the term ZOCOR in connection with the sale of their generic products.
Merck contended that the practice constituted trademark infringement. The defendants, however, asked for summary judgment in their favor, arguing that the practice did not constitute trademark infringement as a matter of law.
Under federal law, trademark infringement requires that the infringing mark be "used in commerce." A mark is used in commerce "when it is used or displayed in the sale or advertising of services and the services are rendered in commerce." Based on this definition, the court noted that "[T]he ZOCOR mark is 'used' only in the sense that a computer user's search of the keyword 'Zocor' will trigger the display of sponsored links to defendants' websites. This internal use of the mark 'Zocor' as a key word to trigger the display of sponsored links is not use of the mark in a trademark sense." According to the court, the defendants simply did not place the plaintiff's marks on any goods or containers or use the marks in any way that suggested source or sponsorship.
The New York holding is not the universal rule. Several federal courts in California, including the Ninth Circuit Court of Appeals, have determined that the use of trademarks in keyword advertising is a "use in commerce."
A recent federal court ruling in Minnesota found a trademark violation arising from keyword advertising. In that case, Edina Realty, a large real estate brokerage firm, sued TheMLSonline.com, a competing real estate brokerage firm, for trademark infringement.
MLSonline used the Edina mark in a variety of ways, including as hidden text and hidden links on MLSonline's Web site. The court singled out one particular sponsored ad, which featured the Edina Realty mark, bold and underlined, in the headline, while MLS was listed in small print at the bottom of the ad.
Edina Realty introduced evidence that consumers were confused, based on e-mails and phone calls received by MLSonline from consumers inquiring about Edina Realty.
In the course of its ruling the Minnesota court came to a conclusion directly opposite to the New York ruling, finding that "Based on the plain meaning of the Lanham Act, the purchase of search terms is a use in commerce."
The message from these cases? The law is unsettled. If you use a competitor's trademark for keyword advertising, the question is, to use a Clint Eastwood quote, "Do you feel lucky?"
This Newsletter is a periodic publication of Graydon Head & Ritchey LLP and should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general information purposes only, and you are urged to consult your own advisor concerning your situation and any specific legal question you may have.