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E-Commerce News
Search Engine Advertising Programs May Violate Trademark Law; Interactive Web Site May Not Create Jurisdiction
July 3, 2007
SEARCH ENGINE ADVERTISING PROGRAMS MAY VIOLATE TRADEMARK LAWA number of Internet search engines have been offering a creative advertising program that allows one competitor to play off the trademark of another competitor. The big question, however, is whether U.S. trademark law will allow it. So far the question has split federal trial courts. The most recent decision – from a California federal court – has found that the program may violate trademark law.
The “adword” program allows company A to purchase certain terms from an Internet search engine, including a competitor’s trademark. So, when an Internet user searches for company B, that search will trigger the appearance of “sponsored links” for company A. Company B, of course, objects, particularly if the Internet user winds up using company A’s products.
The case before the California federal court pitted the search engine Google against American Blind and Wallpaper Factory Inc. (“ABF”). ABF sells window blinds and other window treatments. Google sold to competitors of ABF certain ABF trademarks, including "American Blind," "American Blinds," "American Blind and Wallpaper Factory," "American Blind Factory," and "DecorateToday."
Deciding that it would be better to be on offense rather than defense, Google filed a declaratory judgment action, asking the court to determine that its AdWords program did not infringe ABF’s trademarks. In response, ABF filed counterclaims against Google and several other search engines, contending that the advertising programs constituted trademark infringement, and a host of other transgressions. Keeping up the pressure, Google moved for summary judgment.
Google argued that the sale of the trademarks, which were not visible to the Internet user, could not constitute a “use in commerce” and therefore, could not support a trademark claim. Under federal law, a trademark is not infringed unless it is used “in commerce.”
The California court, while recognizing that some courts had agreed with Google’s argument in other settings, nonetheless determined that the sale and the triggering of the sponsored links satisfied the “use in commerce” requirement. For this reason, the court rejected the summary judgment motion, and ordered that the case proceed to trial.
The adword program has generated intense scrutiny. The “use in commerce” issue is just one question. Another hurdle for a trademark owner who feels wronged by the program is establishing damages. Of course, the search engines are not going to give up a nice revenue stream without a fight. There will be much more on this issue as the case law continues to develop.
INTERACTIVE WEB SITE MAY NOT CREATE JURISDICTION
An Illinois court has recently weighed in on the jurisdictional question posed by the operation of an interactive Web page. The question of course, is whether an entity that offers out-of-state visitors the ability to set up appointments and submit comments on its Web site is subject to jurisdiction wherever a visitor to its Web site happens to reside. In this case, the court found that the interactive Web site did not create jurisdiction.
In this case, the plaintiff, an Illinois resident, suffered injuries while working out at the defendant's Missouri sports training facility. Consistent with the new American way, he filed a lawsuit in his home state of Illinois. The Missouri defendant moved to dismiss, arguing that Illinois lacked jurisdiction.
The primary basis for jurisdiction was the defendant’s interactive Web site. Otherwise, the defendant had virtually no contact with Illinois. Given that Illinois law requires a defendant to be “present and doing business” in Illinois to be subject to jurisdiction, the plaintiff could not sustain its burden.
The Illinois court rejected rulings from other courts finding that an interactive Web site created jurisdiction, determining that such rulings were “arbitrary.” The Illinois court compared the Web site to a magazine or radio advertising. The court relied on a history of case law which rejected the notion that advertising created jurisdiction.
Given the facts and the court’s determination that the Web site was essentially advertising, it is no surprise that the court found jurisdiction lacking.
At one point, it appeared that “interactivity” would be the key issue in Internet jurisdiction cases – if a remote user could actually interact via the Web site, courts tended to find jurisdiction over the entity operating the Web site. The Illinois decision may signal an end to that analysis. We’ll see.
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.