Keyword Ads and Trademark Infringement

in 2009

Update on the latest case-law in the US and Europe which could make or break the search engine industry

Alexander Tsoutsanis

Stanford Law School – April 23rd 2009

Topics

Introduction

Keyword Advertising

Overview 2008/2009

Infringement

by Advertisers

by Search Engines

Evaluation

Portakabin v. Primakabin (NL)

Dispute between TM owner and Advertiser: Google not directly involved

2008: Supreme Court refers to ECJ

Extensive questions:

Infringement

Fair use

First sale doctrine

Unfair competition

7 Questions pending before ECJ

1(a) TM Use. Does the use of a third party TM as a keyword for advertising identical products constitute TM use by the advertiser?

1(b) Presentation. Does it make a difference whether the ‘sponsored result’ is displayed in the ‘ordinary list of webpages found’ or ‘in an advertising section identified as such’?

1(c) Actual offer. Does it make a difference whether the identical products are offered in the ‘sponsored result’ or in the linked webpage?

2. Fair use defense. Can an advertiser escape TM infringement by relying on fair use?

3. First sale doctrine. Can an advertiser escape TM infringement by relying on the first sale doctrine?

4.“Typo keywords”. Do the answers to the foregoing questions also apply for keywords in which the trade mark is deliberately reproduced with minor spelling mistakes ?

5. Unfair competition. If there’s no TM use, can a TM owner invoke unfair competition pursuant to § 5-5 of the Directive?

Keyword Advertising: possible TM use

Selling/ suggesting keyword

Purchase of keyword

Display TM in ad on website SE

Display TM on advertiser’s website

Search engine

Advertiser SE / Advertiser

Advertiser +SE?

Overview 08/09: selected key cases EU + US

Europe3 June 08: Google v LouisVuitton (C-

236/08)

Google v Viaticum (C-237/08)

Google v CNRRH (C-238/08)26 June 08: BergSpechte v G. Guni (C-

278/08)17 Dec 08: Portakabin v Primakabin (C-

558/08)22 Jan 09: Bananabay (I ZR 125/07)

Overview 08/09: selected key cases EU + US

United States18 June 08: Finance Express v Nowcom

(C.D.Cal, 07-01225)1 Aug 08: Hysitron v MTS

(D. Minn., 07-01533)27 March 09: Hearts on Fire v Blue Nile

(D. Mass, 08-11053)3 April 09:Rescuecom v Google

(2nd Cir, 06-4881)

Overview (2): relevance re. defendants

Re. infringement by advertisers:

Google v CNRRH

BergSpechte v G. Guni

Portakabin v Primakabin

Bananabay

***

Fin. Express v Nowcom

Hysitron v MTS

Hearts on Fire v Blue Nile

Re. infringement by search engines:

Google v Louis Vuitton

Google v Viaticum

Google v CNRRH

***

Rescuecom v Google

TM Infringement

Three issues:

1. Use in commerce

2.A Likelihood of confusion

2.B Dilution

3. Defenses

(1) Establishing ‘use’

EU US

Use in commerce “for the purpose of distinguishing goods or services”

“in connection with (offering for) sale, distribution or advertising of any goods or services”

Use as a Trademark?

ECJ: no, as long as use affects function(s) of TM

Key: what function?

McCarthy: No

Barrett: Yes

Score-card keywords

BX: mostly - Portakabin

DE: split +/- Bananabay

AT: + Bergspechte

FR: + Google

Trend towards TM use:

Fin. Express v Nowcom

Hysitron v MTS

Hearts on Fire

Rescuecom v Google

(2a) “Likelihood of confusion”

EU US

Basics Identical sign for identical products (!): presumption

Otherwise: evidence, multi-factor test

Indirect confusion is also sufficient

association = factor.

No presumption

Multi-factor test

‘substantial’ evidence

Initial interest Confusion

Less of an issue, because of presumption

Often invoked

Actual Source confusion

Often invoked in case TM is displayed in ad or website

Keyword context

factors:

Presentation; lay-out Evidence ?

Average consumer

(3) Defenses - selection

EU US

Fair use Now pending in Portakabin

“Honest” use

“Necessary to use TM”

Trend: often denied

“Fair” use

First sale Now pending in Portakabin

Can never apply to ‘typo’ keywords.

?

Keyword context

factors:

Use of TM in Ad

Presentation of advertiser’s website

Link to advertiser’s website

Evaluation

Towards ‘sustainable’ (and profitable) keyword advertising

More clear lay-out

Drop “Suggestion Tool” for third party TM’s

Consistent uniform complaint policies

“Towards best practices” ?

Any questions ?

alexander.tsoutsanis@dlapiper.com