Google, Inc. v. American Blind & Wallpaper Factory, Inc.

Last updated

Google, Inc. v. American Blind & Wallpaper Factory, Inc.
US DC NorCal.svg
Court United States District Court for the Northern District of California
DecidedApril 18, 2007
Docket nos. 5:03-cv-05340
Holding
Google's request for summary judgment that AdWords does not infringe American Blind's trademarks was in part denied because of insufficient facts to establish that Google's use of those marks did not cause consumer confusion.
Court membership
Judge(s) sitting Jeremy Fogel
Keywords
AdWords, Trademark

Google, Inc. v. American Blind and Wallpaper Factory, Inc., No. 5:03-cv-05340 (N.D. Cal. April 18, 2007), [1] was a decision of the United States District Court for the Northern District of California that challenged the legality of Google's AdWords program. The court concluded that, pending the outcome of a jury trial, Google AdWords may be in violation of trademark law (see federal Lanham Act, 15 U.S.C.   § 1114(1)) because it (1) allowed arbitrary advertisers to key their ads (see keyword advertising) to American Blind's trademarks and (2) may confuse search-engine users initially interested in visiting American Blind's website into visiting its competitors' websites (see Initial Interest Confusion doctrine).

Contents

Google v. American Blind was not the first case to address trademark infringement in the context of online keyword advertising (see Playboy Enterprises, Inc. v. Netscape Communications Corp. , [2] 1-800-CONTACTS v. WhenU Inc. [3] ). Nevertheless, it generated interest in the trademark-law community because it came on the heels of Playboy v. Netscape [2] —a case that failed to resolve the legality of keyword advertising in which the origins of ads are clearly designated. [4] Despite a four-year battle, American Blind settled with Google soon after this decision, hence leaving much of this legal territory unexplored.

Background

Facts

Google's AdWords program enables advertisers to trigger a display of their ads when Google users perform keyword searches. Per Google policy, advertisers may trigger their ads on arbitrary keywords, including trademarked keywords that they do not own. [1] This permits competitors of American Blinds to place their ads alongside American Blind's ads when a user searches for "American Blind", "American Blinds", or "Decoratetoday"—all of which are registered trademarks of American Blind. In its stated objective to minimize user confusion concerning the affiliation of the ads, [1] Google places ads in specially marked "Sponsored Links" sections of the web-page and prohibits unauthorized trademark use in the ad content. But despite requests from American Blind and others, Google refuses to discontinue its use of trademarks to trigger the ads. [1]

History

The case began in Nov. 2003 when Google preemptively sought a judicial determination that its AdWords program did not infringe American Blind's trademarks. In May 2004, American Blind counter-sued Google for trademark infringement under the Lanham Act. Google subsequently filed a motion to dismiss in 2005, which was denied. [5] Finally, Google filed a motion for summary judgement, which resulted in this decision.

Dispute

American Blind alleged that Google infringed on its trademarks by enabling advertisers to key their ads to American Blind's marks. Google argued that American Blind's "claims were baseless, and that Google's trademark policies are perfectly reasonable and lawful." [6] Under the Lanham Act, one infringes a trademark if (1) one uses the mark in commerce per 15 U.S.C.   § 1114, 15 U.S.C.   § 1125(a)(1) and (2) one employs the mark to deceive or induce consumer confusion per 15 U.S.C.   § 1125(a)(1)(A), both without the consent of the mark's owner (15 U.S.C.   § 1114). In support of its motion for summary judgment, Google argued that American Blind could prove neither element of its claim.

Trademark use

American Blind alleged that Google "used" its mark as defined in the Lanham Act (15 U.S.C.   § 1127), based on precedent established in Playboy Enterprises, Inc. v. Netscape Communications Corp. —a case in which Netscape's keyword advertising was deemed to have used Playboy's trademark.

Google's defense

Google argued that, despite the Playboy v. Netscape holding, its use of trademarked keywords did not constitute use under the Lanham Act for two reasons. First, it did not place the mark on any of its goods or services per precedent set in Rescuecom Corp. v. Google Inc. ; [7] only advertisers do so. Second, the trademarked keywords are used internally and hence are akin to private thoughts. Specifically, courts prior to Playboy v. Netscape (e.g., 1-800-CONTACTS v. WhenU Inc. [3] ) have deemed private thoughts to be outside the scope of the Lanham Act.

Court's decision

The Court concluded that Google's use of American Blind's trademarks was a use per the Lanham Act, for two reasons. First it was bound by the precedent set in Playboy v. Netscape, in which Netscape's practice of keying searches to trademarked terms was deemed a use of Playboy's marks. The court notes that although use was not explicitly established in the Playboy ruling, the Playboy court focused heavily on the question of confusion, thereby implicitly signaling that use was established. Second, the Court pointed out that precedent set in other circuits also agree that keying is use. For example, in 800-JR Cigar, Inc. v. GoTo.com, Inc. [8] the court concluded that "by accepting bids from those competitors of JR desiring to pay for prominence in search results, GoTo trades on the value of the marks", and hence "uses" the mark as defined in the Lanham Act.

Trademark confusion

American Blind alleged that "although Google claims publicly that its ads are conspicuous and differentiated from its genuine search results, this is not necessarily true." In support, American Blind presented the results of a survey in which "29% of respondents falsely believed...that the sponsored links were affiliated with American Blind." [1] American Blind's allegation was relevant because Courts have looked to the Sleekcraft multi-factor test (established in AMF Inc. v. Sleekcraft Boats [9] ) to determine if there was a likelihood of confusion. American Blind's confusion analysis centered on the fourth Sleekcraft factor: evidence of actual confusion.

Google's defense

Google made two key arguments against American's Blind's allegation. First, it argued that, contrary to case law established in Playboy v. Netscape, the Sleekcraft factors are inapplicable in this case because they were meant for those offering the goods. Google argued that it isn't the one selling the goods—it just put up the advertisements. [1] Second, Google argued that even if the Sleekcraft factors applied, there was no evidence of actual confusion. In particular, Google claimed that American Blind's survey of actual confusion was methodologically flawed: there was no control group and it studied only some of the trademarks in question. [1]

Court's decision

Despite Google's argument against using the Sleekcraft factors, the court concluded it must use them per precedent established in Playboy v. Netscape, and that there were sufficient issues of material fact in question to preclude summary judgment. Specifically, the court held that some of the Sleekcraft factors may weigh in favor of American Blind. For example, it noted that there was some evidence of actual confusion, even if the degree to which it could be relied on was questionable. As another example, the court noted that the degree of consumer care exercised (Sleekcraft factor six) in the arena of online advertisements may be lower than in others, and hence may work in favor of American Blind.

Settlement

Shortly after this decision, American Blind settled its dispute with Google in what some legal experts considered "a stunning victory for Google." [6] Many saw the terms of the agreement as remarkably favorable for Google: it paid nothing to American Blind, which in turn agreed to not sue Google "so long as Google follows is current trademark policy." [6] American Blind won no concessions in return from Google, and in fact was forced to make a $15k compensation to Google for negligence in the discovery process.

The reason for the settlement was controversial. American Blind's CEO Joel Levine stated that continuing litigation made little financial sense in light of American Airlines' dispute with Google over the same issue: "American Airline is more well-suited to take on Google than we are. We sell blinds and wallpaper and that's what we do best. We're not litigators." [10] In contrast, attorneys for Google said that American Blind settled because "they had a terrible case and they decided it wasn't worth pursuing. They quit and went home." [10]

Impact

Had American Blind pursued the case and won at a later date, it seems likely that Google's advertising business would have been severely impacted. Indeed, AdWords revenue accounts for more than 98% of its annual revenue, with the percentage affected by trademark issues unknown. As Judge Fogel remarked in an earlier ruling: “The large number of businesses and users affected by Google’s AdWords program indicates that a significant public interest exists in determining whether the AdWords program violates trademark law."

The outcome of this case called into question the economic rationale for fighting Google on trademark issues. American Blind claimed that the action was justified by the fact that 50% of its revenue comes from web traffic. However, trademark expert Eric Goldman noted that, if anything, this case serves as an example of a lawsuit that "from the trademark owner's standpoint, absolutely makes no financial sense". [11] In particular, he noted that American Blind incurred huge legal fees even though it was unlikely, in Goldman's opinion, to have suffered much profit loss due to diverted keyword advertising in the first place.

The fact that American Blind wasn't able to fight Google all the way left some wondering if anyone could challenge Google's use of trademarks. Legal expert Eric Goldman observed that trademark cases against Google have failed because the plaintiffs in those cases were small companies with few financial resources and relatively obscure brand names. [11] For example, American Blind, Rescuecom, and Check-n-Go (all of which have disputed trademark issues with Google) are small to medium-sized companies that don't have particularly famous marks.

See also

Related Research Articles

<span class="mw-page-title-main">Google Ads</span> Online advertising platform owned by Google

Google Ads is an online advertising platform developed by Google, where advertisers bid to display brief advertisements, service offerings, product listings, or videos to web users. It can place ads both in the results of search engines like Google Search and on non-search websites, mobile apps, and videos. Services are offered under a pay-per-click (PPC) pricing model.

Nominative use, also "nominative fair use", is a legal doctrine that provides an affirmative defense to trademark infringement as enunciated by the United States Ninth Circuit, by which a person may use the trademark of another as a reference to describe the other product, or to compare it to their own. Nominative use may be considered to be either related to, or a type of "trademark fair use". All "trademark fair use" doctrines, however classified, are distinct from the fair use doctrine in copyright law. However, the fair use of a trademark may be protected under copyright laws depending on the complexity or creativity of the mark as a design logo.

<i>Playboy Enterprises, Inc. v. Welles</i>

Playboy Enterprises, Inc. v. Welles, 279 F.3d 796, was a court ruling at the United States Court of Appeals for the Ninth Circuit. The ruling was an important early precedent on the nominative use of trademarked terms for self-identification on the World Wide Web.

1-800 Contacts Inc. is an American contact lens retailer based in Draper, Utah. The brands that 1-800 Contacts use includes Johnson & Johnson Vision Care, Alcon, Bausch & Lomb and CooperVision. The company was founded as the industry's first way to buy contacts online and has since expanded to provide online prescription renewals, glasses, lens replacements, and the in-house AquaSoft Daily contact lenses brand. In 2006, its last year as a public company, the company reported net sales of US$247 million.

In the United States, trademark law includes a fair use defense, sometimes called "trademark fair use" to distinguish it from the better-known fair use doctrine in copyright. Fair use of trademarks is more limited than that which exists in the context of copyright.

Keyword advertising is a form of online advertising in which an advertiser pays to have an advertisement appear in the results listing when a person uses a particular phrase to search the Web, typically by employing a search engine. The particular phrase is composed of one or more key terms that are linked to one or more advertisements. The most common form or keyword advertising, focused on payment methods, is pay per click (PPC), with other forms being cost per action (CPA) or cost per mille (CPM).

An electronic registration mark is a proposed category of trademark that would restrict the use of trademarked words and phrases in online advertising.

<i>Register.com v. Verio</i> American legal case

Register.com v. Verio, 356 F.3d 393, was a decision of the United States Court of Appeals for the Second Circuit that addressed several issues relevant to Internet law, such as browse wrap licensing, trespass to servers, and enforcement of the policies of the Internet Corporation for Assigned Names and Numbers (ICANN). The decision upheld the ruling of a lower court which prevented a provider of web development services from automatically harvesting publicly available registration data from a domain name registrar's servers for advertising purposes.

Initial interest confusion is a legal doctrine under trademark law that permits a finding of infringement when there is temporary confusion that is dispelled before the purchase is made. Generally, trademark infringement is based on the likelihood of confusion for a consumer in the marketplace. This likelihood is typically determined using a multi-factor test that includes factors like the strength of the mark and evidence of any actual confusion. However, trademark infringement that relies on Initial interest confusion does not require a likelihood of confusion at the time of sale; the mark must only capture the consumer's initial attention.

<i>Planned Parenthood Federation of America, Inc. v. Bucci</i> American legal case

Planned Parenthood Federation of America, Inc. v. Bucci, 1997 WL 133313, was a court ruling at the United States District Court for the Southern District of New York. The ruling was an important early precedent on the trademark value of a domain name on the World Wide Web, and established the theory that hosting a site under a domain name that was the registered trademark of a different party constituted trademark infringement.

<i>Brookfield Communications, Inc. v. West Coast Entertainment Corp.</i>

The case Brookfield Communications, Inc. v. West Coast Entertainment Corporation, 174 F.3d 1036, heard by the United States Court of Appeals for the Ninth Circuit, established that trademark infringement could occur through the use of trademarked terms in the HTML metatags of web pages when initial interest confusion was likely to result.

Inwood Laboratories Inc. v. Ives Laboratories, Inc., 456 U.S. 844 (1982), is a United States Supreme Court case, in which the Court confirmed the application of and set out a test for contributory trademark liability under § 32 of the Lanham Act.

<i>Rescuecom Corp. v. Google Inc.</i> American legal case

Rescuecom Corp. v. Google Inc. 562 F.3d 123, was a United States Court of Appeals for the Second Circuit case in which the court held that recommending a trademark for keyword advertising was a commercial use of the trademark, and could constitute trademark infringement.

<i>Playboy Enterprises, Inc. v. Netscape Communications Corp.</i>

Playboy Enterprises, Inc. v. Netscape Communications Corp., 354 F.3d 1020 was a case regarding trademark infringement and trademark dilution decided by the United States Court of Appeals for the Ninth Circuit. The ruling addressed unauthorized use of trademarked terms when using web search data to determine the recipients of banner ads.

Trademark infringement is a violation of the exclusive rights attached to a trademark without the authorization of the trademark owner or any licensees. Infringement may occur when one party, the "infringer", uses a trademark which is identical or confusingly similar to a trademark owned by another party, in relation to products or services which are identical or similar to the products or services which the registration covers. An owner of a trademark may commence civil legal proceedings against a party which infringes its registered trademark. In the United States, the Trademark Counterfeiting Act of 1984 criminalized the intentional trade in counterfeit goods and services.

<i>Network Automation, Inc. v. Advanced Systems Concepts, Inc.</i> Court case decided on March 8, 2011

Network Automation, Inc. v. Advanced Systems Concepts, Inc., 638 F.3d 1137 was a court case decided on March 8, 2011, where the United States Court of Appeals for the Ninth Circuit ruled that the use of a competitor's trademark as an Internet search advertising keyword did not constitute trademark infringement. In the case, Network Automation advertised their own competing product in search queries that contained Advanced Systems Concepts' "ActiveBatch" trademark. In determining whether trademark infringement occurred, the court evaluated factors relevant to the likelihood of customer confusion outlined in AMF Inc. v. Sleekcraft Boats and concluded that confusion was unlikely.

<i>Tiffany (NJ) Inc. v. eBay Inc.</i> American legal case

Tiffany (NJ) Inc. v. eBay Inc. 600 F.3d 93, is a United States Court of Appeals for the Second Circuit case in which plaintiff Tiffany & Co. filed the complaint, first in 2004, alleging that eBay constituted direct and contributory trademark infringement, trademark dilution, and false advertising since it facilitated and advertised counterfeit Tiffany jewelries on its online market. On July 14, 2008, the District Court for S. D. N. Y. decided in favor of eBay on all claims. Tiffany appealed these decisions to the Second Circuit. The court affirmed the judgment of the district court with respect to the claims of trademark infringement and dilution. The false advertising claim was returned to the district court for further processing, which was then ruled in favor of eBay.

<i>College Network, Inc. v. Moore Educational Publishers, Inc.</i>

College Network, Inc. v. Moore Educational Publishers, Inc., No. 09-50596 was an unpublished appellate level case in the Fifth Circuit that upheld a district court jury decision to dismiss the purchase of trademarked keywords as infringing. The original suit was brought on a claim of trademark infringement in the purchase of certain advertising keywords that the defendant countered with claims of defamation and tortious interference, also known as intentional interference with contractual relations. The main issue addressed in the appeal was the sufficiency of the evidence presented in the counterclaims of the defendant. The court upheld the lower court's ruling, but vacated the award for tortious interference.

Lens.com, Inc. v. 1-800 Contacts, Inc., 686 F.3d 1376, is a decision by the United States Court of Appeals for the Federal Circuit which ruled that when software merely acts as a "conduit" for providing services over the internet, and does not have an independent value per se, it does not constitute a "good" being "sold or transported in commerce" for the purposes of establishing whether or not a trademark for "computer software" has been "abandoned" under 15 U.S.C. § 1064 and 15 U.S.C. § 1127

<i>Rosetta Stone Ltd. v. Google, Inc.</i> U.S. court decision

Rosetta Stone v. Google, 676 F.3d 144 was a decision of the United States Court of Appeals for the Fourth Circuit that challenged the legality of Google's AdWords program. The Court overturned a grant of summary judgment for Google that had held Google AdWords was not a violation of trademark law.

References

  1. 1 2 3 4 5 6 7 Google, Inc. v. American Blind and Wallpaper Factory, Inc., No. 03-cv-05340 JF (RS) (N.D. Cal. April 18, 2007).
  2. 1 2 Playboy Enterprises, Inc. v. Netscape Communications Corp., 354 F.3d 1020 Archived May 17, 2010, at the Wayback Machine (9th Cir. 2004).
  3. 1 2 1-800-CONTACTS v. WhenU Inc., 414 F.3d 400 Archived May 17, 2010, at the Wayback Machine (2d Cir. 2005).
  4. ↑ Kevin J. Heller, American Blind v. Google Archived September 30, 2008, at the Wayback Machine , Tech Law Advisor (March 31, 2005).
  5. ↑ Google, Inc. v. American Blind & Wallpaper Factory, Inc. , No. 03-cv-05340 JF (RS) (N.D. Cal. March 30, 2005) (denying in part Google's motion to dismiss American Blind's trademark infringement allegations).
  6. 1 2 3 Eric Auchard, Trademark plaintiff drops suit vs. Google over ads , Reuters (September 4, 2007).
  7. ↑ Rescuecom Corp. v. Google Inc., 456 F. Supp. 2d 393 (N.D.N.Y. 2006). Later overturned by 562 F.3d 123 Archived July 27, 2011, at the Wayback Machine (2d Cir. 2009)
  8. ↑ 800-JR Cigar, Inc. v. GoTo.com, Inc., 437 F.Supp.2d 273 (D.N.J 2006).
  9. ↑ AMF Inc. v. Sleekcraft Boats, 599 F.2d 341 Archived July 21, 2011, at the Wayback Machine , 348-49 (9th Cir. 1979).
  10. 1 2 Jessie Seyfer, Google Foe Ends Unique Trademark Suit Over Keywords Law.com (September 5, 2007).
  11. 1 2 Eric Goldman, Google Gets Mixed Bag in Latest Ruling in American Blinds Case , Technology & Marketing Law Blog (April 19, 2007).
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.