(This article was originally featured in Modern Practice, Findlaw’s Law and Practice Technology Magazine, in August 2004.)
Over the past two years, courts have decided four pop-up advertising cases. The results have been mixed -- two decisions in favor of pop-up advertisers and two decisions in favor of website owners -- and whether pop-up advertising violates the intellectual property rights of website owners remains mostly unresolved. Nonetheless, courts have provided some insight into factors important to both sides of this Internet law quagmire. Namely, pop-up advertising litigants now have a better idea about the courts in which they would prefer to litigate and the claims and defenses that possess the most merit.
I. Choosing a Forum
Two primary factors appear most relevant to choosing a forum in which to litigate pop-up advertising claims. First, plaintiffs would prefer to be in courts already finding that pop-up ads infringe intellectual property rights of website owners. Although pop-up advertising cases have been litigated in three forums the Eastern District of Virginia, the Eastern District of Michigan, and the Southern District of New York the two cases decided in the Eastern District of Virginia completely contradict each other. Ignoring the Eastern District of Virginia, then, a website owner plaintiff would want to bring an action in the Southern District of New York, while a pop-up advertiser defendant would prefer to defend in the Eastern District of Michigan.
Second, as with other Internet law disputes, the initial interest confusion doctrine appears to have some influence on the willingness of a court to find trademark infringement. Under the initial interest confusion doctrine, use of another party's mark to generate initial consumer interest (not confusion) in the first party's goods or services is actionable; it does not matter whether a transaction results or whether consumers ultimately know that the goods or services of the two parties originate from different sources.
The Eastern District of Virginia decisions did not mention initial interest confusion probably because the doctrine has never been recognized by the Fourth Circuit. Similarly, the Eastern District of Michigan refused to apply the doctrine, stating that "the Sixth Circuit Court of Appeals [] has not adopted the initial interest confusion doctrine and has not even acknowledged the doctrine in recent Internet trademark cases." [1] In contrast, the Second Circuit has a long tradition of finding initial interest confusion, and the Southern District of New York applied the doctrine in its only pop-up advertising case.
Beyond the four pop-up advertising cases, courts of appeals in the second, the third, the fifth, the sixth, the seventh, and the ninth circuits have adopted or recognized the initial interest confusion doctrine. Some district courts in other circuits have also found that initial interest confusion is actionable.
Clearly, bringing an action against a pop advertiser in a jurisdiction recognizing the initial interest confusion doctrine favors a plaintiff. Courts adhering to the initial interest confusion doctrine may completely bypass traditional likelihood of confusion analysis and find liability based on the single notion that pop-up ads unfairly capitalize on the goodwill of a website owner's mark. Pop-up advertisers, on the other side, would prefer to avoid defending in initial interest confusion jurisdictions. Therefore, potential defendants may want to bring an action in a forum more sympathetic to pop-up advertising activities for a declaratory judgment of non-infringement.
II. Focusing on the Most Relevant Claims & Defenses
A. Claims
Of the 9 to 10 claims appearing in complaints against pop-up advertisers (typically 5 to 6 federal claims and 3 to 4 state claims),[2] the trademark claims have fared the best. The courts are almost unanimous in finding that pop-up advertisements do not violate copyright law.[3] Courts expressly addressing such claim that pop-up ads do not copy, display, alter, or modify underlying a website owner's copyright protected work. Thus, the ads do not infringe the website owner's copyrights. Unless plaintiffs have unique facts and original arguments pertaining to copyright law claims, they may want to consider omitting copyright infringement from their complaints altogether. If they don't, pop-up advertisers will have at least persuasive authority to support a motion to dismiss any such claims.
Regarding trademark law claims, courts have generally focused on infringement, rather than on dilution. First, as with infringement, if a mark is not used in commerce, a claim for dilution will not stand. So, two of the pop-up advertising decisions had no reason to address dilution. Second, while the Eastern District of Virginia issued a preliminary injunction that probably covered a dilution claim, it provided no rationale for its decision. Finally, the Southern District of New York noted that where other federal claims "would [not] entitle plaintiff to greater relief than that appropriate under its infringement and cybersquatting claims, there is no need to consider them." For now, at least, trademark infringement appears to be the weapon of choice against pop-up ads.
B. Defenses
In an action involving pop-up advertisements, a defendant will most likely attempt to dismiss any copyright law claims, argue that likelihood of confusion does not exist, and, in the alternative, argue that use of a website owner's mark is fair and facilitates comparative advertising. The argument that the courts have focused on most, however, is whether pop-up ads use a website owner's mark in commerce sufficient to give rise to liability under the Lanham Act. In general, website owner plaintiffs have relied on three grounds in claiming "use in commerce" of their marks: (1) pop-ups appear on a computer screen simultaneously with a website owner's mark; (2) pop-ups are triggered by trademarks and/or URLs stored in the pop-up ad software directory; and (3) pop-ups interfere with use of a plaintiff's website. The decisions specifically addressing use in commerce have yielded contrasting results.
In the two opinions finding that use in commerce was lacking, the courts rejected all three bases. The courts more or less found that Internet users were aware that they were viewing two independent sources of information, that using marks and URLs to trigger ads is a function similar to many forms of comparative advertising, and that, despite annoyances, Internet users were not prevented from accessing websites they were attempting to reach. Moreover, the pop up ads did not use the website owners' marks to indicate anything about the source of products or services advertised by the pop-up advertisers. Thus, the courts found that a pop-up ad makes no Lanham Act use in commerce of a website owner's mark.
In the one opinion expressly finding use in commerce, the court came to the opposite conclusion based on two grounds. First, since the pop-up ads and the website owner's mark appeared together on a computer screen, the pop-up ads use the plaintiff's mark in commerce to advertise the defendant's services. Second, pop-up ads triggered by a website owner's URL to advertise companies in direct competition with the website owner constitutes a trademark use in commerce.
The important point for litigants to appreciate is that use in commerce is essential to any trademark law claim. With respect to pop-up advertising cases, this element has garnered perhaps surprising importance. Litigants on both sides, therefore, want to adequately research "in commerce" jurisprudence in the forum in which they are (or will be) situated and adequately address the issue at the outset.
In conclusion, each side in the pop-up advertising battle should focus on the most favorable forum in which to make its case and the most relevant claims and defenses to present. For website owners, forums in which pop-up advertising has been deemed unlawful or where the initial interest confusion doctrine is recognized are likely advantageous. The opposite is, of course, true for pop-up advertisers. Further, Depending on whether the facts differ from previous pop-up cases, or whether the court is more liberal in extending copyright protection, website owners may also want to focus their attention on trademark infringement claims. Pop-up advertisers, on the other hand, will likely find comfort in authority categorically dismissing copyright claims. Finally, both sides must be prepared to address the use in commerce issue which has played prominently in all reasoned pop-up advertising cases.
________________________________________
[1] The district court apparently overlooked one decision of the Sixth Circuit. PACCAR Inc. v. TeleScan Techs., L.L.C., 319 F.3d 243, 253 (6th Cir. 2003) (finding that "' initial interest confusion ' is recognized as an infringement under the Lanham Act").
[2] See, e.g., Wells Fargo & Co. v. WhenU.com Inc., 293 F. Supp. 2d 734 (E.D. Mich. 2003) (the following federal claims were alleged: trademark infringement, trademark dilution, copyright infringement, contributory copyright infringement, unfair competition, and false designation of origin).
[3] The Eastern District of Virginia really didn't address the copyright claims in any meaningful manner.
4.01.2004
Search Engine Comparative AdWare-tising Under Scrutiny
(This article was originally featured in Modern Practice, Findlaw’s Law and Practice Technology Magazine, in April 2004.)
The future of keyword advertising—and by implication, other forms of online advertising—was recently put in jeopardy by the Court of Appeals of the Ninth Circuit. The Ninth Circuit decision, which reversed the lower court, now permits Playboy to pursue its trademark law claims against search engines for using software (adware) to key advertisements to Playboy trademarks without Playboy’s consent. As there is little authority in this area of law, the decision served as a menacing warning to Internet advertisers which will continue to ripple through Internet law waters for some time.
From the trademark owners’ point of view, competitive advertisements keyed to trademarks steal away potential Internet customers by redirecting them to competitors’ websites. In their view, competitors essentially get to free ride on the valuable goodwill that consumers associate with the trademark owners’ marks. Trademark owners obviously want to have a lock on the goodwill that they have created in the marketplace and to preclude undeserving interlopers from interfering with it on the Internet.
On the defense, search engines eschew responsibility for policing which keywords and ad text their advertisers choose to employ in ad campaigns. Relatedly, the advertisers choosing well-known marks to trigger their advertisements believe that they are within their rights to engage in comparative advertising. They argue that using trademarks in such manner ensures a competitive environment where consumers receive timely and relevant information useful to making well-informed purchasing decisions.
In 2000, search engines were temporarily emboldened by a federal district court decision. Playboy Enterprises brought an action against Excite and Netscape alleging trademark infringement and dilution. The search engines were selling to Playboy’s competitors banner advertisements triggered by the key terms “playboy” and “playmate,” which are Playboy trademarks. On the search engines’ motion for summary judgment, the District Court for the Central District of California held that the search engines did not make actionable trademark use of Playboy’s trademarks—i.e., they did not use the marks to identify Playboy’s goods or services. Therefore, the court found that Playboy had no basis on which to allege trademark infringement and dilution.
Four years later, on appeal, the trademark owners experienced victory. The Ninth Circuit reversed and remanded the decision, finding that material issues of fact existed and that a likelihood of (initial interest) confusion precluded summary judgment in favor of the search engines. To wit, the court found that keying comparative ads to trademarks would lead Internet users to initially believe there was an affiliation between search engine advertisers and trademark owners. Even if Internet users realize before making a transaction that no affiliation exists, they visit competing websites based on their initial interest in the well-known trademark. Although one judge was concerned about continuing to rely on the insupportable initial interest confusion doctrine to find trademark liability, at least for now, such confusion remains actionable in the Ninth Circuit.[1]
The Ninth Circuit is the first court of appeals to address this realm of Internet advertising law, and its decision is important for a few reasons. First, should courts universally accept the Ninth Circuit decision, Internet search engines could be forced to significantly change their business models. Even before the Ninth Circuit issued its decision, Internet search engine icon Google asked a federal district court in the northern district of California to declare that its keyword-triggered ad program (AdWords) does not violate trademark law. The posturing of the parties must have changed somewhat when the Ninth Circuit decision came out just two months after Google filed its action.
Second, the Ninth Circuit decision will impact related Internet advertising activities. For example, other courts will soon be hearing pop-up advertising cases on appeal. They will surely look to the Ninth Circuit’s decision for some guidance. Whether they come to the same conclusion is another matter; but, for the foreseeable future, the Ninth Circuit decision will be the standard by which all future Internet advertising disputes will be measured.
Finally, at least according to Circuit Judge Berzon, the initial interest confusion doctrine may have outlived its theoretical cyberlaw utility. Initially, the doctrine was viewed as a panacea for finding trademark liability where courts could not otherwise determine how to hold individuals accountable for their Internet activities. Now, however, the Internet is not so novel, Internet activities are not so obscure, and the doctrine, perhaps, is not so useful as the courts once believed. While the full effect of the Ninth Circuit decision has yet to be realized, it may stall some online advertising practices of Internet search engines, and other Internet advertisers, if left unchecked.
[1] In Judge Berzon’s concurrence, she indicated that the court should consider abolishing the initial interest confusion doctrine. Presumably, Judge Berzon’s concurrence signaled that she would not have found consumer confusion was likely without applying the initial interest confusion doctrine.
The future of keyword advertising—and by implication, other forms of online advertising—was recently put in jeopardy by the Court of Appeals of the Ninth Circuit. The Ninth Circuit decision, which reversed the lower court, now permits Playboy to pursue its trademark law claims against search engines for using software (adware) to key advertisements to Playboy trademarks without Playboy’s consent. As there is little authority in this area of law, the decision served as a menacing warning to Internet advertisers which will continue to ripple through Internet law waters for some time.
From the trademark owners’ point of view, competitive advertisements keyed to trademarks steal away potential Internet customers by redirecting them to competitors’ websites. In their view, competitors essentially get to free ride on the valuable goodwill that consumers associate with the trademark owners’ marks. Trademark owners obviously want to have a lock on the goodwill that they have created in the marketplace and to preclude undeserving interlopers from interfering with it on the Internet.
On the defense, search engines eschew responsibility for policing which keywords and ad text their advertisers choose to employ in ad campaigns. Relatedly, the advertisers choosing well-known marks to trigger their advertisements believe that they are within their rights to engage in comparative advertising. They argue that using trademarks in such manner ensures a competitive environment where consumers receive timely and relevant information useful to making well-informed purchasing decisions.
In 2000, search engines were temporarily emboldened by a federal district court decision. Playboy Enterprises brought an action against Excite and Netscape alleging trademark infringement and dilution. The search engines were selling to Playboy’s competitors banner advertisements triggered by the key terms “playboy” and “playmate,” which are Playboy trademarks. On the search engines’ motion for summary judgment, the District Court for the Central District of California held that the search engines did not make actionable trademark use of Playboy’s trademarks—i.e., they did not use the marks to identify Playboy’s goods or services. Therefore, the court found that Playboy had no basis on which to allege trademark infringement and dilution.
Four years later, on appeal, the trademark owners experienced victory. The Ninth Circuit reversed and remanded the decision, finding that material issues of fact existed and that a likelihood of (initial interest) confusion precluded summary judgment in favor of the search engines. To wit, the court found that keying comparative ads to trademarks would lead Internet users to initially believe there was an affiliation between search engine advertisers and trademark owners. Even if Internet users realize before making a transaction that no affiliation exists, they visit competing websites based on their initial interest in the well-known trademark. Although one judge was concerned about continuing to rely on the insupportable initial interest confusion doctrine to find trademark liability, at least for now, such confusion remains actionable in the Ninth Circuit.[1]
The Ninth Circuit is the first court of appeals to address this realm of Internet advertising law, and its decision is important for a few reasons. First, should courts universally accept the Ninth Circuit decision, Internet search engines could be forced to significantly change their business models. Even before the Ninth Circuit issued its decision, Internet search engine icon Google asked a federal district court in the northern district of California to declare that its keyword-triggered ad program (AdWords) does not violate trademark law. The posturing of the parties must have changed somewhat when the Ninth Circuit decision came out just two months after Google filed its action.
Second, the Ninth Circuit decision will impact related Internet advertising activities. For example, other courts will soon be hearing pop-up advertising cases on appeal. They will surely look to the Ninth Circuit’s decision for some guidance. Whether they come to the same conclusion is another matter; but, for the foreseeable future, the Ninth Circuit decision will be the standard by which all future Internet advertising disputes will be measured.
Finally, at least according to Circuit Judge Berzon, the initial interest confusion doctrine may have outlived its theoretical cyberlaw utility. Initially, the doctrine was viewed as a panacea for finding trademark liability where courts could not otherwise determine how to hold individuals accountable for their Internet activities. Now, however, the Internet is not so novel, Internet activities are not so obscure, and the doctrine, perhaps, is not so useful as the courts once believed. While the full effect of the Ninth Circuit decision has yet to be realized, it may stall some online advertising practices of Internet search engines, and other Internet advertisers, if left unchecked.
[1] In Judge Berzon’s concurrence, she indicated that the court should consider abolishing the initial interest confusion doctrine. Presumably, Judge Berzon’s concurrence signaled that she would not have found consumer confusion was likely without applying the initial interest confusion doctrine.
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