(This article was originally featured in Modern Practice, Findlaw’s Law and Practice Technology Magazine, in November 2006.)
Remember the days, 16 January 1996 until 4 March 2003, when many thought federal trademark dilution law required proof based on a “likelihood” of dilution, rather than “actual” dilution? Remember when Victor’s Little Secret spoiled Victoria’s Secret’s party?
Ringing in a new era of trademark dilution law, which somewhat resembles many people’s understanding of the law circa 1996, President Bush signed the Trademark Dilution Revision Act (TDRA) on 6 October 2006. As many expected, famous mark owners were invited to party and relive the glory days, while unsanctioned users of famous mark were reminded that they don’t get to have fun with the goodwill of others. So what’s to celebrate, you ask. Below is a brief overview of key aspects of the TDRA
Favoring Famous Owners (Plaintiffs)
1. “Likelihood” of Dilution in Again
The TDRA abolishes the “actual” dilution standard, replacing it with the likelihood of dilution standard on which many famous mark previously relied. Although the courts will still have to determine how to measure “likelihood” of dilution, it is sure to be modeled on the likelihood of confusion standard upon which trademark infringement actions are based. Obviously, this should make trademark dilution much easier for plaintiffs to prove.
2. Blurring & Tarnishment Spelled Out
Old federal dilution law never did specify whether both dilution by blurring and dilution by tarnishment were covered. Now, however, the TDRA makes this clear. Dilution by blurring occurs where an association impairs a mark’s distinctiveness. Dilution by tarnishment covers any association that harms a mark’s reputation. How courts will actually interpret these broad definitions is another matter, but generally they favor trademark plaintiffs.
3. Acquired Distinctiveness Is Enough
Under previous federal dilution law, courts often differed on whether dilution of the “distinctive quality of the famous mark” meant a mark must be inherently distinctive or whether acquired distinctiveness was enough. The TDRA now specifies that distinctiveness acquired through secondary meaning is sufficient to bring a dilution action, which helps trademark plaintiffs.
Favoring Unsanctioned Users (Defendants)
1. Niche Fame Is Out
Courts long struggled with whether a mark having niche fame, i.e., fame within a specific region or category, was protected under federal dilution law. The TDRA resolves this issue in favor of defendants. As the current law reads, a mark is only “famous” and entitled to dilution protection “if it is widely recognized by the general consuming public of the United States as a designation of source of the goods or services of the mark’s owner.” Marks famous only in some podunk town, the state of Maryland, or even the southern half of the United States should not be considered famous for trademark dilution purposes.
2. Unregistered Trade Dress Burden
The new dilution law somewhat clarifies a mark owner’s burden of proving dilution of unregistered trade dress. Taken as a whole, the claimed trade dress cannot be functional and must be famous. In addition, unregistered matter must be famous separate and apart from any fame of a registered mark. This means that a mark owner cannot rely on the fame of a registered mark to establish fame of unregistered trade dress, even if the famous mark is incorporated in unregistered trade dress.
3. Fair Use Expressly In the Act
The TDRA clarifies fair use defenses by providing express protection for comparative advertising, parodies, criticism and comments. Although these protections are now more apparent, they do not really afford defendants more protection than what they already had. Nevertheless, the clarifications work in favor of trademark defendants.
Although the favors dished out appear even (3 to 3), the Trademark Dilution Revision Act considerably broadened federal trademark dilution law, benefiting owners of famous marks. The original impetus behind revising federal dilution law was to change the standard from “actual” dilution to “likelihood” of dilution, which would have been a huge win for owners of famous marks without more. But, in many ways, the TDRA remade dilution law altogether. The net effect of the TDRA is to greatly expand the rights of owners of famous marks and better equip them to succeed in dilution actions, while clarifying some minor ambiguities in favor of defendants. So, for owners of a famous mark, the party is on. But for unsanctioned users of famous marks, the party is looking less and less inviting.
11.01.2006
4.02.2006
STOP Counterfeiting Act
On March 16, 2006, President Bush signed the Stop Counterfeiting In Manufactured Goods Act (“Stop Counterfeiting Act” or “SCA”), which expands current counterfeit law and is designed to target counterfeit labels and packaging, as well as equipment
used to make them.
Underpinning the SCA are the following findings by Congress: (1) counterfeiting is estimated to cost the U.S. $200 billion annually; (2) “counterfeit automobile parts, including brake pads, cost the auto industry alone billions of dollars in lost sales each year;” (3) “counterfeit products have invaded numerous industries, including those producing auto parts, electrical appliances, medicines, tools, toys, office equipment, clothing, and many other products; (4) counterfeiting is tied to terrorist activities; and (5) “counterfeiting of manufactured goods poses a widespread threat to public health and safety.”
Congress sought to address certain ambiguities in existing anticounterfeiting law, which helped counterfeiters avoid liability. For example, in United States v. Giles, 213 F.3d 1246 (10th Cir. 2000), the Tenth Circuit held that trafficking in counterfeit trademarks that are not actually attached to any “goods or services” was not a violation of the federal criminal infringement statute. Defendant Giles had been dealing in counterfeit “patch sets” of the Dooney & Bourke logo, which consisted of a leather patch and gold medallion bearing a logo and a leather strap used to attach the medallion to fake goods. The court noted that the statutory scheme indicated that “goods” were intended to be viewed as separate from the marks they carried. As a result, the statute prohibited trafficking in goods to which a counterfeit mark was attached, but it did not prohibit trafficking in counterfeit labels unattached to goods. Thus, under the old law counterfeiters were safe as long as they did not attach counterfeit marks to goods.
The Stop Counterfeiting Act closes the Giles loophole (and others) and expands the scope of protection and remedies available to trademark owners. The benefits to trademark owners are substantial. First, the SCA expands the definition of “counterfeit mark” to include goods and services as well as “labels, patches, stickers, wrappers, badges, emblems, medallions, charms, boxes, containers, cans, cases, hangtags, documentation, or packaging of any type or nature” that is either applied to or used in connection with counterfeit goods. Thus, it is now a crime to traffic in labels and various forms of packaging bearing a counterfeit mark that is likely to cause confusion.
Second, the SCA makes counterfeiting less profitable by imposing harsher, mandatory forfeiture and destruction penalties, such as the forfeiture and destruction of counterfeit goods including labels), the forfeiture of equipment and materials used to make counterfeit goods, and the forfeiture of assets derived from counterfeiting. In addition, the SCA requires convicted counterfeiters to pay restitution to the mark owner. Under the new law, counterfeiters will have a much more difficult time resuming counterfeiting operations without the equipment and money to do so.
Third, the SCA now broadly defines “traffic” and “financial gain” in a manner that prohibits distributing (including importing and exporting), or intending to distribute, counterfeit goods in exchange for the receipt or expected receipt of anything of value. Under the SCA, it is now illegal to give away counterfeit goods in exchange for some future benefit—i.e., the bartering of counterfeit goods is prohibited.
In short, the Stop Counterfeiting Act removes ambiguity used by counterfeiters to evade legal consequences and strengthens trademark law. By doing so, it serves as a valuable new weapon, protecting intellectual property owners and consumers alike, in the battle against counterfeits.
used to make them.
Underpinning the SCA are the following findings by Congress: (1) counterfeiting is estimated to cost the U.S. $200 billion annually; (2) “counterfeit automobile parts, including brake pads, cost the auto industry alone billions of dollars in lost sales each year;” (3) “counterfeit products have invaded numerous industries, including those producing auto parts, electrical appliances, medicines, tools, toys, office equipment, clothing, and many other products; (4) counterfeiting is tied to terrorist activities; and (5) “counterfeiting of manufactured goods poses a widespread threat to public health and safety.”
Congress sought to address certain ambiguities in existing anticounterfeiting law, which helped counterfeiters avoid liability. For example, in United States v. Giles, 213 F.3d 1246 (10th Cir. 2000), the Tenth Circuit held that trafficking in counterfeit trademarks that are not actually attached to any “goods or services” was not a violation of the federal criminal infringement statute. Defendant Giles had been dealing in counterfeit “patch sets” of the Dooney & Bourke logo, which consisted of a leather patch and gold medallion bearing a logo and a leather strap used to attach the medallion to fake goods. The court noted that the statutory scheme indicated that “goods” were intended to be viewed as separate from the marks they carried. As a result, the statute prohibited trafficking in goods to which a counterfeit mark was attached, but it did not prohibit trafficking in counterfeit labels unattached to goods. Thus, under the old law counterfeiters were safe as long as they did not attach counterfeit marks to goods.
The Stop Counterfeiting Act closes the Giles loophole (and others) and expands the scope of protection and remedies available to trademark owners. The benefits to trademark owners are substantial. First, the SCA expands the definition of “counterfeit mark” to include goods and services as well as “labels, patches, stickers, wrappers, badges, emblems, medallions, charms, boxes, containers, cans, cases, hangtags, documentation, or packaging of any type or nature” that is either applied to or used in connection with counterfeit goods. Thus, it is now a crime to traffic in labels and various forms of packaging bearing a counterfeit mark that is likely to cause confusion.
Second, the SCA makes counterfeiting less profitable by imposing harsher, mandatory forfeiture and destruction penalties, such as the forfeiture and destruction of counterfeit goods including labels), the forfeiture of equipment and materials used to make counterfeit goods, and the forfeiture of assets derived from counterfeiting. In addition, the SCA requires convicted counterfeiters to pay restitution to the mark owner. Under the new law, counterfeiters will have a much more difficult time resuming counterfeiting operations without the equipment and money to do so.
Third, the SCA now broadly defines “traffic” and “financial gain” in a manner that prohibits distributing (including importing and exporting), or intending to distribute, counterfeit goods in exchange for the receipt or expected receipt of anything of value. Under the SCA, it is now illegal to give away counterfeit goods in exchange for some future benefit—i.e., the bartering of counterfeit goods is prohibited.
In short, the Stop Counterfeiting Act removes ambiguity used by counterfeiters to evade legal consequences and strengthens trademark law. By doing so, it serves as a valuable new weapon, protecting intellectual property owners and consumers alike, in the battle against counterfeits.
4.01.2006
Rankings, Google Slight – Not Every Player Gets To Compete In This Search Engine Game
(This article was originally featured in Modern Practice, Findlaw’s Law and Practice Technology Magazine, in April 2006.)
Running parallel to the George Mason Cinderella story about its ability to move up in the ranks of the most preeminent college basketball tournament, is the lesser known story of a low ranking website that cannot get noticed on the world’s leading Internet search engine.
On March 17, 2006, to get back into the search engine game, KinderStart lodged a seven-count complaint against Google, based on its website being downgraded and virtually banished from Google since March 2005 for reasons unknown to KinderStart. The lawsuit centers on whether Google, a private company and the gateway (or gatekeeper) to vast Internet content, has the right to keep others out via its proprietary and secret search techniques. The question is whether this sad, yet compelling, story has more than a short, shaky leg to stand on under any theory of law.
Low Percentages, Rank
At one point, Google was the source of 70% of KinderStart’s Web traffic. Since March 2005, however, KinderStart has been denied a spot in the Google rankings, showing a mere 0.01% referral traffic from Google. As a result, the self-claimed “largest (and most popular) indexed directory and search engine focused on children zero to seven on the 'net” wants to force the world’s largest Internet search engine to recognize its website in private search rankings.
Harmful Blockage
In the complaint, KinderStart—along with other sadly situated plaintiffs hoping for class certification—alleges that Google violates federal and California constitutional laws, federal antitrust law, and state unfair trade, defamatory and good faith and fair dealing laws. KinderStart is really complaining about what it terms “Blockage.” In the complaint, “Blockage” is defined as Google’s unilateral and unreasonable acts of terminating KinderStart’s free speech, traffic and commerce otherwise available by virtue of “normal” search engine operation. Unlike the typical remedy sought for blockage, i.e., fiber, KinderStart seeks relief in the form of a declaration, an injunction, and money.
Kitchen Sink Offense & Pre-Game Gut Analysis
Below are brief summaries of counts alleged in the complaint, along with a pre-game gut analysis.
1. Violation of Free Speech Right Under the U.S. and California Constitutions. Google, a speech intermediary and cyber forum, denies KinderStart its right to the exercise of free speech by engaging in blockage, and it fails to exercise reasonable regulation of time, place, or manner of restriction to the exercise of KinderStart’s free speech right.
Gut Analysis: Google is not a state actor. Similar attempts to pin free speech violations on Internet companies have failed. This one also is likely to fail.
2. Sherman Act 2: Monopolization. Google abused its monopoly power in the search engine usage and search-driven Internet advertising markets by denying linking and referrals to KinderStart’s website and by artificially depressing KinderStart’s rank.
Gut Analysis: Does Google really have a monopoly on Internet searches? This claim seems specious: while Google has 36.5% of the U.S. Internet search market, Yahoo has 30.5%, MSN has 15.5%, AOL has 10%, Ask Jeeves has 6%, and InfoSpace has 1%.
3. Unfair Competition and Practices Under California Law. Google’s blockage practice is wrongful and without reasonable business justification. Google falsely and artificially calculated and presented the KinderStart website as a low rank, and it deceived, concealed, and omitted material facts as to the operation and execution of the AdSense Program. Google’s AdSense program wrongfully leads consumers to believe that they can realize adequate value and financial benefit by using AdSense. By engaging in blockage, Google also engages in price discrimination without business justification, which tends to destroy market competition.
Gut Analysis: KinderStart is likely to go farthest with its claim of “unfair competition,” but probably not all the way. Unfair competition under California law appears to provide broad-based protection against violations of public policy and acts injurious to consumers (or competitors, but then it starts to look more like an antitrust claim). If true, KinderStart’s claim that Google falsely touts objective search
methods may have some traction.
Google will likely argue that any blocking (by algorithm or human) is not unfair, is not prohibited by law, and is justified for business reasons given websites’ attempts to optimize search results. In addition, Google may argue that KinderStart is free to rely on one of the other search engines to drive traffic to its site. Although none of these defenses would directly refute inaccurate claims of objectivity, a court is likely to balance the benefits versus harm to consumers as a result of Google’s blocking practices. Of course, if Google’s stated policy that the order and content of its search results are completely automated is true, then KinderStart’s claim would likely fall apart.
The “unfair practices” claim concerns price discrimination and does not seem like it will make the cut. Of the three basic types of price discrimination prohibited in California, KinderStart relies on the “secret payments and discounts” type of price discrimination. Two predicates to this type of claim work against KinderStart. For one, KinderStart must prove that the discount or rebate is a “secret.” This is especially difficult were there is no misrepresentation to one purchaser that is getting the same pricing as favored purchasers. Second, KinderStart will have to prove intent. Specifically, it will have to prove that Google offered secret payments and discounts with the intention of injuring competitors or destroying competition.
4. Breach of Implied Covenant of Good Faith and Fair Dealing. Google has an affirmative duty not to deprive KinderStart benefit of the AdSense Program, which provides opportunity to increase the appeal of and traffic to websites. Blockage of KinderStart redirects web searchers to other websites, which may generate advertising revenues that may have gone to KinderStart were there no blockage.
Gut Analysis: This claim misses the mark. If KinderStart is a member of the AdSense Program, Google benefits by directing traffic to KinderStart’s website. Since Google is a source of generating potential customers for AdSense partners, which in turn may produce prospective customers for Google, it would not be in Google’s interest to deny itself this advertising opportunity. In addition, the fact that Google’s algorithm has somehow removed KinderStart’s website from search results would tend to support the idea that the algorithm operates objectively—i.e., Google’s AdSense Program managers would be unlikely to purposefully remove AdSense partners from the program.
5. Defamation and Libel. Google improperly lists (to the public) the KinderStart website as having a PageRank of “0,” which is
artificially depressed and mathematically impossible within the normal operation of Google’s search algorithm.
Gut Analysis: This claim scores “0.” At the most basic level, a defamation claim requires proof of a false statement. But Google defines the meaning of a zero rank—i.e., Google’s PageRank relies on its private and publicly unknown algorithm for determining how to rank pages. The public does not know what a zero rank means other than as Google defines it. For instance, if I say I assign KinderStart’s defamation claim a rank of zero, I have not defamed KinderStart. I have merely expressed an opinion, based on my own definition of zero, of how I rank KinderStart’s claim. Google has not made a false statement.
6. Negligent Interference with Prospective Economic Advantage. By participating in Google’s AdSense program, Google owed KinderStart a duty of care to permit search referrals, and corollary advertising revenues, to flow to KinderStart. Google’s blockage wrongfully interfered with this flow.
Gut Analysis: This claim seems baseless for the same reasons stated above regarding the breach of covenant of good faith and fair dealing claim.
A Non-Cinderella Ending
If CBS college basketball analyst Billy Packer were commenting on this case, he might say that KinderStart—like Search King and others before it—doesn’t have a chance in this contest. Despite the understandable desire of website owners to be ranked higher in Google’s system, they must remember that it is “Google’s” system. Until Google takes over as a form of government or controls the entire Internet search industry, it is not likely to violate any rights to free speech or antitrust laws, respectively. Likewise, to the extent that Google accurately describes its advertising and ranking policies (should it describe them at all), it is unlikely that it will be liable for denying certain websites a place in the Internet search results game.
Running parallel to the George Mason Cinderella story about its ability to move up in the ranks of the most preeminent college basketball tournament, is the lesser known story of a low ranking website that cannot get noticed on the world’s leading Internet search engine.
On March 17, 2006, to get back into the search engine game, KinderStart lodged a seven-count complaint against Google, based on its website being downgraded and virtually banished from Google since March 2005 for reasons unknown to KinderStart. The lawsuit centers on whether Google, a private company and the gateway (or gatekeeper) to vast Internet content, has the right to keep others out via its proprietary and secret search techniques. The question is whether this sad, yet compelling, story has more than a short, shaky leg to stand on under any theory of law.
Low Percentages, Rank
At one point, Google was the source of 70% of KinderStart’s Web traffic. Since March 2005, however, KinderStart has been denied a spot in the Google rankings, showing a mere 0.01% referral traffic from Google. As a result, the self-claimed “largest (and most popular) indexed directory and search engine focused on children zero to seven on the 'net” wants to force the world’s largest Internet search engine to recognize its website in private search rankings.
Harmful Blockage
In the complaint, KinderStart—along with other sadly situated plaintiffs hoping for class certification—alleges that Google violates federal and California constitutional laws, federal antitrust law, and state unfair trade, defamatory and good faith and fair dealing laws. KinderStart is really complaining about what it terms “Blockage.” In the complaint, “Blockage” is defined as Google’s unilateral and unreasonable acts of terminating KinderStart’s free speech, traffic and commerce otherwise available by virtue of “normal” search engine operation. Unlike the typical remedy sought for blockage, i.e., fiber, KinderStart seeks relief in the form of a declaration, an injunction, and money.
Kitchen Sink Offense & Pre-Game Gut Analysis
Below are brief summaries of counts alleged in the complaint, along with a pre-game gut analysis.
1. Violation of Free Speech Right Under the U.S. and California Constitutions. Google, a speech intermediary and cyber forum, denies KinderStart its right to the exercise of free speech by engaging in blockage, and it fails to exercise reasonable regulation of time, place, or manner of restriction to the exercise of KinderStart’s free speech right.
Gut Analysis: Google is not a state actor. Similar attempts to pin free speech violations on Internet companies have failed. This one also is likely to fail.
2. Sherman Act 2: Monopolization. Google abused its monopoly power in the search engine usage and search-driven Internet advertising markets by denying linking and referrals to KinderStart’s website and by artificially depressing KinderStart’s rank.
Gut Analysis: Does Google really have a monopoly on Internet searches? This claim seems specious: while Google has 36.5% of the U.S. Internet search market, Yahoo has 30.5%, MSN has 15.5%, AOL has 10%, Ask Jeeves has 6%, and InfoSpace has 1%.
3. Unfair Competition and Practices Under California Law. Google’s blockage practice is wrongful and without reasonable business justification. Google falsely and artificially calculated and presented the KinderStart website as a low rank, and it deceived, concealed, and omitted material facts as to the operation and execution of the AdSense Program. Google’s AdSense program wrongfully leads consumers to believe that they can realize adequate value and financial benefit by using AdSense. By engaging in blockage, Google also engages in price discrimination without business justification, which tends to destroy market competition.
Gut Analysis: KinderStart is likely to go farthest with its claim of “unfair competition,” but probably not all the way. Unfair competition under California law appears to provide broad-based protection against violations of public policy and acts injurious to consumers (or competitors, but then it starts to look more like an antitrust claim). If true, KinderStart’s claim that Google falsely touts objective search
methods may have some traction.
Google will likely argue that any blocking (by algorithm or human) is not unfair, is not prohibited by law, and is justified for business reasons given websites’ attempts to optimize search results. In addition, Google may argue that KinderStart is free to rely on one of the other search engines to drive traffic to its site. Although none of these defenses would directly refute inaccurate claims of objectivity, a court is likely to balance the benefits versus harm to consumers as a result of Google’s blocking practices. Of course, if Google’s stated policy that the order and content of its search results are completely automated is true, then KinderStart’s claim would likely fall apart.
The “unfair practices” claim concerns price discrimination and does not seem like it will make the cut. Of the three basic types of price discrimination prohibited in California, KinderStart relies on the “secret payments and discounts” type of price discrimination. Two predicates to this type of claim work against KinderStart. For one, KinderStart must prove that the discount or rebate is a “secret.” This is especially difficult were there is no misrepresentation to one purchaser that is getting the same pricing as favored purchasers. Second, KinderStart will have to prove intent. Specifically, it will have to prove that Google offered secret payments and discounts with the intention of injuring competitors or destroying competition.
4. Breach of Implied Covenant of Good Faith and Fair Dealing. Google has an affirmative duty not to deprive KinderStart benefit of the AdSense Program, which provides opportunity to increase the appeal of and traffic to websites. Blockage of KinderStart redirects web searchers to other websites, which may generate advertising revenues that may have gone to KinderStart were there no blockage.
Gut Analysis: This claim misses the mark. If KinderStart is a member of the AdSense Program, Google benefits by directing traffic to KinderStart’s website. Since Google is a source of generating potential customers for AdSense partners, which in turn may produce prospective customers for Google, it would not be in Google’s interest to deny itself this advertising opportunity. In addition, the fact that Google’s algorithm has somehow removed KinderStart’s website from search results would tend to support the idea that the algorithm operates objectively—i.e., Google’s AdSense Program managers would be unlikely to purposefully remove AdSense partners from the program.
5. Defamation and Libel. Google improperly lists (to the public) the KinderStart website as having a PageRank of “0,” which is
artificially depressed and mathematically impossible within the normal operation of Google’s search algorithm.
Gut Analysis: This claim scores “0.” At the most basic level, a defamation claim requires proof of a false statement. But Google defines the meaning of a zero rank—i.e., Google’s PageRank relies on its private and publicly unknown algorithm for determining how to rank pages. The public does not know what a zero rank means other than as Google defines it. For instance, if I say I assign KinderStart’s defamation claim a rank of zero, I have not defamed KinderStart. I have merely expressed an opinion, based on my own definition of zero, of how I rank KinderStart’s claim. Google has not made a false statement.
6. Negligent Interference with Prospective Economic Advantage. By participating in Google’s AdSense program, Google owed KinderStart a duty of care to permit search referrals, and corollary advertising revenues, to flow to KinderStart. Google’s blockage wrongfully interfered with this flow.
Gut Analysis: This claim seems baseless for the same reasons stated above regarding the breach of covenant of good faith and fair dealing claim.
A Non-Cinderella Ending
If CBS college basketball analyst Billy Packer were commenting on this case, he might say that KinderStart—like Search King and others before it—doesn’t have a chance in this contest. Despite the understandable desire of website owners to be ranked higher in Google’s system, they must remember that it is “Google’s” system. Until Google takes over as a form of government or controls the entire Internet search industry, it is not likely to violate any rights to free speech or antitrust laws, respectively. Likewise, to the extent that Google accurately describes its advertising and ranking policies (should it describe them at all), it is unlikely that it will be liable for denying certain websites a place in the Internet search results game.
2.01.2006
Copyright Clash Over Image Searches: An Imperfect Means to a Pornographic End?
(This article was originally featured in Modern Practice, Findlaw’s Law and Practice Technology Magazine, in February 2006.)
Everyone knows that “Pornography” (content) and “Google” (a means to online content) have played major roles in driving the development of the Web and Internet law. It may come as little surprise, then, that these two forces were recently at odds in pleadings, briefs, and a district court decision involving a search engine’s right to display copyright protected images (1) as thumbnails, and (2) through in-line linking to third party websites.
Perfect 10 publishes adult content and owns thousands of copyright protected adult images available online. Google, the largest Internet search engine, provides an “image search” function, which displays thumbnail versions of images cached on Google’s servers and inline links to images stored and served by third party websites. Google’s image search makes it easy to find Perfect 10’s images online.
In a 12-count complaint, Perfect 10 claimed, inter alia, that Google directly, vicariously, and contributorily infringes Perfect 10’s copyrighted images by displaying and distributing them via Google’s image search function. Google argued that its use of Perfect 10’s images is protected under the fair use doctrine. On Perfect 10’s motion for a preliminary injunction, the U.S. District Court for the Central District of California held that the issues would likely be decided as follows: (1) Google’s in-line links to infringing copies do not constitute direct infringement; (2) Google’s display of thumbnails of Perfect 10’s copyrighted images does constitute direct infringement (not a fair use); and (3) Google is not secondarily liable for its in-line links or thumbnails.
Direct Liability
To determine whether Google’s in-line links and thumbnails directly infringed Perfect 10’s copyrights, the court first had to determine whether Google’s activities constituted a public display or distribution of Perfect 10’s images. To do so, the court applied the “server test.” Under the server test, “the website on which content is stored and by which it is served directly to a user, not the website that inline links to it, is the website that ‘displays’ the content.”
Since third party websites, not Google, stored and served the Perfect 10 images to which Google provided in-line links, Google did not display such images. By creating and storing thumbnails of Perfect 10’s images on Google’s servers, however, Google did display such images. Thus, the court held that Perfect 10’s claim of direct infringement based on Google’s in-line links would likely fail, whereas its claim based on Google’s thumbnails would likely prevail.
The court also found that Google did not publicly distribute copies of Perfect 10’s images by in-line linking since Google was not involved in the transfer of any files—again, the third party websites were doing all the work. Although Google may distribute the thumbnails, the court found that Google’s distribution would likely be a fair use and that the issue was moot anyway since it already found that direct infringement was likely based on a violation of Perfect 10’s display right.
The most interesting aspects of this case, however, are found in the fair use analysis; not because the analysis is groundbreaking, but because of how the court distinguishes Kelley v. Aribasoft, 336 F.3d 811 (9th Cir. 2003) (finding fair use of thumbnail images). Analyzing fair use of a copyrighted work involves examining the following factors:
1. the purpose and character of the use;
2. the nature of the copyrighted work;
3. the amount and substantiality of the portion of the work used; and
4. the effect of the use upon the potential market for the copyrighted work.
The court found that two things set this case apart from the Kelly decision. First, Google’s use of thumbnails was far more commercial than the search engine’s use of thumbnails in Kelly. The fact that Google may increase user traffic and advertising revenue from its image search was not so significant since Google does not directly profit from use of Perfect 10’s images.
The court was persuaded, however, by Perfect 10’s evidence showing third-party websites that serve infringing content and receive and display AdSense ads from Google. Google’s AdSense program allows third party websites to carry Google-sponsored advertising and share revenue that flows from the advertising displays and click-throughs. Thus, the court believed that the connection between Google’s use of Perfect 10’s images and Google’s bottom line was much stronger here.
Second, Google’s use of thumbnails harms Perfect 10’s potential market for smaller images. After filing suit, Perfect 10 entered into a licensing agreement with another company for the sale and distribution of Perfect 10 reduced-size images for download to and use on cell phones. The court reasoned that since users of Google’s image search can download thumbnails of Perfect 10’s copyrighted images for free, they will be less likely to buy them from Perfect 10’s licensee. On these bases, the court found that Google’s thumbnail use was much more commercial and harmful than the use in Kelly. Thus, Google’s fair use defense failed.
Secondary Liability
Perfect 10 failed to introduce evidence showing that Google users directly infringe its copyright protected images. So the court only addressed Google’s secondary liability vis-a-vis direct infringement by the third party websites. In analyzing whether Google was contributorily liable, the court assumed (without deciding) that Google had actual knowledge of direct infringement (the first element) since it ultimately determined that Google did not materially contribute to direct infringement (the second element). In short, the court found that Google did not materially contribute to direct infringement because the infringing third-party websites existed before Google’s image search and would continue to exist were it shut down.
Perfect 10’s claim of vicarious liability also failed. Although Google, through its AdSense program, benefits financially (the first element) from the third party display of Perfect 10’s images, it does not have the right and ability to control infringing activity taking place on third party websites. As a result, Perfect 10 would be unlikely to succeed in proving that Google can be held secondarily liable.
Conclusion
The upshot is that Google’s “loss” at the preliminary injunction stage may not be all that significant to Web based activities for a few reasons. First, using thumbnails is not per se copyright infringement—The Ninth Circuit’s decision in Kelly still holds true. The nuance that the district court focused on here was whether the search engine enjoyed a direct financial benefit as a result of displaying thumbnails that infringe another’s work. The district court found that Google did benefit a little too directly, but the Ninth Circuit may view things differently if (when) this decision is appealed.
Second, in-line linking is still okay. A website that merely points to other information, stored and served on another party’s website, should be able to avoid direct infringement liability. Had the district court taken a different approach, every in-line link would be subject to potential liability. Third, search engines are not going to be held vicariously liable simply for facilitating the discovery of information —even if that information turns out to be infringing. There has to be an additional element such as the right and ability to control the infringing environment. Obviously, search engines cannot remove all infringing content from the Web.
In sum, the vitality of Web does not appear in jeopardy as a result of the district court’s decision, even if it holds on appeal. In addition, the development of Internet law does not appear stunted. Perhaps a new branch is growing from traditional fair use analysis, but on that branch each case will really bend on the relatedness of commercial benefit from the specific use in question.
Everyone knows that “Pornography” (content) and “Google” (a means to online content) have played major roles in driving the development of the Web and Internet law. It may come as little surprise, then, that these two forces were recently at odds in pleadings, briefs, and a district court decision involving a search engine’s right to display copyright protected images (1) as thumbnails, and (2) through in-line linking to third party websites.
Perfect 10 publishes adult content and owns thousands of copyright protected adult images available online. Google, the largest Internet search engine, provides an “image search” function, which displays thumbnail versions of images cached on Google’s servers and inline links to images stored and served by third party websites. Google’s image search makes it easy to find Perfect 10’s images online.
In a 12-count complaint, Perfect 10 claimed, inter alia, that Google directly, vicariously, and contributorily infringes Perfect 10’s copyrighted images by displaying and distributing them via Google’s image search function. Google argued that its use of Perfect 10’s images is protected under the fair use doctrine. On Perfect 10’s motion for a preliminary injunction, the U.S. District Court for the Central District of California held that the issues would likely be decided as follows: (1) Google’s in-line links to infringing copies do not constitute direct infringement; (2) Google’s display of thumbnails of Perfect 10’s copyrighted images does constitute direct infringement (not a fair use); and (3) Google is not secondarily liable for its in-line links or thumbnails.
Direct Liability
To determine whether Google’s in-line links and thumbnails directly infringed Perfect 10’s copyrights, the court first had to determine whether Google’s activities constituted a public display or distribution of Perfect 10’s images. To do so, the court applied the “server test.” Under the server test, “the website on which content is stored and by which it is served directly to a user, not the website that inline links to it, is the website that ‘displays’ the content.”
Since third party websites, not Google, stored and served the Perfect 10 images to which Google provided in-line links, Google did not display such images. By creating and storing thumbnails of Perfect 10’s images on Google’s servers, however, Google did display such images. Thus, the court held that Perfect 10’s claim of direct infringement based on Google’s in-line links would likely fail, whereas its claim based on Google’s thumbnails would likely prevail.
The court also found that Google did not publicly distribute copies of Perfect 10’s images by in-line linking since Google was not involved in the transfer of any files—again, the third party websites were doing all the work. Although Google may distribute the thumbnails, the court found that Google’s distribution would likely be a fair use and that the issue was moot anyway since it already found that direct infringement was likely based on a violation of Perfect 10’s display right.
The most interesting aspects of this case, however, are found in the fair use analysis; not because the analysis is groundbreaking, but because of how the court distinguishes Kelley v. Aribasoft, 336 F.3d 811 (9th Cir. 2003) (finding fair use of thumbnail images). Analyzing fair use of a copyrighted work involves examining the following factors:
1. the purpose and character of the use;
2. the nature of the copyrighted work;
3. the amount and substantiality of the portion of the work used; and
4. the effect of the use upon the potential market for the copyrighted work.
The court found that two things set this case apart from the Kelly decision. First, Google’s use of thumbnails was far more commercial than the search engine’s use of thumbnails in Kelly. The fact that Google may increase user traffic and advertising revenue from its image search was not so significant since Google does not directly profit from use of Perfect 10’s images.
The court was persuaded, however, by Perfect 10’s evidence showing third-party websites that serve infringing content and receive and display AdSense ads from Google. Google’s AdSense program allows third party websites to carry Google-sponsored advertising and share revenue that flows from the advertising displays and click-throughs. Thus, the court believed that the connection between Google’s use of Perfect 10’s images and Google’s bottom line was much stronger here.
Second, Google’s use of thumbnails harms Perfect 10’s potential market for smaller images. After filing suit, Perfect 10 entered into a licensing agreement with another company for the sale and distribution of Perfect 10 reduced-size images for download to and use on cell phones. The court reasoned that since users of Google’s image search can download thumbnails of Perfect 10’s copyrighted images for free, they will be less likely to buy them from Perfect 10’s licensee. On these bases, the court found that Google’s thumbnail use was much more commercial and harmful than the use in Kelly. Thus, Google’s fair use defense failed.
Secondary Liability
Perfect 10 failed to introduce evidence showing that Google users directly infringe its copyright protected images. So the court only addressed Google’s secondary liability vis-a-vis direct infringement by the third party websites. In analyzing whether Google was contributorily liable, the court assumed (without deciding) that Google had actual knowledge of direct infringement (the first element) since it ultimately determined that Google did not materially contribute to direct infringement (the second element). In short, the court found that Google did not materially contribute to direct infringement because the infringing third-party websites existed before Google’s image search and would continue to exist were it shut down.
Perfect 10’s claim of vicarious liability also failed. Although Google, through its AdSense program, benefits financially (the first element) from the third party display of Perfect 10’s images, it does not have the right and ability to control infringing activity taking place on third party websites. As a result, Perfect 10 would be unlikely to succeed in proving that Google can be held secondarily liable.
Conclusion
The upshot is that Google’s “loss” at the preliminary injunction stage may not be all that significant to Web based activities for a few reasons. First, using thumbnails is not per se copyright infringement—The Ninth Circuit’s decision in Kelly still holds true. The nuance that the district court focused on here was whether the search engine enjoyed a direct financial benefit as a result of displaying thumbnails that infringe another’s work. The district court found that Google did benefit a little too directly, but the Ninth Circuit may view things differently if (when) this decision is appealed.
Second, in-line linking is still okay. A website that merely points to other information, stored and served on another party’s website, should be able to avoid direct infringement liability. Had the district court taken a different approach, every in-line link would be subject to potential liability. Third, search engines are not going to be held vicariously liable simply for facilitating the discovery of information —even if that information turns out to be infringing. There has to be an additional element such as the right and ability to control the infringing environment. Obviously, search engines cannot remove all infringing content from the Web.
In sum, the vitality of Web does not appear in jeopardy as a result of the district court’s decision, even if it holds on appeal. In addition, the development of Internet law does not appear stunted. Perhaps a new branch is growing from traditional fair use analysis, but on that branch each case will really bend on the relatedness of commercial benefit from the specific use in question.
1.01.2005
Uh Oh, Google Gets Geico: No Insurance Against Trademark Keying Policy
(This article was originally featured in Modern Practice, Findlaw’s Law and Practice Technology Magazine, in January 2005.)
Following a three day trial, a recent decision by the Eastern District of Virginia gave new life to the practice of trademark keying. In Geico v. Google (No. 1:04CV507), Judge Brinkema ruled from the bench that Geico "has not established that the mere use of [Geico's] trademark by Google as a search word or keyword or even using it in [Google's] AdWord program standing alone violates the Lanham Act."[1] This ruling counters a year-old Ninth Circuit decision in Playboy v. Excite case [2], which found that material issues of fact based on initial interest confusion precluded the search engines' motion for summary judgment regarding their trademark keying practices. Although there are now two major (opposing) decisions regarding the legality of trademark keying, as with other areas of Internet law, there still exists no uniform rule of law to guide those advertising on the Internet.
Until this recent decision, Google was waging an uphill battle in the Eastern District of Virginia, attempting to defend its right to practice trademark keying. First, Google moved to dismiss Lanham Act claims, arguing that trademark keying did not make use in commerce of Geico's trademark. Second, Google moved the court for summary judgment. In both instances, the court denied Google's motion, siding instead with Geico. At the close of Geico's case-in-chief during trial, however, Google moved the court for judgment as a matter of law. Under Rule 52(c) of the Federal Rules of Civil Procedure:
If during a trial without a jury a party has been fully heard on an issue and the court finds against the party on that issue, the court may enter judgment as a matter of law against that party with respect to a claim or defense that cannot under the controlling law be maintained or defeated without a favorable finding on that issue, or the court may decline to render any judgment until the close of all the evidence. Such a judgment shall be supported by findings of fact and conclusions of law as required by subdivision (a) of this rule.
The Court granted Google's motion in part, and denied it in part. Most significantly, the court held that there existed insufficient evidence of a trademark violation to bar Google from displaying banner ads for competitive insurers when Internet users search using the term "Geico." In other words, the court ruled as a matter of law that using trademarks as keywords to trigger advertising does not constitutes trademark infringement. This was a clear victory for Google and all Internet companies that provide keyword advertising programs.
The court denied, however, Google's motion for judgment regarding whether Google is liable for those sponsored ads using Geico's name in the title of the banner ads themselves or in the text accompanying such ads. The court found that that Geico "presented enough evidence [of confusion] at this point to avoid a motion for judgment as a matter of law." Moreover, since Google could offer no counter evidence, the court found that "the evidence before this Court does establish that those sponsored sites that contain 'GEICO' either in the title or in the text are likely to confuse for the purposes of the Lanham Act requirements." Therefore, in order to write a more detailed legal opinion, and to give the parties time to settle, Judge Brinkema stayed trial until sometime in early January. The only issues remaining, however, would be whether Google is contributorily liable for the infringing sponsored sites-despite Google's express policy prohibiting such practice.
Emboldened by Judge Brinkema's ruling, Google warned its many other adversaries, chiefly, American Blind,[3] that "this is a clear signal to other litigants that our keyword policy is lawful." Over a year ago, Google sought a declaratory judgment from the Northern District of California that its trademark keying policy does not amount to trademark infringement. Although the Northern District of California has not yet decided the case, obviously, the court will be called upon to consider Judge Brinkema's forthcoming analysis of legal issues implicated by Google's trademark keying practices.
Beyond this one legal dispute, Judge Brinkema's decision is likely to have far-reaching affects not only on future trademark keying decisions, but also on various other innovative advertising practices that continue to challenge intellectual property rights in the digital domain (e.g., pop-up advertising).
Endnotes:
1. A transcript of the oral decision is available at http://patentlaw.typepad.com/patent/files/geico1215.txt.
2. The Ninth Circuit opinion is available at http://caselaw.lp.findlaw.com/data2/circs/9th/0056648p.pdf.
3. Among several suits against the Internet Search Engine icon, Google has recently been named as defendant in actions by the American Chemical Society (No. 1:2004CV659) for trademark infringement, and by Perfect 10 (No. 2:2004CV9484), primarily for copyright-related claims.
Following a three day trial, a recent decision by the Eastern District of Virginia gave new life to the practice of trademark keying. In Geico v. Google (No. 1:04CV507), Judge Brinkema ruled from the bench that Geico "has not established that the mere use of [Geico's] trademark by Google as a search word or keyword or even using it in [Google's] AdWord program standing alone violates the Lanham Act."[1] This ruling counters a year-old Ninth Circuit decision in Playboy v. Excite case [2], which found that material issues of fact based on initial interest confusion precluded the search engines' motion for summary judgment regarding their trademark keying practices. Although there are now two major (opposing) decisions regarding the legality of trademark keying, as with other areas of Internet law, there still exists no uniform rule of law to guide those advertising on the Internet.
Until this recent decision, Google was waging an uphill battle in the Eastern District of Virginia, attempting to defend its right to practice trademark keying. First, Google moved to dismiss Lanham Act claims, arguing that trademark keying did not make use in commerce of Geico's trademark. Second, Google moved the court for summary judgment. In both instances, the court denied Google's motion, siding instead with Geico. At the close of Geico's case-in-chief during trial, however, Google moved the court for judgment as a matter of law. Under Rule 52(c) of the Federal Rules of Civil Procedure:
If during a trial without a jury a party has been fully heard on an issue and the court finds against the party on that issue, the court may enter judgment as a matter of law against that party with respect to a claim or defense that cannot under the controlling law be maintained or defeated without a favorable finding on that issue, or the court may decline to render any judgment until the close of all the evidence. Such a judgment shall be supported by findings of fact and conclusions of law as required by subdivision (a) of this rule.
The Court granted Google's motion in part, and denied it in part. Most significantly, the court held that there existed insufficient evidence of a trademark violation to bar Google from displaying banner ads for competitive insurers when Internet users search using the term "Geico." In other words, the court ruled as a matter of law that using trademarks as keywords to trigger advertising does not constitutes trademark infringement. This was a clear victory for Google and all Internet companies that provide keyword advertising programs.
The court denied, however, Google's motion for judgment regarding whether Google is liable for those sponsored ads using Geico's name in the title of the banner ads themselves or in the text accompanying such ads. The court found that that Geico "presented enough evidence [of confusion] at this point to avoid a motion for judgment as a matter of law." Moreover, since Google could offer no counter evidence, the court found that "the evidence before this Court does establish that those sponsored sites that contain 'GEICO' either in the title or in the text are likely to confuse for the purposes of the Lanham Act requirements." Therefore, in order to write a more detailed legal opinion, and to give the parties time to settle, Judge Brinkema stayed trial until sometime in early January. The only issues remaining, however, would be whether Google is contributorily liable for the infringing sponsored sites-despite Google's express policy prohibiting such practice.
Emboldened by Judge Brinkema's ruling, Google warned its many other adversaries, chiefly, American Blind,[3] that "this is a clear signal to other litigants that our keyword policy is lawful." Over a year ago, Google sought a declaratory judgment from the Northern District of California that its trademark keying policy does not amount to trademark infringement. Although the Northern District of California has not yet decided the case, obviously, the court will be called upon to consider Judge Brinkema's forthcoming analysis of legal issues implicated by Google's trademark keying practices.
Beyond this one legal dispute, Judge Brinkema's decision is likely to have far-reaching affects not only on future trademark keying decisions, but also on various other innovative advertising practices that continue to challenge intellectual property rights in the digital domain (e.g., pop-up advertising).
Endnotes:
1. A transcript of the oral decision is available at http://patentlaw.typepad.com/patent/files/geico1215.txt.
2. The Ninth Circuit opinion is available at http://caselaw.lp.findlaw.com/data2/circs/9th/0056648p.pdf.
3. Among several suits against the Internet Search Engine icon, Google has recently been named as defendant in actions by the American Chemical Society (No. 1:2004CV659) for trademark infringement, and by Perfect 10 (No. 2:2004CV9484), primarily for copyright-related claims.
8.01.2004
Pop-Up Ad Litigation Strategy: Forums, Claims and Defenses
(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.
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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