Factual Background Edit
Rescuecom is a computer service franchising company that offers on-site computer services and sales; the trademark name “Rescuecom” was federally registered in 1998. AdWords is the name of Google’s program through which advertisers may purchase keywords. Google also offers a Keyword Suggestion Tool, a program that recommends certain keywords to advertisers for purchase. Google had recommended to Rescuecom’s competitors through its Keyword Suggestion Tool the trademark “Rescuecom” as a search term to be purchased. Therefore, when an Internet user searched for the term “Rescuecom,” wanting to be directed to Rescuecom’s website, the competitors’ advertisements and links appeared on the searcher’s screen.
Trial Court Proceedings Edit
Rescuecom filed a trademark infringement lawsuit against Google, alleging that such keyword triggering is “likely to cause the searcher to believe mistakenly that a competitor’s advertisement (and website link) is sponsored by, endorsed by, approved by, or affiliated with Rescuecom.” The district court in Rescuecom rejected the plaintiff’s “use in commerce” argument in concluding the following:
|“||Defendant’s internal use of plaintiff’s trademark to trigger sponsored links is not a use of a trademark within the meaning of the Lanham Act, either because there is no allegation that defendant places plaintiff’s trademark on any goods, containers, displays, or advertisements, or that its internal use is visible to the public.||”|
By failing to satisfy this gatekeeper matter, the plaintiff was unable to overcome Google’s motion to dismiss the case for failure to state a claim for relief, pursuant to Federal Rules of Civil Procedure 12(b)(6). Rescuecom appealed.
Appellate Court Proceedings Edit
The appellate court vacated the lower court’s decision and remanded the case for further proceedings. The Second Circuit found a “use in commerce” when Google recommends and sells to its advertisers Rescuecom’s trademark. Through its Keyword Suggestion Tool, Google displays, offers, and encourages the purchase of of Rescuecom’s mark. The Second Circuit was not convinced that so-called “internal uses” of trademarks, in which the trademark is never visibly displayed to customers, is beyond the scope of the Lanham Act’s protections, because if that were true, search engine operators could freely use trademarks in ways that could deceive and cause consumer confusion:
|“||For example, instead of having a separate “sponsored links” or paid advertisement section, search engines could allow advertisers to pay to appear at the top of the “relevance” list based on a user entering a competitor’s trademark—a functionality that would be highly likely to cause consumer confusion. Alternatively, sellers of products or services could pay to have the operators of search engines automatically divert users to their website when the users enter a competitor’s trademark as a search term. Such conduct is surely not beyond judicial review merely because it is engineered through the internal workings of a computer program.||”|
While the appellate court resolved the “use in commerce” issue in favor of the trademark owner, the opinion only permits Rescuecom to proceed with the trademark infringement lawsuit on remand and try to prove that Google’s use of Rescuecom’s trademark causes likelihood of confusion or mistake.
In an unusual step, the Second Circuit attached a lengthy appendix to its Rescuecom decision, which is expressly labeled dicta and therefore not a binding opinion of the court. The appendix explored an issue that has caused much confusion among the lower courts — interpretations of the Lanham Act’s “use in commerce” requirement. At the end of the appendix, the appellate court opined: “It would be helpful for Congress to study and clear up this ambiguity.”
The Second Circuit noted that while the phrase “use in commerce” is defined by the Lanham Act’s definitions section, the court did not believe Congress intended for such definition to apply to trademark infringement claims brought under 15 U.S.C. §§1114 and 1125. The appellate court observed that the Lanham Act’s definitions section begins by explaining that the defined terms shall have those assigned meanings in construing the Act “unless the contrary is plainly apparent from the context.” In the Second Circuit’s opinion, the statutory definition of “use in commerce” is more properly applied in the context of trademark registration and a description of the benefits and protections provided by the Lanham Act, rather than specifying the conduct in which an alleged infringer must engage in order to be liable for infringement. The court explained:
|“||[T]he opening phrase of the definition of “use in commerce” . . . makes it “plainly apparent from the context” that the full definition set forth in §1127 cannot apply to the infringement sections. The definition in §1127 begins by saying, “The term ‘use in commerce’ means the bona fide use of a mark in the ordinary course of trade, and not made merely to reserve a right in a mark.” 15 U.S.C. §1127 (emphasis added). The requirement that a use be a bona fide use in the ordinary course of trade in order to be considered a “use in commerce” makes clear that the particular definition was not intended as a limitation on conduct of an accused infringer that might cause liability. If Section 1127’s definition is applied to the definition of conduct giving rise to liability in §§1114 and 1125, this would mean that an accused infringer would escape liability, notwithstanding deliberate deception, precisely because he acted in bad faith. A bad faith infringer would not have made a use in commerce, and therefore a necessary element of liability would be lacking. Liability would fall only on those defendants who acted in good faith. We think it inconceivable that the statute could have intended to exempt infringers from liability because they acted in bad faith. Such an interpretation of the statute makes no sense whatsoever.||”|
The Second Circuit instead suggested that the “use in commerce” language that appears in the trademark infringement causes of action was a way for Congress to invoke its jurisdiction to regulate this area under the Commerce Clause of the U.S. Constitution. The court observed that the Lanham Act contains a definition of “commerce” to mean “all commerce which may lawfully be regulated by Congress.” The court then noted that the Lanham Act frequently employs the word “use” as either a noun or verb in order to describe what one does with a trademark. The court traced the complex legislative history of the revisions to the Lanham Act, in which the words “commerce” and “use” were joined together. The appellate court believes that Congress did not intend for the statutory definition of “use in commerce” to define conduct that determines an infringer’s liability for trademark infringement, but rather Congress wanted “to make clear that liability would be imposed for acts that occur in or affect commerce, i.e. those within Congress’s Commerce Clause power.”
The Second Circuit stated, however, “Congress does not enact intentions. It enacts statutes. And the process of enacting legislation is of such complexity that understandably the words of statutes do not always conform perfectly to the motivating intentions. This can create for courts difficult problems of interpretation.”
Subsequent Activities Edit
In early March 2010, Rescuecom and Google agreed to dismiss without prejudice all claims and counterclaims between the parties. The reason for Rescuecom’s voluntary abandonment of the lawsuit against Google is not clear, although there is speculation that the expense of the multi-year litigation against Google played a factor, as well as another keyword advertising lawsuit with which Rescuecom is involved.
The impact of Rescuecom is significant. First, it clarifies the "use in commerce" requirement for keyword advertising cases brought within the Second Circuit, thereby bringing the circuit in conformity with other judicial circuits on this matter. It also may very well end attempts by defendants to dismiss keyword advertising cases for failure to state a claim on the basis that such trademark use is not a "use in commerce." By allowing such cases to move forward, Rescuecom should permit district courts in the Second Circuit to focus their attention on the more crucial element of a trademark infringement claim, the “likelihood of confusion."
In addition, because defendants in keyword advertising cases would need to defend themselves at trial rather than being able to dismiss the case using pre-trial motions, the increased costs of litigation may encourage more settlements of these cases. However, some observers are concerned that Rescuecom may have a “chilling effect” on Internet search engines’ keyword advertising practices that will hamper consumers’ ability to find information about competitors’ products or criticism about the trademark owner.
- ↑ 562 F.3d at 125.
- ↑ Id. at 125.
- ↑ 456 F. Supp. at 403.
- ↑ Id.
- ↑ 562 F.3d at 129.
- ↑ Id. at 130 n.4.
- ↑ Id. at 130-31.
- ↑ 562 F.3d at 140-41.
- ↑ 15 U.S.C. §1127.
- ↑ Id. at 132.
- ↑ Id. at 133.
- ↑ Id. at 132-33.
- ↑ U.S. Const., art. I, §8, cl. 3.
- ↑ 15 U.S.C. §1127.
- ↑ Rescuecom, 562 F.3d at 134.
- ↑ Id. at 138.
- ↑ Id. at 139.
- ↑ See Rescuecom Corp. v. Google, Inc., No. 5:04-cv-01055 (N.D.N.Y. Mar. 5, 2010) (order granting stipulation of dismissal) (full-text).
- ↑ See Eric Goldman, Rescuecom Abandons Its Litigation Against Google, Mar. 5, 2010.(full-text) ("Rescuecom is defending a trademark lawsuit brought by Best Buy over Rescuecom’s competitive AdWords purchases of the 'geek squad' trademark. Rescuecom was caught in the duplicitous position of making plaintiff-side arguments against Google while making highly contradictory defense-side arguments against Best Buy. As a result, every positive step in its Google case had the potential to degrade its position in the Best Buy case. By abandoning the Google fight, Rescuecom avoids this difficult dilemma.").
- ↑ Corynne McSherry, "Second Circuit Expands Trademark Rights, Restricts Consumer Search Options" (Electronic Frontier Foundation, Apr. 3, 2009) (full-text).
- ↑ Id. ("[C]onsider a consumer seeking comparative information on hybrid vehicles, searching on the (trademarked) term ‘Prius.’ That consumer might like to know about GM’s hybrid offerings . . . but after today, the threat of litigation may make Google hesitant to let GM buy a 'sponsored link' triggered by the term ‘Prius’ [owned by Toyota].").
- Brian T. Yeh, "Use of Trademarks as Keywords to Trigger Internet Search Engine Advertisements" 9-11 (Cong. Res. Serv. Mar. 22, 2010) (full-text).