October 20, 2006
Courts Can't Figure Out if Buying Keywords Constitutes Trademark Use--Buying for the Home v. Humble Abode
By Eric Goldman
Buying for the Home, LLC v. Humble Abode, LLC, 03-CV-2783 (JAP) (D.N.J. Oct. 20, 2006)
2006 has been a bit of a jurisprudential disaster on the question of whether buying/selling keywords constitutes a trademark use in commerce. Basically, courts can't agree, so plaintiffs and defendants are trading wins--sequentially by date, the answer to whether keyword advertising is a use in commerce has been yes (Edina), no (Merck), yes (800-JR Cigar), no (Rescuecom) and yes (Buying for the Home). At least we have a predictable pattern emerging (consistent with the pattern, the next case should be a "no")...but the alternating pattern is hardly confidence inspiring.
In this case, the parties are competitors in the online furniture business. The plaintiff claims a trademark in the phrase "Total Bedroom" and alleges that the defendant bought keyword ads at Google on "total bedroom." (There is a factual debate on this point--the defendant alleges that its ads were broad-matched to the phrase "bedroom"). It appears undisputed that the defendant never displayed the phrase "total bedroom" in its ad copy, so the lawsuit is based purely on the trademark implications of buying the keyword.
On the use in commerce factor, the court acknowledges that "the law is unsettled regarding whether the purchase of another’s protected mark as a search engine keyword can constitute unfair competition or infringement." After recapping the muddled precedent, the court casts its vote:
the Court finds Plaintiff has satisfied the “use” requirement of the Lanham Act in that Defendants’ alleged use was “in commerce” and was “in connection with any goods or services.” 15 U.S.C. 1125(a)(1). First, the alleged purchase of the keyword was a commercial transaction that occurred “in commerce,” trading on the value of Plaintiff’s mark. Second, Defendants’ alleged use was both “in commerce” and “in connection with any goods or services” in that Plaintiff’s mark was allegedly used to trigger commercial advertising which included a link to Defendants’ furniture retailing website. Therefore, not only was the alleged use of Plaintiff’s mark tied to the promotion of Defendants’ goods and retail services, but the mark was used to provide a computer user with direct access (i.e., a link) to Defendants’ website through which the user could make furniture purchases. The Court finds that these allegations clearly satisfy the Lanham Act’s “use” requirement.
As a result, the court denied the defendant's motion for summary judgment on the use in commerce issue. For more on why this result is wrong, see my writeups on the Edina Realty and 800-JR-Cigar cases.
In an ironic twist, the defendant alleges that the plaintiff buys the "Humble Abode" keyword at Google and displays an ad saying: "Save on Humble Abode. Find many of the Humble Abode.com beds at a significant discount" and providing a link to the plaintiff's website. I really don't understand how a plaintiff can complain with a straight face about competitive keyword purchases on its trademarks when it does the same thing itself. (But this seems to happen fairly frequently--for example, it was an embarrassing fact in the 1-800 Contacts case as well).
In this ruling, the defendant sought SJ on its counterclaim against the plaintiff for buying its trademarks. This should set up a mirror image opinion--if keyword purchases are a problem, the plaintiff should be liable too. The judge sidesteps this parallelism by ignoring the use in commerce question altogether, instead citing the possibility that the plaintiff is protected by the nominative use defense to deny the defendant's SJ motion on the counterclaim. Of course, this raises a highly ironic question, but the irony appears to have been lost on (or ignored by) the judge.
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Tracked on October 21, 2006 06:27 AM
Eric - thanks to Threadwatch.org, I came across your blog. I have been following the issue of brand management through search engines for the past couple of years. It can be a major issue for brand owners. In our analysis of over 8.43 million UK internet users, we found that about 8% of visits from searches for a brand go to a competitor or price comparison website. When we removed the brands that sell through re-sellers (i.e. British Airways) that figure dropped to 3%.
However, to only look at the protected brand names misses the real story - consumers often misspell brand names (i.e. "brittish airways") or type them in to search engines using other keyword combinations (such as "ba flights" or "british airways flights to new york"). We found that in the UK a much larger proportion of consumers are pulled away to competitor or price comparison sites in these cases. Part of the reason is that the search engines offer some protection for the trademark protected name but not for misspellings. And competitors can broadmatch on terms like "flights" pushing the brand's results lower down the SERP (potentially). This indicates that if competitors were able to bid on the protected brand name, searches would be lured to competitors more often.
Advertisers often liken this to buying ads in the yellow pages. American Airlines could not buy an ad under Delta Airlines' brand.
Posted by: Heather Hopkins at October 23, 2006 06:23 AM
Hey Eric -- yep, I just got the alert for this one too. I guess one good thing about all this "unsettled law" stuff is that it encourages some of us to find a good way to settle it! :-)
Posted by: greglas at October 31, 2006 08:47 AM