Keyword Ads and Metatags Don’t Confuse Consumers–J.G. Wentworth v. Settlement Funding

By Eric Goldman

J.G. Wentworth SSC Ltd v. Settlement Funding LLC, No. 06-0597 (E.D. Pa. Jan. 4, 2007)

The keyword advertising legal roller-coaster continues. Last time I blogged on the matter in the Buying for the Home case, I indicated that plaintiffs and defendants traded wins in 2006. Consistent with the pattern, this time the defendant gets the win [see FN below]–although this time the win was based on (the lack of) likelihood of consumer confusion, not the use in commerce requirement as I predicted.

Even though this case didn’t quite fit the pattern, this is a big win for advertisers. The court holds that, as a matter of law, the use of keyword-triggered ads and keyword metatags cannot confuse consumers if the resulting ads/search results don’t display the plaintiff’s trademarks. Given the inconsistencies of past rulings, I simply don’t believe that this case will be the final word on the matter. However, if other courts follow this conclusion, we would see a reduction in the quantity of silly litigation over keyword advertising and keyword metatags.

Facts

The plaintiff claims to be the market leader in buying settlement funding (i.e., converting the promise of future settlement payments into an upfront cash payment). The defendant is allegedly the #2 competitor. The defendant bought the keywords “J.G. Wentworth” and “JG Wentworth” in Google AdWords and put the defendant’s trademarks (it’s not clear exactly which terms) into the keyword metatags of its websites.

However, the plaintiff did not allege that the ads or search results displayed the plaintiff’s trademarks. As a result, this case is purely about “behind the scenes” uses of the trademarks as ad/content triggers.

(I’m intentionally overlooking the fact that most search engines, including Google, ignore keyword metatags, so they don’t have any triggering power. When will courts get this message??? In this case, the plaintiff claims that the defendant’s websites are in the top 10 search results for plaintiff’s trademarks, although we know this has nothing to do with the keyword metatag usage.)

Trademark Use in Commerce

The court acknowledges the split of opinion about whether buying keyword ads constitutes a trademark use in commerce, citing on the defendant’s behalf the Wells Fargo, U-Haul and 1-800 Contacts adware cases. However, the court is more persuaded by the Buying for the Home argument that triggering ads based on a trademark is a use in commerce in connection with goods or services. Thus, the court concludes, “By establishing an opportunity to reach consumers via alleged purchase and/or use of a protected trademark, defendant has crossed the line from internal use to use in commerce under the Lanham Act.”

What does “establishing an opportunity to reach consumers” mean? This language is sufficiently opaque to defy easy analysis. If getting exposure to a competitor’s customers is a trademark use in commerce, then I assume that creating shelf space adjacencies in retailing environments should also qualify. This would be a crazy result. Fortunately, the court doesn’t stop the analysis there.

Likelihood of Consumer Confusion

Few of the precedent cases have reached summary judgment on the likelihood of consumer confusion issue. Usually the matter is reserved for a trial on the facts. But this court resolves this issue as a matter of law, with potentially significant implications. The court holds:

Even accepting plaintiff’s allegations as true – i.e., assuming that defendant did in fact use plaintiff’s marks through Google’s AdWords program or in the keyword meta tags for its website – as a matter of law defendant’s actions do not result in any actionable likelihood of confusion under the Lanham Act.

The court focuses on the plaintiff’s claim of initial interest confusion and observes that the IIC doctrine had not been applied to keyword metatags by the Third Circuit. Then, the court takes issue with the 9th Circuit Brookfield case, rejecting that case’s bald and unsupported assertion that consumers will simply settle on competitive offerings they chance upon. Instead, the court correctly notes that consumers choose among the search results/ads presented to them, and those results or ads didn’t display the plaintiff’s trademarks. Thus, “Due to the separate and distinct nature of the links created on any of the search results pages in question, potential consumers have no opportunity to confuse defendant’s services, goods, advertisements, links or websites for those of plaintiff.”

Conclusion

Even though I’m thrilled with the result in this case, I think the court got the analysis wrong on two fronts. First, I think that neither buying competitive trademarks as keyword nor including trademarks in keyword metatags constitute a trademark use in commerce because neither activity is perceivable by the consumer. Second, I think that it’s very difficult to make any determinations (even a pro-defendant determination) about likelihood of consumer confusion based on ad copy without reviewing the ad copy in question; this may necessitate the review of dozens or even hundreds of different ads. As a result, I think this court was being a little glib granting summary judgment on the likelihood of consumer confusion question, even if the ad copy never used the trademarks in question.

Nevertheless, this case stands for two clear legal propositions:

* if keyword-triggered ad copy doesn’t display the plaintiff’s trademarks, plaintiff loses

* if search results don’t display the plaintiff’s trademarks even though the trademarks were included in the keyword metatags, plaintiff loses

Now, let’s see if future courts will follow these sensible conclusions!

Footnote

I’m ignoring a case I just discovered called International Profit Associates v. Paisola, No. 06 C 6154 (N.D. Ill. Nov. 14, 2006), which was an ex parte application for a TRO against a griper/alleged extortionist (i.e., someone who allegedly said that he would stop saying bad things if he got some money). Because it was ex parte, the court didn’t do a particularly careful job diligencing the plaintiff’s arguments. In any case, the court said that the plaintiff established that the defendant used the plaintiff’s trademarks in the text of Google Adwords advertisements and in the domain name “ipaopinion.com,” and these activities supported a TRO. I don’t think this case has any real precedential value, and the parties settled the dispute (presumably after they actually started talking to each other) in December. However, purists might count this as a plaintiff’s win in between Buying for the Home and the JG Wentworth case, disrupting the pattern further.

Category: Product #: Regular price:$ (Sale ends ) Available from: Condition: Good ! Order now!
Reviewed by on. Rating: