Yahoo Countersues American Airlines for Declaratory Judgment
By Eric Goldman
As you recall, American Airlines recently followed its July settlement with Google by bringing a clone-and-revise trademark infringement lawsuit against Yahoo in Fort Worth, Texas. I thought that this lawsuit might go away quickly because the parties should be able to iron out their differences. Instead, Yahoo apparently has decided to fight back by bringing a declaratory judgment action against American Airlines in the presumably more friendly confines of the Northern District of California.
I’m not enough of a civil procedure expert to handicap the odds that Yahoo can strongarm the case out of Texas and into California. I’ve seen a few such ploys in Internet cases fail recently, but I’m not sure if those were aberrational. Regardless of the likelihood of success, I’m fascinated by the fact that Yahoo wants to move the battle to a Ninth Circuit jurisdiction. After all, until the Rescuecom oral argument train wreck, most of us thought that the Second Circuit was the most defendant-favorable jurisdiction for keyword advertising lawsuits because courts have regularly dismissed those cases on trademark use in commerce grounds. In contrast, I highly doubt that a Ninth Circuit court will kick out American Airlines’ lawsuit on that basis. See, e.g., the American Blinds and Picture It Sold cases.
Meanwhile, the Ninth Circuit has issued some awful Internet trademark opinions, such as the horrendous 1999 Brookfield case that opened the floodgates of bogus initial interest confusion Internet cases. Worse, fairly directly on point is the Ninth Circuit’s 2004 Playboy v. Netscape case, where (among many other analytical defects) the court couldn’t even decide if search engines should be analyzed under direct or contributory trademark infringement doctrines–but kept going and trashed Netscape anyway. I realize that the Fifth Circuit Internet trademark jurisprudence is thin, so Yahoo might want to opt out of the unknown, but opting into Ninth Circuit Internet trademark jurisprudence seems…well…counterintuitive….
Of course, Yahoo may be trying to benefit from home court jurisdiction just like American Airlines is, but Yahoo’s complaint gives another clue why it might be seeking out Ninth Circuit law. The declaratory judgment complaint references “nominative fair use” repeatedly, suggesting that Yahoo’s trademark policy only allows advertisers to bid on American Airline trademarks when doing so would qualify as a nominative fair use. The Ninth Circuit has a more well-developed nominative use doctrine than other circuits and has issued several favorable nominative fair use cases, including the seminal New Kids on the Block case. In contrast, the nominative use doctrine is not as well accepted elsewhere; for example, the Sixth Circuit expressly disclaimed it in the PACCAR case. Therefore, Yahoo may be hoping that the Ninth Circuit’s favorable and well-established nominative fair use doctrine may provide it with the strongest chance of success, even if Yahoo has to abandon any chance of a quick victory based on the use in commerce defense (not that such a defense was probable in Fifth Circuit courts).
(FWIW, I personally think that keyword sales are more accurately characterized as a commercial referential trademark use than a nominative use, but I haven’t found many folks buying into this theory).
One other reason why Yahoo might be able to pull the jurisdictional switcheroo. The complaint brielfy notes that American Airlines has entered into a contract with Yahoo containing a venue selection clause. Even if true, Yahoo should have been able to raise the contract clause as a defense to the Texas litigation. The declaratory judgment may be a way to try to prevent a Texas judge from disregarding the venue selection clause. Or Yahoo’s move might just be a show of strength that Yahoo is going to defend its turf aggressively.