Competitive Keyword Advertiser Wins at Trial–Fair Isaac v. Experian

By Eric Goldman

Fair Isaac Corp. v. Experian Information Solutions Inc., 2009 WL 4263699 (D. Minn. Nov. 25, 2009)

This is an interesting and complicated lawsuit that hasn’t gotten the attention it deserves. Fair Isaac produces the ubiquitous “FICO” credit score, which is heavily used in the financial industry to assess borrower creditworthiness. Fair Isaac launched a litigation campaign to suppress competition by rival producers of credit scores. In July, Fair Isaac mostly lost a bunch of its arguments in a complex ruling. Read Rebecca’s excellent recap of that ruling. The July ruling left a few issues open for trial, which ended late last month with Fair Isaac’s jury loss. See the (uninsightful) jury verdict form and this article from the St. Paul Business Journal.

Normally with a jury verdict, we don’t get a lot of legal insight. However, the jury verdict led to a short post-trial ruling by the judge.

First, Fair Isaac tried to claim that its score range from “300-850″ was a protectable trademark as a way of trying to thwart its competitors’ range of 501-990. I’ve always wondered why credit scores start at 300 instead of 0, just like the SATs start at 200 or LSAT scores now start at 120. This case finally gave me a new hypothesis: maybe these services think they can claim a trademark in their score ranges…? (As Rebecca also observed, I suspect not wanting to tell people they are a “zero” is also a relevant consideration).

In any case, Fair Isaac’s bid to trademark the score range “300-850″ failed. As the judge recaps, “the jury returned a verdict finding that the alleged ’300-850′ mark was not a valid, protectable trademark because the term ’300-850”’has not acquired secondary meaning.” Once again, a putative trademark owner goes to court only to find out that it has fewer trademarked assets than it thought.

Second, the court rejected Fair Isaac’s trademark claim over competitive keyword advertising based on insufficient proof of consumer confusion. The court recaps:

To the extent that Fair Isaac bases its keyword advertising claims on the alleged “300-850” mark, such a claim fails in light the jury’s finding that “300-850” is not a valid mark. To the extent that the keyword advertising claims are based on the “Fair Isaac” and “FICO” marks, the Court finds that the weight of the evidence adduced at trial does not support a credible inference that Experian’s and Trans Union’s purchases of Fair Isaac’s trademarks as keyword search terms was likely to confuse consumers. The only evidence adduced at trial in support of the assertion that the keyword advertising was likely to cause confusion-the opinion testimony of Fair Isaac’s expert James Berger-lacks credibility. [emphasis added]

(Bummer for Fair Isaac to see the court toss aside its expert like a rag doll. I’m guessing the expert wasn’t cheap).

This is one of only a few cases reaching a definitive “final” ruling about the legitimacy of competitive keyword advertising. Most cases settle or end on some other basis (like the plaintiff’s lack of a protectable trademark, as the court ruled here for the “300-850″ keyword purchases). The only other similar trial outcome was the old 2004/05 GEICO v. Google case, which concluded in a poorly reasoned and difficult-to-follow opinion after trial that Google was not liable for keyword triggered ads that didn’t contain the trademark in the ad copy and potentially liable for the triggered ads that did. Other than the GEICO mess, we have only a few summary judgment rulings on consumer confusion due to competitive keyword advertising:

* Finding that referencing the trademarks in the ad copy creates a likelihood of consumer confusion: Storus

* Finding that merely using the trademark to trigger keyword advertising does not create a likelihood of consumer confusion: J.G. Wentworth and Designer Skin

In light of these limited precedents reaching a final outcome on keyword triggering, this ruling is significant because it’s the strongest evidence yet that keyword advertising defendants do not create actionable consumer confusion and therefore will win at trial. This is one of the reasons why I favor finding doctrinal ways for defendants to end cases earlier in the process (and well before trial) if the defendants are going to win at trial anyway.

According to the St. Paul Business Journal article, Fair Isaac plans to appeal this ruling as well as their July loss. Better to fight in court than fight in the marketplace, I guess.