A Jury Verdict That Competitive Keyword Advertising Isn’t Trademark Infringement–College Network v. Moore

By Eric Goldman

College Network, Inc. v. Moore Educational Publishers, Inc., 2010 WL 1923763 (5th Cir. May 12, 2010). The jury verdict form from January 2009. The district court’s final judgment from June 2009.

In December, I blogged about the Fair Isaac v. Experian case, which I thought was the first jury verdict on trademarked keyword advertising. I now stand corrected on two fronts.

First, although the decision came after the jury trial, the judge made a bench ruling that Experian had not committed trademark infringement by buying competitive keyword advertising. Rebecca has some additional updates on the case.

Second, I’ve since discovered an earlier case, College Network v. Moore Educational Publishers, which had a January 2009 jury finding that competitive keyword advertising doesn’t constitute trademark infringement (see the qualifications below). This jury verdict appears to have gone unnoticed, as I could not find any press coverage of the district court proceedings. In fact, I learned about it only because the case was appealed and the Fifth Circuit upheld the dismissal of the trademark claims.

Unfortunately, the three documents linked in my intro paragraph don’t completely explain the alleged trademark infringement. The Fifth Circuit ruling summarizes the situation by saying that the advertiser “had purchased the phrase ‘The College Network’ from Google and Yahoo as a search-engine keyword to summon MEP’s sponsored-link advertising.” The advertiser responded that the trademark owner had bought the advertiser’s trademarks as well (which would be consistent with keyword advertising plaintiffs’ frequently duplicitous behavior), but this allegation wasn’t pursued and appears to be immaterial.

Now the provisos on the jury ruling: the jury verdict probably was skewed by the trial court’s ruling (pre-Rescuecom) that the advertiser did not make a use in commerce. So where the jury verdict form indicated that the advertiser didn’t infringe the trademark, it’s unclear if this was based on the jury’s finding of no likelihood of confusion or a lack of use in commerce.

On appeal, the Fifth Circuit sidesteps the use in commerce question and says that “the evidence does not compel a finding of likelihood of confusion”–a conclusion that the court weakly explains as it rejects many of the trademark owner’s arguments on procedural technicalities. However, in a footnote, the Fifth Circuit partially explains:

In any event, sufficient evidence supported the jury’s finding of no likelihood of confusion under the Fifth Circuit test. MEP and Moore presented extensive documentary evidence on the issue. The jury was permitted to view the keywordsearch process and visually compare the companies’ websites. TCN’s own expert testified as to lack of actual confusion. The evidence does not point so “strongly and overwhelmingly in favor” of TCN that a reasonable jury could not arrive at a contrary verdict.

I haven’t parsed through the lower court proceedings to see how the trademark owner’s expert (Otto Wheeler, presumably this gentleman) undercut his client’s case, but the Fifth Circuit’s characterization sure doesn’t sound good. Perhaps there should be a motto among litigation experts similar to a doctor’s ethical tenet: First, Do No Harm.

[UPDATE: I received a letter from Otto Wheeler saying that the Fifth Circuit opinion mistakenly identified him as the expert providing the unsuccessful opinions. He says he only opined on damages. Instead, he suggests Howie Jacobson, PhD provided the expert opinion which failed to impress the court.]

The trademark owner’s loss is doubly ironic because the Fifth Circuit mostly upheld the lower court’s conclusions that it owes the advertiser (and its principal) approximately $700k on a defamation counterclaim. Perhaps the advertiser would have sued the trademark owner for defamation no matter what, but a counterclaim was apropos once the trademark owner decided to dance in court. So once again, a trademark owner kicks off a keyword advertising fight only to end up writing a check to the defense. Smart move, guys.

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