August 26, 2008
Court Slams Competitive Metatagging and Keyword Advertising--Soilworks v. Midwest Industrial Supply
By Eric Goldman
Soilworks, LLC v. Midwest Indus. Supply, Inc., 2008 WL 3286975 (D. Ariz. Aug. 7, 2008)
All too frequently, we get an opinion where the judge clearly didn't grasp current implementations of keyword advertising and metatagging. Often, it's simply a bad luck of the draw; in other cases, the defense lawyers may have failed to educate the judge properly (IMO, the Axiom case is an example of the latter).
This opinion, an outgrowth of patent litigation involving two competitors in the soil anti-erosion business, is a good example of a judge who just doesn't get it. The advertiser's misdeed is that it "uses the [trademarked] phrase 'soil sement' in keyword advertising on an Internet search engine and uses variations of the phrase in metatags for its websites." The opinion doesn't specify if the advertiser triggered ads on the term "soil sement" or displayed the trademark in the ad copy, nor does the opinion specify which metatags (keyword, description, others) contained the "soil sement" references.
Those "details" don't matter to this judge, though, because the initial interest confusion doctrine provides a cure-all for any factual or analytical deficiencies. Even though there was zero evidence that the advertiser's behavior actually or might have confused consumers one bit, the court says that the potential for attention diversion from keyword advertising and metatagging was sufficient to constitute initial interest confusion ("the wrong in a metatag initial interest confusion case is ... the diversion of the consumer's initial attention to the defendant's website using the plaintiff's trademark and goodwill"). Unfortunately for the analytical rigor of the judge's discussion, it's already well-established that (1) keyword metatags have no meaningful diversionary power, and (2) as I've explained here, it is impossible to conclude that consumers were diverted until we can confirm where the consumers were trying to go in the first place (and a simple keyword search can't tell us that). (There are plenty more bases to attack the "logic" here; I'm trying to be selective). As a result, this court's reliance on attention diversion concerns is anachronistic at best and pernicious at worst.
This opinion is too inscrutable to draw many useful lessons from it. However, it reinforces a broader lesson that there remains significant legal downside, and minimal marketing upside, to including competitive trademarks in keyword metatags. Therefore, I continue to strongly suggest that advertisers should avoid this practice.
For more, see Rebecca's commentary, where she says she's "depressed" by rulings like this.
Posted by Eric at 09:57 AM | Search Engines , Trademark | TrackBack
August 11, 2008
Minnesota Court Says Keyword Advertising is TM Use in Commerce--Hysitron v. MTS
By Eric Goldman
Hysitron Inc. v. MTS Systems Corp., 2008 WL 3161969 (D. Minn. Aug. 1, 2008)
In a brief and pedestrian opinion, another court outside the Second Circuit said that buying a trademarked keyword is "use in commerce" under the Lanham Act even if the trademark doesn't appear in the ad copy. The court says:
This Court adopts the majority view that using a trademark to generate advertising constitutes a “use in commerce” under the Lanham Act. This approach adheres to the plain meaning of the Lanham Act's definition of “use in commerce.” The language used in the definition suggests that a “use in commerce” is not limited to affixing another's mark to one's own goods but also encompasses any use of another's mark to advertise or sell one's own goods and services.
The court is right about the majority vote, but it's hardly a strong majority. According to my count, the vote was 7-to-6 before this ruling. However, all 6 no votes are in the 2d Circuit, so geographically there is a stronger basis to characterize the rule as the majority rule.
The court also denied the defense SJ motion because more discovery is required to determine consumer confusion.
Posted by Eric at 11:01 PM | Search Engines , Trademark | TrackBack
August 07, 2008
July 2008 Quick Links, Part II (Non-IP Edition)
By Eric Goldman
Search Engines
* Google explains all of the ways that it reinterprets the actual search query provided by a consumer to deliver results for words the searcher didn't use. As I've said before, Google's intermediation makes it impossible for a judge to assume that a defendant's website was ranked based on the search terms selected by the searcher.
* In the vein of In re Yahoo, Google was hit with two class action lawsuits alleging that Google failed to disclose that AdWords ads were going to be placed on undesirable pages liked parked pages. See Levitte v. Google (complaint and Justia page) and RK West v. Google (complaint and Justia page).
* Google was denied attorneys fees in the long-running Parker v. Google case. Parker v. Google, Inc., 2008 WL 2600299 (E.D. Pa. June 30, 2008).
Wikipedia
* Defamation lawsuit against Wikimedia tossed per 230. I've been waiting for the actual ruling to do a complete writeup. If you see it, please pass it along.
* NYT: "Wikipedia Tries Approval System to Reduce Vandalism on Pages." Surprised?
Trespass to Chattels
* In the latest development in Oracle v. SAP/TomorrowNow, SAP has shut down TomorrowNow, the subsidiary that prompted the lawsuit from Oracle. The Second Amended Complaint expands the finger-pointing at SAP for supervising its subsidiary. Still unresolved: the size of SAP's check to Oracle, and possible jailtime for TomorrowNow folk.
* Thomas O'Toole: Illinois adds anti-scraping provision to its attorney discipline website to block Avvo's crawlers.
Marketing
* 50 Cent is back in court on another questionable legal theory (see our first deconstruction of his litigation tactics). This time, Taco Bell tried a quasi-ambush marketing stunt to get something for free that he thinks they should have paid for.
* Rebecca on the latest ruling in NetQuote v. Byrd, the "lead fraud" case. Also, the ruling has some interesting discussion about whether a competitor who clicks on a competitor's ads in AdSense is guilty of a tort of "click fraud." The court says not in this case.
* TRUSTe is converting from a non-profit to a for-profit company.
Porn
* ACLU v. Mukasey (I've lost track of the number of AGs who have been the named defendant in this lawsuit). The Third Circuit struck down COPA for the third time.
* PC Magazine: RIP Usenet, killed by the New York AG office's campaign against child porn traded on USENET.
Miscellaneous
* A bizarre article on "Internet trolling" in NYT Magazine. With its rambling and scattered discussion, I have no idea what the author defines as trolling. However, the article did bring to mind a much better 1994 article from Wired, The War Between alt.tasteless and rec.pets.cats.
* Steinbuch v. Cutler, 2008 WL 2622853 (E.D. Ark. July 1, 2008). The court denied a motion to transfer the long-running case to DC.
* If a caffeine-addicted blogger goes off about your business, it's risky to fight back.
* Mike Masnick: Keeping The Benevolent Dictators of Silicon Valley Honest
* Wed, Aug. 13, 1-2 Eastern time, David Donoghue, Evan Brown and I will be doing an ALI-ABA teleseminar about the latest developments in 47 USC 230. Details. Mention coupon code TSPV02EG and save $30.
Posted by Eric at 06:57 AM | Content Regulation , Internet History , Marketing , Search Engines | TrackBack
July 05, 2008
Two Regressive Search Engine Advertising Rulings--Standard Process v. Total Health and Finance Express v. Nowcom
By Eric Goldman
It's not uncommon for courts to make judgments based on outdated understandings of precedent and technology, especially when dealing with dynamically evolving areas like Internet trademark law. Nevertheless, it can be a little dispiriting to read opinions that ignore modern sensibilities and look like they could have been written years ago. Two such cases came out in June:
Standard Process, Inc. v. Total Health Discount, Inc., 2008 WL 2337279 (E.D. Wis. June 6, 2008)
This is yet another case involving channel leakage leading to unauthorized Internet sales of legitimate goods. I've blogged about this issue several times, including:
* Australian Gold v. Hatfield (10th Cir 2006)
* S&L Vitamins v. Australian Gold (EDNY 2007)
* Standard Process v. Banks (E.D. Wis. 2008) [yes, same court and same plaintiff]
* Designer Skin v. S&L Vitamins (D. Ariz. 2008)
The last two cases were largely favorable for the Internet retailer. Unfortunately, this latest ruling barely acknowledges the S&L case (and ignores the Standard Process case altogether) and jumps back to the pro-plaintiff (and doctrinally corrupt) Australian Gold precedent as if it were the only relevant ruling. What happened?
The court says that the Internet retailer may be communicating implied sponsorship/favoritism of the trademark owner by (1) using the "we" and "our" pronouns to describe the product on its website, apparently creating an overly familiar discourse, and (2) buying keyword advertising triggered by the trademark and ranking well for it. This implied sponsorship/favoritism costs the Internet retailer both a first sale defense and a nominative use defense. No SJ for the Internet retailer on trademark infringement.
The court's emphasis on first-person pronouns is ticky-tack at best. I'd sure love to see some consumer survey evidence to show that the usage actually led consumers to make some association between the retailer and the manufacturer. I'd be really surprised if consumers drew any of the inferences made by the courts.
Similarly, thinking that consumers assume that high ad placement for the trademark implies sponsorship by the trademark owner is SO five years ago. Though this issue has come up in a few prior cases (for example, an analogous issue was central to the Playboy v. Netscape case from 2004), I've never seen any empirical evidence validating this assumption, and I am fairly confident that a reliable survey conducted today would thoroughly destroy this line of thinking.
In any case, the breezy way that the court tossed aside the nominative use defense highlights that the defense isn't all that useful to Internet trademark defendants. For this reason, I continue to believe that we need the trademark use doctrine (which, I understand, wasn't at issue here) to screen out cases before defendants have to rely on such a flimsy doctrine like nominative use.
The case also discusses whether the Internet retailer committed false advertising by saying that it bought from authorized sources. Rebecca parses this issue.
Finance Express LLC v. Nowcom Corp., 2008 WL 2477430 (C.D. Cal. June 18, 2008)
Finance Express and Nowcom are competitive providers of "software to automate and facilitate credit relationships between used automobile dealers and lenders." Finance Express acquired some software and tried to migrate users of that software to its standard platform. This transition appeared to trigger a scramble for customers in transition, and Nowcom launched a self-acknowledged "aggressive" marketing campaign for those customers that included the following features:
* registering several domain names containing Finance Express trademarks
* posting a self-laudatory press release at those domain names urging customers to transition to it. Oddly, this press release contained an "About Finance Express" section that the court said made it look like a joint press release between Nowcom and Finance Express.
* including Finance Express' trademarks in the metatags, which the court describes using the archaic term "keyword stuffing."
* "keying" (another archaic term) by buying Finance Express' trademarks as keyword triggers at the search engines to trigger banner ads. The court expressly refers to banner ads, but in the discussion it's clear that Newcom bought typical text ads.
If Nowcom's marketing campaign had only 1 of these features, a court might have been more willing to give it a free pass. But the overall package of competitive features was clearly overwhelming to the court. It was easy for the court to see competitive trademark references plus a perceived injury (Finance Express had transitioned only 250 dealers when it projected it would transfer 850) and blame the technology.
The court goes through numerous gyrations to find potential trademark liability here. For example, Finance Express has a number of weak descriptive trademarks, but the court circularly uses the fact that Nowcom targeted the trademarks as evidence that the descriptive trademarks had derived secondary meaning. The court also struggles with the Ninth Circuit's ambiguous caselaw on whether metatags and "keying" constitutes a use in commerce, but the court says that it sees lots of commercial activity on Nowcom's part, so it must qualify. (Cite to two 2006 cases Edina Realty and Humble Abode--hey judge, there have been just a few use in commerce cases since 2006!). And finally on the likelihood of consumer confusion question, the court uses the initial interest confusion doctrine as a crutch (extensive cites to Brookfield). Overall, this analysis reads more like a ruling from 1999 than 2008. Preliminary injunction for Finance Express.
Unfortunately, I'm not sure how many practical lessons we can learn from this case.
* The domain names. I don't know many trademark lawyers who would greenlight one competitor's purchase of domain names containing the trademarks of a competitor, and it's a little unsettling to see Nowcom use the technique in 2007. Indeed, the court finds the practice completely meritless, concluding "the only purpose Nowcom could have had in registering Finance Express' domain name was to direct potential consumers of Finance Express' products to Nowcom's website."
* Metatags/Keyword Stuffing. I have argued against including competitive trademarks in keyword metatags on a straight cost-benefit basis because they are relatively ineffectual from an SEO standpoint but courts--like this one--are easily spooked by them and exaggerate their technological power.
* Keying. The court reflects the overall confusion about "keying" in the Ninth Circuit, but the fact that the court doesn't even understand the difference between banner ads and text ads undercuts this ruling's credibility.
Posted by Eric at 09:09 PM | Search Engines , Trademark | TrackBack
July 01, 2008
June 2008 Quick Links
By Eric Goldman
Trademarks/Domain Names
* Utah Lighthouse Ministry v. Foundation for Apologetic Information and Research, 2008 WL 22043807 (10th Cir. May 29, 2008). CMLP writeup. Nice 10th Circuit win for a gripe site against trademark infringement and cybersquatting. This case, plus the SKI VAIL case, indicate that the 10th circuit is making progress undoing the harm it created in the Australian Gold v. Hatfield case.
* Georgia has a new anti-phishing law (16-9-109.1) that acts as a para-trademark law. See my comments on the analogous California anti-phishing law.
* After initiating a trademark lawsuit against a consumer review site and soundly losing in court, Lifestyle Lift paid $17,500 to settle its own lawsuit and avoid claims for legal fees under Rule 11 and the Lanham Act.
* Marty reports on a German case saying that white-text-on-a-white-background is a trademark use.
* Update on the battle over the trademark registration for "SEO."
* Will TLD proliferation lead to a new open era in domain name administration, or will the resulting anarchy just reinforce that top search engine placement is the really important online real estate? It seems like the currently limited number of TLDs has some benefits from a bounded rationality standpoint, and those benefits will be lost in a cacophony of unknown TLDs.
Patents
* My colleague Colleen Chien has posted "Patently Protectionist? An Empirical Analysis of Patent Cases at the International Trade Commission" (forthcoming William & Mary Law Review). She empirically demonstrates that the ITC mostly involves disputes between two domestic litigants, making it a redundant battleground with federal district court but nevertheless an attractive venue for plaintiffs due to a number of procedural advantages. She makes a number of recommendations to eliminate the litigation gamesmanship offered by having parallel venues. Check it out.
Search Engines
* Udi Manber, chief algorithm keeper for Google, reiterates why it's silly for lawyers and judges to put too much legal emphasis on the relative placement of search engine results, saying "it's definitely the case that if you do the same search on a different cluster, you may get slightly different results at a given time. It's also the case that if you do the same search on different days you may get different results, because some of the results are things we indexed five minutes ago."
(Over)Regulation
* In response to an enforcement effort by the NY AG's office, several Internet access providers have blocked access to newsgroups that are putatively sources of child pornography. See the NYT story and the NY AG press release. In practice, this means wholesale takedowns of newsgroups that may have nothing to do with child porn. For example, Verizon is killing all USENET hierarchies except comp.*, misc.*, news.*, rec.*, sci.*, soc.*, and talk.*. Wired suggests this is the death of online intermediary freedom as conceptualized in 47 USC 230. Of course, 230 never protected intermediaries from criminal exposure for child porn, and this isn't the first time that an access provider has knuckled under to the NY AG's office. See the BuffNet enforcement action from 2001.
* Ohm, Paul. The myth of the superuser: fear, risk, and harm online. 41 UC Davis L. Rev. 1327-1402 (2008). A neat article on how regulators manufacture a fake bogeyman, the unbeatable "superuser," as a justification for expansive regulatory power.
* No evidence that data breach disclosure laws actually help reduce identity theft. Surprised?
* The FTC wants civil enforcement authority for spyware actions. Haven't they heard that the adware battle is already over...and they won?
Contracts
* Mark Radcliffe expresses concern about the ALI's proposed software licensing project on open source licenses.
* Sarah Bird on a messy contract lawsuit involving an SEO contractor.
Anonymity
* Tendler v. www.jewishsurvivors.blogspot.com, 2008 WL 2352497 (Cal. App. Ct. June 10, 2008). A subpoena request to identify a blogger doesn't support an anti-SLAPP cause of action.
* In the AutoAdmit lawsuit, Doe 21's motions to squash the subpoena and proceed anonymously were both denied. David Hoffman provides an update on the case.
Event Tickets
* Chicago has moved against eBay for reselling tickets in violation of its amusement tax law.
* The Ticketmaster v. RMG case ended with a default judgment granting a permanent injunction and $18.2M in damages.
General
* Vanity Fair: How the Web Was Won.
* Paul Levy blogs about a plaintiff's effort to bypass 230 by suing the authors of complaints about the vendor and then joining the consumer complaint site as a necessary party as a cost-increasing tactic.
* BusinessWeek on emerging technological tools to protect workers' attention against unwanted/untimely interruptions.
* Text message-savvy kids educate the North Carolina DMV about the meaning of the term "WTF," which was used on a license plate example on the DMV's website.
* I have one free pass to OMMA Behavioral in San Francisco July 21. First person to send me an email asking for the pass gets it.
Posted by Eric at 12:32 PM | Adware/Spyware , Content Regulation , Derivative Liability , Domain Names , E-Commerce , Internet History , Licensing/Contracts , Marketing , Patents , Privacy/Security , Search Engines , Trademark | TrackBack
June 05, 2008
Keyword Metatags and Keyword-Triggered Ads Don't Create Initial Interest Confusion--Designer Skin v. S&L Vitamins
By Eric Goldman
Designer Skin, LLC v. S & L Vitamins, Inc., 2008 WL 2116646 (D. Ariz. May 20, 2008)
An Arizona district court has ruled that the surreptitious use of trademarks doesn't create a likelihood of initial interest confusion, granting summary judgment on the trademark claims to the defendant.
This case is another enforcement action brought by a manufacturer trying to keep its goods from leaking out of its restricted channel and being sold on the Internet. For other lawsuits along this line, see Australian Gold v. Hatfield, S&L Vitamins v. Australian Gold (yes, the same S&L...and the same lawyer) and Standard Process v. Banks. The plaintiff tries the typical arsenal of claims to control the independent online retailer, including trademark infringement and dilution, copyright infringement for displaying product shots, interference with contract and other related claims.
Trademark Infringement
With respect to trademark infringement, the plaintiff only complained about the surreptitious trademark uses in the keyword metatags and in keyword advertising, not any uses visible to consumers. The plaintiffs argued that these surreptitious uses created initial interest confusion (the discussion skips over the trademark use in commerce question). As I've said repeatedly, no one really knows what initial interest confusion means or how to develop a doctrinally rigorous test for measuring it, so every court makes up its own definition. This court's manufactured definition anchors initial interest confusion in "deception." This is consistent with the general Seventh Circuit articulation of initial interest confusion (although the 7th Circuit doesn't understand initial interest confusion any better than the other circuits), and the court cites to the 7th Circuit Dorr-Oliver case. However, the court partially breaks with some of the controlling Ninth Circuit jurisprudence, which in Brookfield rooted the doctrine in attention diversion, not deception.
By grounding initial interest confusion in deception, it makes the doctrine easy to apply in this case. S&L Vitamins didn't deceive consumers--it was selling legitimate goods and accurately describing this fact. The case has some odd discussion about the possible inherent deception if S&L Vitamins ranked well in the organic search results, but the court rejects this line of thinking, saying anyone confused by good search engine placement on a competitor's trademark will be the "naive few" because S&L operated under a distinguishable domain name. This is the right result but the wrong reasoning--for the right reasoning, see here.
Instead of thinking that keyword metatags and ads creates deception, the court sees them as information-enhancing, thus getting the point that the goal is to match interested consumers with willing vendors:
In contrast to the deceptive conduct that forms the basis of a finding of initial interest confusion, S & L Vitamins uses Designer Skin’s marks to truthfully inform internet searchers where they can find Designer Skin’s products. Rather than deceive customers into visiting their websites, this use truthfully informs customers of the contents of those sites. Indeed, in practical effect S & L Vitamins invites Designer Skin’s customers to purchase Designer Skin’s products. The fact that these customers will have the opportunity to purchase competing products when they arrive at S & L Vitamins’ sites is irrelevant. The customers searching for Designer Skin’s products find exactly what they are looking for when they arrive at these sites. S & L Vitamins is not deceiving consumers in any way.
Bingo! Summary judgment for S&L Vitamins.
Even though this IIC-qua-deception meme is generally consistent with 7th Circuit law, this result appears to be directly contrary to the uncited 7th Circuit Promatek v. Equitrac case, where the court waffled on whether keyword metatags were inherently deceptive, even when used by a legitimate provider of services for the trademarked good.
More importantly, this result also runs directly contrary to the 2006 10th Circuit Australian Gold case, which found that keyword metatags in a virtually identical situation (unauthorized seller of leaked legitimate goods) constituted initial interest confusion. The court acknowledges this conflict but dismisses the 10th Circuit case as "unpersuasive" because the mark usage is designed to attract consumers to the trademark owner's actual goods. From my perspective, this is more evidence that courts are not following the Australian Gold v. Hatfield precedent--the most obvious example being the 10th Circuit's own Ski Vail case, which took a big chunk out of the Hatfield precedent. I know plaintiffs love citing the Hatfield precedent, but it's becoming increasingly less credible to do so.
Trademark Dilution
Given the more rigorous requirements for fame post-TDRA, it seems like many manufacturers who tightly control their channel and restrict Internet sales may inherently have a problem establishing fame. Perhaps I'm not part of the target audience, but I had never heard of Designer Skin products before.
The court doesn't get into the fame issue, instead granting summary judgment to S&L based on the nominative use defense because all of S&L's trademark uses refer to the plaintiff's trademark. I'd have to do some research to confirm this, but I believe this is one of the first (if not the first) post-TDRA cases dismissing a dilution claim on nominative use grounds. Personally, I think S&L's usage neatly fits my characterization as a "commercial referential trademark use," but it's great to see a court get the point, whatever terms it uses to describe the behavior. The court also (correctly, IMO) says that a commercial referential trademark use effectively can't cause a likelihood of dilution because it's neither blurring (there's no new definition) nor tarnishing (it's an accurate reference).
Copyright Infringement
Designer Skin complained that S&L copied the photos posted to its website. S&L claims that it simply recreated the product shots independently. This factual dispute is enough to prevent SJ. Patry believes that 17 USC 113(c) should have protected S&L here, but as Rebecca explains very well, 113(c) may not be germane--Designer Skin admitted that S&L could recreate its own shots if it wants to (see FN9 of the opinion), so the only question is whether the photos actually displayed on S&L's site were independently created.
If S&L snatched the photos from Designer Skin's website, then the court says republishing those would not be a fair use. I think this is probably right, although it's rather silly from a social welfare perspective to make people recreate product shots when invariably they will look effectively the same, and certainly the manufacturer isn't going to stop producing product shots simply because legitimate downstream retailers "free ride" on that investment. Rebecca has more to say about the fair use discussion.
Other Claims
The court dismisses the interference with contract claim and S&L's unfair competition claim, but it preserved Designer Skin's unfair competition claim (which, as Rebecca rightly points out, should be preempted by copyright's preemption clause).
Conclusion
As I've said before, I don't understand why plaintiffs try to control their channel so tightly to preclude Internet sales. I mean, I get the fact that they are trying to increase profits by reducing retailer competition, but those efforts will pay off only in the short run at best. Time to develop a new business model! Meanwhile, courts are realizing that they are being asked to facilitate anti-competitive practices, and wisely they are balking. Thus, a case like this illustrates that a judge will find limits to the initial interest confusion doctrine (a doctrine that otherwise has no natural doctrinal limits) and interpose pro-competitive defenses to trademark dilution.
Posted by Eric at 10:49 AM | E-Commerce , Search Engines , Trademark | TrackBack
June 04, 2008
Google Sued for Running Ads for "Fraudulent Mobile Subscription Services"--Goddard v. Google
By Eric Goldman
Goddard v. Google, Inc., Case No. 108CV111658 (Cal. Super. Ct. complaint dated April 30, 2008). Google's notice of removal to federal court C08 02738 (N.D. Cal. removal notice dated May 30, 2008). [warning: 1.5MB file. Google's notice contains a copy of the original complaint.]
Cyberlaw is filled with examples of plaintiffs suing the wrong defendant for perceived transgressions committed by someone else. Today's misdirected lawsuit involves "fraudulent mobile subscription services," which are optional third party services for cellphones (such as ringtones) that are charged on a periodic basis. The plaintiffs in this putative class action lawsuit feel like they got fleeced by providers of these subscription services. If they did, I hope they get appropriate redress from the wrongdoing vendors. But instead of suing the allegedly fraudulent vendors, the plaintiffs think Google should cover the losses for the sole reason that Google ran ads for the services. The argument goes as follows:
* Google has an express policy requiring mobile service providers to disclose certain info to consumers about their practices
* Google deliberately does not enforce this policy (or inadequately enforces it) to enjoy undeserved cash
* As a result, Google should stand behind all of the losses committed by its advertisers
There are some obvious problems with this argument. First, it's a gross example of cyberspace exceptionalism. An analogy might be that dead-trees newspapers should stand behind any losses suffered by readers who transact with newspaper advertisers. Sounds ridiculous? It does to me, whether the publisher is online or off.
Second, this argument ought to be clearly, squarely and soundly trumped by 47 USC 230. eBay has won on this exact point when plaintiffs have tried to hold it liable for accepting advertising (in the form of listings) for fraudulent products (at minimum, the Gentry case involving fake sports memorabilia seems apropos). The recent Doe v. MySpace case is also analogous, because the plaintiffs were trying to hold MySpace liable under a "premises liability" theory for tortious activity that took place outside of its premises. Either way, if Google's sole role in the process was publishing third party ads, it's not liable per 230.
It's not clear if the plaintiffs know about 230 or think it applies to this case, but they made two arguments that could be used to argue around 230. First, they allege that Google helped write the ad copy. I'm still not sure if this allegation actually is enough to hold Google liable for downstream fraud, but unless Google actually wrote the copy itself, it's not liable for third party ads even if it helped edit them or prescreened them (see Ramey v. Darkside Productions).
Second, they try to argue that Google's contract with its advertisers describing minimum standards for mobile service vendors running Google ads is an express marketing representation that binds Google for any breaches by the advertiser. By anchoring the claim in false advertising, the allegation might be designed to take advantage of the Mazur v. eBay exclusion to 230. However, treating contractual restrictions with a third party as affirmative representations to consumers is the exact same analytical error made by the New Jersey Attorney General's office in the JuicyCampus investigation, and the error is no less baffling here. I remain surprised that bright lawyers so fundamentally misunderstand the interaction between contract and false advertising law.
There's one more twist to this lawsuit that merits discussion. As a predicate harm for some of its claims, the plaintiffs argue that their cellphones are computers under the Computer Fraud & Abuse Act (CFAA) and the vendor's confirmatory text messages (required to authorize the service) are unauthorized accesses of a protected computer under the CFAA. I'm not really sure what to make of this theory, but I'm pretty sure it's novel (not necessarily in a good way). I'm OK with treating at least some cellphones as computers under the statutory definition, although this would expand the CFAA's reach quite a bit, but I think it would be highly problematic to treat text messages to a cellphone as an unauthorized access. And even if we did that, I still don't see how Google is responsible for the violation.
(For kicks, there is an analogous claim that Google aided and abetted the vendors' trespass to chattel of the cellphones).
One more thing: this interpretation of the CFAA follows the DOJ's recent attempt to treat breaches of a website's user agreement as a criminal CFAA violation in the Lori Drew prosecution. Given these crazy expansive CFAA claims, it may be time to rethink that statute.
Posted by Eric at 08:20 AM | Derivative Liability , Marketing , Privacy/Security , Search Engines | TrackBack
June 02, 2008
May 2008 Quick Links, Part 1 (Trademarks/Domain Names Edition)
By Eric Goldman
* Syncsort Inc. v. Innovative Routines Intern., Inc., 2008 WL 1925304 (D.N.J. April 30, 2008). Including a third party trademark in a keyword metatag qualified as nominative use. (Along the same lines, see the Designer Skin case that I will blog about later this week).
* Punch Clock, Inc. v. Smart Software Development, 2008 WL 936889 (S.D. Fla. April 7, 2008). In a default judgment, a judge awarded the trademark owner the right to obtain 7 years of corrective advertising (a total of over $1M), calculated by what it would take for the trademark owner to buy the top spot in Google AdWords. Tom O'Toole sorts through this mess.
* A new ruling in the V Secret v. Moseley case. Rebecca puts it in context.
* Matthew Nelson, Comment, Utah's Trademark Protection Act: Over-Reaching Unconstitutional Protectionism or Decisive Clarifying Legislation?, 2007 Utah L. Rev. 1199. A couple of months after the Utah legislature repealed the Utah Trademark Protection Act, a Utah law student says the law is unconstitutional. His conclusion:
The Utah Trademark Protection Act places an undue burden on interstate commerce and the courts should find it unconstitutional under the dormant Commerce Clause using the Pike balancing test. Apart from the constitutional problems, the Act is bad policy for Utah businesses and Utah consumers. Although the unpredictability that currently exists in the courts makes it difficult for Internet advertisers and advertising sellers to mitigate risks and set efficient policy, these risks are far outweighed by costs to consumers and business. The Act sacrifices fair use, comparative advertising, and noncommercial use to gain certainty. These trademark functions are more important than the additional protections afforded mark holders under the law, protections that go too far and encourage anticonsumer policy rather than furthering the competitive environment trademark policy seeks to create.
Uses of keywords to trigger advertising that are unfair, deceptive, and contrary to trademark policy can still be pursued under the current common law. Trademark law is effectively evolving to handle these new challenges. If there should be legislation, it should be at the federal level because this issue so profoundly affects interstate commerce. The refining process that is occurring in the courts will provide Congress, should it choose to act, with valuable insight into how to handle all the competing interests in the rapidly growing area of Internet advertising.
* Tdata Inc. v. Aircraft Technical Publishers, 2008 WL 2169353 (S.D. Ohio May 21, 2008). Initial interest confusion does not substitute for actual confusion when considering if damages are appropriate under the Lanham Act. See my prior post on this case. See also the related Gibson Guitar case.
* I'm not exactly sure what's going on in France, but a French court has asked the European Court of Justice to opine on the legitimacy of keyword advertising.
* Verisign has obtained a patent for its defunct SiteFinder tool. Domain name wildcarding was taking place for years before VeriSign tried it, so I wonder about the prior art to this patent.
* NYT: Can a Dead Brand Live Again? This article discusses the development of a secondary market for well-recognized but defunct brands. Says the market maker: "We're taking consumers' memories and starting entire businesses."
* Todd Davies, A Behavioral Perspective on Technology Evolution and Domain Name Regulation, PAC. MCGEORGE GLOBAL BUS. & DEV. L.J. 21, 1-25 (2008). See my previous blog post about this paper.
Posted by Eric at 10:36 AM | Domain Names , Patents , Search Engines , Trademark | TrackBack
May 26, 2008
Search Engine Advertiser Litigation Updates
By Eric Goldman
Recently, there were intermediate rulings in two long-standing cases by search engine advertisers against search engines.
CLRB Hanson Industries, LLC v. Google Inc., 2008 WL 2079200 (N.D. Cal. May 14, 2008)
This lawsuit involves the Google AdWords feature that allows advertisers to set "daily budgets." Google doesn't enforce the daily budgets strictly; instead, it gives itself the permission to deliver up to 20% overage in any day and credit the overage against future performance. The lawsuit was initially filed in August 2005. In August 2007, the judge issued an important preliminary ruling that had three main holdings:
1) Google's AdWords contract was a binding contract.
2) Much of the breach of contract claim was dismissed, but the judge left open claims by advertisers of less than 1 month, advertisers who ended their campaign in a partial month, and advertisers who paused their campaign.
3) The false advertising claim was left open.
Because the August 2007 substantially limited the remedies available to advertisers, I expected that ruling to prompt the parties to settle. But here we are in May 2008, and the parties are still going at it. This month's ruling was largely procedural in that it attempted to clean up any lingering confusion over the August 2007 ruling. As a result, it really doesn't break much new ground; instead, the opinion largely reiterates the main rulings from the August 2007 opinion. Rebecca has more thoughts on the false advertising aspects.
In re Yahoo! Litigation, 2008 WL 1882786 (C.D. Cal. April 21, 2008)
This lawsuit got a lot of press when it was first filed in May 2006 as an example of "syndication fraud." See my initial post. It relates to Yahoo's display of ads on pages promoted by adware and on typosquatted and domain name parking pages. The advertisers believed these pages had lower quality traffic than other pages, and this disrupted their expectations.
In the past two years, the case has gone through various procedural shenanigans. This ruling addresses Yahoo's motion to dismiss the second amended complaint on a number of grounds.
Yahoo invoked a clause in its advertising agreement barring class litigation against it. Under prevailing California law, these clauses are probably unenforceable in consumer contracts; but there hasn't been a lot of litigation over these clauses in business-to-business contexts, especially because it's hard to argue unconscionability in B2B contexts. The court punts the issue on Yahoo's motion to dismiss, saying that it needs more facts about the parties' respective positions, which makes this issue more appropriate for resolution on summary judgment. Tom O'Toole has more to say about this issue.
Yahoo also tries to dismiss the breach of contract claim over its alleged promise of targeted ad placement, but the court refuses to dismiss because California law freely allows extrinsic evidence to explain unambiguous contractual terms. However, though the court didn't dismiss the claim, I think the plaintiffs will have difficulty prevailing on this contract breach claim because, as the court implicitly concludes, the plain language of the contract weighs heavily against their arguments.
Yahoo made several other efforts to dismiss clams, and the court rejects all but one of them (it dismissed the claim of civil conspiracy). Because so much of the lawsuit survived, this motion to dismiss ruling appears to be largely a win for the plaintiffs. However, I still think this remains a low-merit lawsuit because it's disingenuous for advertisers to complain when they got everything they paid for. Further, two years later, this lawsuit now seems strangely anachronistic given that the Great Adware Wars of the mid-2000s are over.
Posted by Eric at 08:57 PM | Licensing/Contracts , Marketing , Search Engines | TrackBack
May 07, 2008
April 2008 Quick Links
By Eric Goldman
Anti-Gaming
* Even though Ticketmaster won its lawsuit, Minnesota overreacted to the Hannah Montana ticket crush by banning software to circumvent an online ticket allocation process. See Sec. 609.806. Check out the hyperbole in this press release! What's next? Are legislators going to make SEO a crime?
* Google modified its relevancy algorithm 450 times in 2007. And yet courts still cite to Brookfield for how search engines operate!
* The UK cracks down on shill marketing online. ClickZ: "Under the new [UK] Consumer Protection from Unfair Trading regulations, it will be illegal to "Falsely claim or create the impression that the trader is not acting for purposes relating to his/her trade, business, craft or profession," or to "falsely represent oneself as a consumer."" See also AdAge.
IP
* Speaking of SEO....the latest pathetic attempt to grab a generic term and trademark it? "SEO." Sarah Bird is on the job.
* Do student notes of a professor's lecture constitute copyright infringement? We may find out.
* Atlantic v. Howell. More on the "making available" theory of copyright infringement.
* Sarah Bird on registering copyrights in websites and blogs.
* A for-profit T-shirt listing the names of deceased Iraq soldiers sparks a publicity rights lawsuit.
General
* Bowen v. YouTube, Inc., 2008 WL 1757578 (W.D. Wash. April 15, 2008). The court upheld the forum selection clause in YouTube's user agreement.
* eBay is ending its promotion of third party live auctions. Maybe because of this loss?
* Rebecca blogs on SuccessFactors, Inc. v. Softscape, Inc., 2008 WL 906420 (N.D. Cal.), an odd case involving the Computer Fraud & Abuse Act and an "attack PowerPoint" allegedly sent by a competitor to its prospective customers.
* Kate Kaye writes about the new Internet industry lobby group, the "State Privacy and Security Coalition," designed to fight laws like the Utah Trademark Protection Act.
* Kevin Werbach, The Centripetal Network: How the Internet Holds Itself Together, and the Forces Tearing it Apart, UC Davis Law Review, Forthcoming. An interesting paper applying "network formation" theory to show how the Internet came together as a unified network and how those unifying forces are under constant stress.
Posted by Eric at 08:52 PM | Content Regulation , Copyright , Internet History , Licensing/Contracts , Marketing , Publicity/Privacy Rights , Search Engines , Trademark | TrackBack
April 26, 2008
Injunction Requires Negative Keywords in Future Adwords Campaigns
By Eric Goldman
Orion Bancorp Inc. v. Orion Residential Finance LLC, 2008 WL 816794 (M.D. Fla. March 25, 2008).
It looks like courts/lawyers are finally getting savvier about broad matching (see my previous blogging on the legal understanding of broad matching in the Rhino Sports, Hamzik and Picture It Sold cases). In a default judgment over trademark infringement using the term "Orion," the plaintiff's lawyer got the judge to order a restriction on the defendant:
from purchasing or using any form of advertising including keywords or “adwords” in internet advertising containing any mark incorporating Plaintiff’s Mark, or any confusingly similar mark, and shall, when purchasing internet advertising using keywords, adwords or the like, require the activation of the term “ORION” as negative keywords or negative adwords1 in any internet advertising purchased or used.(emphasis added)
According to this injunction, then, if the defendant buys the keyword 'bank" and broad matches it, the ads still should not show up for a search on the term "Orion Bank." Perhaps there have been other injunctions with similar requirements to use negative keywords, but this is the first I've seen. (I did a search in Westlaw on the term "negative keyword" and this was the only injunction I found). Going forward, I think it's a logical addition to any injunctive relief request in a trademark infringement case.
HT: Tom O'Toole
UPDATE: Sarah Bird provides some helpful context for the injunction.
Posted by Eric at 03:42 PM | Search Engines , Trademark | TrackBack
April 24, 2008
Court Says Keyword Metatags Don't Matter--Standard Process v. Banks
By Eric Goldman
Standard Process, Inc. v. Banks, 2008 WL 1805374 (E.D. Wis. April 18, 2008)
SEOs and SEMs have known for years that most search engines ignore or give minimal acknowledgement to keyword metatags. Lawyers, on the other hand, have been living in a parallel fantasy universe where keyword metatags single-handedly divert unwaveringly brand-loyal customers to piratical competitors. Even today, many courts still rely on the 1999 Brookfield case and its dreadful keyword metatags-as-a-false-billboard analogy as an accurate and definitive statement of how search engines operate today. Prime offender #1: the recent 11th Circuit hairball in National American Medical v. Axiom, where the court may not have even understood the difference between keyword metatags and description metatags.
Despite this, defendants have occasionally defeated trademark claims over their inclusion of third party trademarks in the keyword metatags based on a variety of theories, including a lack of a use in commerce (ex: Site Pro-1, S&L Vitamins), insufficient likelihood of consumer confusion (ex: JG Wentworth), nominative use (ex: Welles) and others. But as far as I can recall, no court had rejected a keyword metatag for the right reason, which is that they are technologically ineffective.
That's why this new opinion appears to break important new ground. The court, citing this paper and Prof. McCarthy's treatise, rejects the argument that keyword metatags create initial interest confusion, in part because keyword metatags are immaterial. Hooray! Hey all of you lawyers still citing to Brookfield for its description of search engine operations, I think you need to acknowledge this case now too.
The rest of the case is really interesting too, with facts highly similar to the Australian Gold cases (see S&L Vitamins v. Australian Gold; Australian Gold v. Hatfield). The plaintiff makes dietary supplements. Through its distribution agreements, it tightly controls its channels to limit retailing to healthcare providers and, not incidentally, preserve high margins; thus, all authorized distributors are prohibited from making Internet sales. The defendant once was an authorized distributor but was kicked out of the chain for selling over the Internet. In response, the defendant bought supplies from other authorized distributors (who were contractually barred from reselling to distributors selling via the Internet) and continued offering the products via his website. The manufacturer is now suing the website for selling these legitimate goods that leaked out of the authorized channel.
As I've mentioned before, efforts to preserve high margins through anti-Internet channel control are doomed. Some of the lawsuits might succeed in controlling the channel in the short run, but Internet competition will prevail, like it or not, and supra-competitive margins will be a relic of the past.
In any case, under the trademark exhaustion/first sale doctrine, the defendant may resell the legitimate goods so long as consumers are not confused about a sponsorship relationship between the manufacturer and distributor.
(That's not to say that the defendant has the right to buy the goods. If the plaintiff really cares about the channel conflict, the plaintiff can clamp down on the authorized distributors who are leaking the goods to the defendant and therefore dry up the defendant's supply. But it may have to do so without the aid of trademark infringement claims.)
So, the main issue in this case is whether consumers will be confused about a sponsorship relationship between the manufacturer and the website. The court says no with respect to website sales where the defendant didn't show any product shots and included a prominent disclaimer. In contrast, consumers may be confused by the defendant's emails touting the products when the emails included product shots but didn't have a prominent disclaimer. On that basis, the defendant accepted, and the court ordered, an injunction against further promotion of the product without the disclaimer.
This relatively narrow injunction makes some sense, but I'm still confused why the court discussed the product shots. (The plaintiff is also confused why the defendant wasn't enjoined from using product shots, and yesterday it filed a motion to amend the injunction to include a restriction on product shots). I don't see how the inclusion of product shots can communicate some actual/implied sponsorship between manufacturer and retailer. If the takeaway from this case is that a retailer of legitimate goods that leak out of the channel can't display product shots, it seems like this would hurt consumer decision-making, not help it.
Posted by Eric at 01:49 PM | Search Engines , Trademark | TrackBack
April 21, 2008
March 2008 Quick Links, Part I
By Eric Goldman
It's a sign of my busy March/April that I am just now posting these...
Reputation/47 USC 230
* I have a lot to say about the JuicyCampus story (AP, MSNBC, Chronicle of Higher Education). Unfortunately, I ran out of time to write a full blog post on the subject. For now, some quick thoughts about this interesting and complex situation:
- Taken to its logical conclusion, 47 USC 230 naturally enables sites to do absolutely nothing to restrict harmful speech. (I'm not saying that accurately describes JuicyCampus--I don't have enough facts to make that claim). However, that's not an unexpected failure of the statute--it's the natural consequence of the statute's design. Any concerns about the costs of unrestricted speech fora need to compared with the costs of more regulated systems. It's not clear that one result is automatically better than the other, and certainly there are costs implicit in all solutions. Sam Bayard explores this issue more.
- Sites that lack credible information will face marketplace responses regardless of any legal rules. In JuicyCampus' case, the marketplace responses include consumers deeming the site not credible, plus intermediaries (in this case, universities) may simply block access by its core users.
- Any possible legal action by the New Jersey Attorney General over JuicyCampus' facilitation of harmful speech should be unambiguously preempted by 47 USC 230--even after Roommates.com.
- The attempted legal bypass to 47 USC 230--trying to convert a negative covenant from the users in the user agreement into an actionable affirmative marketing representation by JuicyCampus--is analytically corrupt. It's also not the law, and it's been rejected in several 230 cases (Noah v. AOL comes immediately to mind). Rebecca has more to say on this issue.
- If negative behavioral covenants by users in a user agreement are actionable affirmative marketing representations that such behavior isn't occurring, then the Internet is a target-rich ecosystem because I imagine that just about every Internet company is eligible for enforcement actions.
- Isn't it typical of an enforcement action to go after the target's vendors (in this case, JuicyCampus' ad networks) and watch them instantly fold?
- This issue reminds us that a website can't promise its users anonymity if it allows anyone else (such as an ad server) to serve up portions of its page and thereby have the ability to collect the same server log data.
* Ciolli v. Iravani: The AutoAdmit lawsuits spill over into a new battleground. As I said when I first blogged on the case, this is a "very messy situation" that has only gotten messier.
* Nemet v. ConsumerAffairs.com. Another lawsuit against an online consumer review site for publishing allegedly defamatory negative critiques.
* Steinbuch v. Cutler, 2008 WL 596747 (8th Cir. Mar. 6, 2008). Steinbuch's lawsuit against Hyperion, the publisher of the Washingtonienne book, can continue in Arkansas. His other claims must proceed in Washington DC if at all.
* Washington Post: Due to the speed at which gossip moves over the Internet, "compared with the pre-Internet era, politicians are less likely than ever to survive a sex scandal with their careers intact."
* H. Brian Holland, In Defense of Online Intermediary Immunity: Facilitating Communities of Modified Exceptionalism, 56 U. Kan. L. Rev. 369 (2008). Prof. Holland wrote a paper I had been meaning to write! He explains how 47 USC 230 enables online communities to use a variety of self-governance structures, while a different liability regime would give communities fewer choices and thereby inhibit community formation and management.
Search Engines
* A Canadian web network called Geosign received $160M of VC money but the company was rendered worthless overnight when Google changed its policies and cut off traffic. Domainers beware!
* New book worth checking out: WEB SEARCH: MULTIDISCIPLINARY PERSPECTIVES (Amanda Spink & Michael Zimmer, eds.) (Springer 2008). A nice cross-section of essays on search engine issues from multiple disciplines.
* Need some original content to improve your SEO? You can automatically generate it through splogging, or you can pay actual humans a small amount of money to write short articles. If the cost is low enough and the SEO credit for truly original content is high enough, the latter may end up being a better economic deal.
Spam
* The FTC has lost a jury trial against Impulse Media on its theory that Impulse Media is liable for the spam sent by its affiliates. This is a pretty important decision because (1) the FTC/DOJ rarely lose at trial, (2) their expansive theories about liability for affiliate behavior may be legally incorrect, and (3) the FTC has strong-armed numerous defendants into settlements based on its theory, and future defendants now be willing to fight back.
* On that topic, Cyberheat won an early round in litigation with the FTC over its affiliate practices but has now settled up with the FTC. The settlement gives some guidance about the FTC's thoughts of how marketers should police affiliates, but the Impulse Media jury loss may undermine the teaching of this settlement.
Posted by Eric at 08:32 AM | Derivative Liability , Licensing/Contracts , Marketing , Search Engines , Spam | TrackBack
April 08, 2008
11th Circuit Freaks Out About Metatags--North American Medical v. Axiom
By Eric Goldman
North American Medical Corp. v. Axiom Worldwide, Inc., 2008 WL 918411 (11th Cir. April 7, 2008)
Oh man, what a bizarre and frustrating ruling from the 11th Circuit on metatags. The parties compete in the "spinal decompression" device market. Defendant Axiom included the plaintiff NAM's trademarks “Accu-Spina” and “IDD Therapy" in the metatags but did not otherwise use the terms. The district court concluded that this constituted trademark infringement, a determination that the 11th Circuit upholds here.
Unfortunately, it's hard to parse this case because the court is imprecise about which metatags were used. I've looked through the defendant's appellate brief and they don't clarify the technology for the court at all--I'm wondering if any of the attorneys involved in this case know that there are multiple types of metatags. We only have the following three facts to work with:
* Axiom included competitive trademarks in the metatags
* Axiom appeared as the second organic search result in Google for the trademarked terms (following the plaintiff, which was #1 in the search results)
* The trademarked terms appeared in the search results descriptions
The court assumes causality here between the metatag inclusion and the search engine displays. This might be possible if Axiom put its competitor trademarks in the description metatags. Doing so isn't automatically problematic; for example, a description metatag that has comparative statements with competitive products should be permissible. However, description metatags--just like any other marketing copy--could be written in a way designed to deceive consumers. If that's what happened here, then I understand the court's anger (even if I might disagree with its analysis).
But another hypothesis fits these facts. The court does not exhibit any understanding of anchor text or the fact that Google sometimes automatically assembles search result descriptions using third party content (such as DMOZ). So it's entirely possible for these three salient facts to occur (i.e., Axiom's site to show up for searches on the competitive trademarks with the trademarks in the site description) even if Axiom only included the trademarks in the keyword metatags (which we know Google ignores). If the latter hypothesis is true, the 11th Circuit completely misattributed responsibility to Axiom for doing things it didn't do.
Predicated on its poorly articulated and possibly erroneous assumptions about Axiom's role in appearing in the search results, the court has little difficulty slamming down Axiom. On the use in commerce question, the court concludes that, pursuant to the "plain meaning" of the statute, metatags are clearly a use in commerce in connection with goods or services because they support advertising objectives. I don't think the statutory language is the least bit clear, especially if search engines ignore keyword metatags and thus the trademark references have no chance of being perceived.
Along the way, the 11th Circuit distinguishes (and denigrates) the Second Circuit's 1-800 Contacts v. WhenU case on two grounds: (1) this involves metatags, not URLs, and (2) "unlike in 1-800 Contacts, the defendant-Axiom in this case did cause plaintiff's trademark to be displayed to the consumer in the search results' description of defendant's site." The court takes an affirmative swipe at the Second Circuit, saying that the analysis in the 1-800 Contacts case is "questionable" and unpersuasive.
On the consumer confusion question, because the plaintiff's trademarks appeared in the search results, the court assumes that "Consumers viewing these search results would be led to believe that Axiom's products have the same source as the products of the owner of the “IDD Therapy” and “Accu-Spina” trademarks, or at least that Axiom distributed or sold all of the products to which the brief description referred, or that Axiom was otherwise related to NAM....Thus, the factual situation in the instant case is that Axiom's use of the meta tags caused a likelihood of actual consumer confusion as to source."
Fortunately, the court does try to limit the collateral damage of its ruling by narrowing the facts at issue:
This is not a case like Brookfield or Promatek where a defendant's use of the plaintiff's trademark as a meta tag causes in the search result merely a listing of the defendant's website along with other legitimate websites, without any misleading descriptions. This is also not a case where the defendant's website includes an explicit comparative advertisement (e.g., our product uses a technology similar to that of a trademarked product of our competitor, accomplishes similar results, but costs approximately half as much as the competitor's product). Although we express no opinion thereon, such a defendant may have a legitimate reason to use the competitor's trademark as a meta tag and, in any event, when the defendant's website is actually accessed, it will be clear to the consumer that there is no relationship between the defendant and the competitor beyond the competitive relationship.
But despite this disclaimer, there's plenty of sloppy and broad language to keep plaintiffs going for some time.
From my perspective, there are two obvious lessons to learn from this case. First, the text of description metatags needs to be reviewed just like any other ad copy. This may seem obvious, but I suspect that many SEMs do not run their metatag scripts by the lawyers. When I was in practice, I would proactively ask our SEM folks to provide a copy.
Second, if you are going to use keyword metatags, you must ensure that competitive trademarks do not appear in your keyword metatags, period. It's just not worth it. They don't buy you much juice with the search engines anyway, and it will leave you exposed to irrational judicial freakouts about keyword metatags if ever tested in court.
Posted by Eric at 12:00 PM | Search Engines , Trademark | TrackBack
April 04, 2008
Rescuecom v. Google Second Circuit Oral Arguments
By Eric Goldman
Yesterday the Second Circuit heard oral arguments in Rescuecom v. Google, and reports from the oral arguments are trickling out.
James Grimmelmann provides a comprehensive report. Many thanks to James for taking the time to write this up. I know how long it takes to write a blog post like his, so we're all the beneficiaries of his work. He concludes with a provocative prediction (thoroughly caveated in his post):
Prediction: 3-0 for Rescuecom, Leval authoring, in a narrow opinion that emphasizes the 12(b)(6) rule against incorporating matters not apparent from the face of the complaint. A Calabresi concurrence mentions the narrowness of the holding and explains why, in his view, it does not affect the settled understanding that retail shelving arrangements, handing out flyers in front of billboards, and other common offline practices are not trademark infringements. Neither opinion says much about the implication of the holding for other online businesses.
Wendy Davis of Mediapost was at the oral argument too, and she wrote up a recap article and an editorial.
Reading James' report, I'm struck by how much of the time the judges spent spinning out hypotheticals, many of them pretty far-fetched. That's unfortunate because judges in full fantasy mode can hypothesize some really crazy scenarios that have no relationship to reality, and writing opinions in response to these hypotheticals ultimately leads to more confusing opinions.
In response to James' prediction, I do think that the case's 12(b)(6) posture heightens the concern for the judges, so I could why the judges would decide to move the legal question to a summary judgment stage. Personally, I am a fan of resolving these issues on the 12(b)(6) because I believe defendants will win these cases anyway after full litigation, so the 12(b)(6) is just a quick way to reach the right result that would likely obtain later only at much higher transactions costs.
The case library:
* Commercial Referential Trademark Uses (Rescuecom v. Google Amicus Brief Outtakes)
* Rescuecom reply brief
* Law professors' brief by Stacey Dogan and me
* Electronic Frontier Foundation amicus brief by Jason Schultz, Corynne McSherry and Fred von Lohmann
* Public Citizen amicus brief by Paul Levy
* eBay/Yahoo/AOL amicus brief by Celia Goldwag Barenholtz, Janet Cullum and others of Cooley Godward Kronish [now mooted]
* Google's initial brief
* Rescuecom's initial brief
* District Court's opinion
Posted by Eric at 05:19 PM | Search Engines , Trademark | TrackBack
March 27, 2008
Rescuecom v. Google Pre-Oral Argument Details
By Eric Goldman
We're anxiously awaiting oral arguments in the Rescuecom v. Google case next week. In advance of that, the court cleaned up a couple of matters:
1) The court denied the amicus brief from Yahoo, AOL and eBay. It didn't give a reason for bouncing the brief, although sometimes it's done to avoid a panelist's recusal.
2) Earlier this week, the court posted the following notice:
"Judge Leval wishes to advise the parties as follows:
1. A year ago Judge Leval was invited by the Stanford Law School to be a participant in a two-day conference at the school focusing on Internet issues, which was to be jointly sponsored and organized by the Stanford Law School and Google, Inc. [Eric's note: this is the Legal Futures Conference--see the conference website.] The conference, which was held at the Law school on March 7 and 8, 2008, will pay the travel, lodging and board expenses of the participants. The conferees, numbering approximately 50, included professors of law, business, economics and communications, participants the Internet from the profit and not-for-profit sectors, writers, lawyers, government representatives, judges, and Stanford law students. In preparation for the conference, Judge Leval communicated by email with a Google representative concerning the subject matter and organization of a panel in which he would participate (The subject of the panel was unrelated to trademark law or to any other issue involved in this case.). On one evening, the conferees were hosted for dinner by Google at its campus. During the two days, Judge Leval met and chatted briefly with Google representatives who were involved in organizing the conference.
2. Judge Leval has been friendly for nearly twenty years with William Patry, Esq., since the time Mr. Patry was employed in the United States Copyright Office in the Library of Congress and as Copyright Counsel to the US House of Representatives, Committee on Intellectual Property. For approximately the last two years, Mr. Patry has been part of the legal staff of Google (Mr. Patry was not a participant in the Stanford conference).
Judge Leval is confident that these contacts with Google, Inc. Would in no way influence his consideration of the case. If either party wishes to move for Judge Leval`s recusal from consideration the case (or to request further information or clarification), it should submit a letter-motion (or letter requesting such further information) to the Clerk of the Court by 11:00am on Friday March 28."
Barring such a recusal request, the panel will be Judges Calabresi, Leval and Wesley.
More case resources:
* Commercial Referential Trademark Uses (Rescuecom v. Google Amicus Brief Outtakes)
* Rescuecom reply brief
* Law professors' brief by Stacey Dogan and me
* Electronic Frontier Foundation amicus brief by Jason Schultz, Corynne McSherry and Fred von Lohmann
* Public Citizen amicus brief by Paul Levy
* eBay/Yahoo/AOL amicus brief by Celia Goldwag Barenholtz, Janet Cullum and others of Cooley Godward Kronish [now mooted]
* Google's initial brief
* Rescuecom's initial brief
* District Court's opinion
Posted by Eric at 04:17 PM | Search Engines , Trademark | TrackBack
Google Site-Specific Search-Within-Search Tool--Why is Everyone So Worked Up About This?
By Eric Goldman
On Monday, Bob Tedeschi at the NYT published an article entitled "A New Tool From Google Alarms Sites" about Google's recently launched site-specific search-within-search box. When I first saw the feature, I really didn't think about it very much because I already use Google to search within a site and bypass the site's internal search function. In fact, I routinely use Google to locate items in my own website and blog instead of my own search tool (blog.ericgoldman.org is the #1 site in my Google Web History).
As a result, I didn't think the tool or the article was particularly blog-worthy. However, I've now gotten at least 4 emails from people wanting to chat about this tool. So, by popular demand, some thoughts:
From a trademark law standpoint, I don't think the tool changes the analysis. In theory, Google is gaining more insights into the searcher's intentions; instead of knowing just X (the first search term), it now knows X+Y, which increases the odds that we might intuit the searcher's intent well enough to assess if the searcher is being "diverted" by alternative options. However, (1) even with the additional information, Google still doesn't know searcher intent, so it will still be improper to make any conclusions of "diversion," (2) in practice, this really isn't any different than if the searcher initially puts in X+Y into the search box, so Google already faces this liability, and (3) in all cases, Google may lack the requisite use in commerce to be liable for trademark infringement regardless of how deep it goes into the consumer search process.
Irrespective of the legal analysis, I think it's interesting that some publishers are revolting against Google, which forces Google to think carefully about how it can maintain good publisher relations. Even more interesting is if Google is cutting special deals with some publishers to remove the site-specific search. I don't think that Google can realistically support treating different sites differently, so I assume that Google ultimately will be pressured to give all sites an opt-out option (or take down the tool entirely).
One last thought--I wonder just how many searchers are using this new search option? It wouldn't surprise me if usage is modest, in which case this could all be a tempest in a teapot.
Posted by Eric at 03:42 PM | Search Engines , Trademark | TrackBack
March 23, 2008
Adwords Ad Creates Initial Interest Confusion--Storus v. Aroa
By Eric Goldman
Storus Corp. v. Aroa Marketing Inc., 2008 WL 449835 (N.D. Cal. Feb. 15, 2008).
(Sorry for my delay blogging this one).
A federal district court has held that displaying a competitor's trademark in Adwords ad copy constitutes impermissible initial interest confusion, leading to a summary judgment win for the trademark owner. This is one of the first competitor-vs.-competitor search advertising cases where the plaintiff has won the trademark claims. This case also has an interesting and rare discussion about the trademark implications of a retailer’s internal search engine.
Claims Against Aroa
Storus distributes money clips under the trademark "smart money clips." Storus was able to get a federal registration for the mark, which is interesting because I’d love to see the showing of secondary meaning. Given the registration, Aroa instead tries to knock out "smart" as a laudatory phrase, but the court isn't convinced. Thus, the court permits Storus to proceed with a pathetic descriptive mark.
Aroa sells competitive money clips. Through Adwords, it purchased the keyword "smart money clip" to display the following ad:
Smart Money Clip
www.steinhausenonline.com Elegant Steinhausen accessories. Perfect to add to any collection.
Per Google's standard formatting, the trademark shows up bold and underlined, which the court says overshadows Aroa’s display of its own trademarks in the ad copy. The court also invokes initial interest confusion (as part of the Ninth Circuit's inconsistently invoked "Internet trilogy" likelihood of consumer confusion analysis) and notes that "defendants offer no evidence to show a lack of actual initial interest confusion." Summary judgment for plaintiff.
Claims Against Skymall
Skymall is an online retailer of Aroa products. Storus alleges that Skymall included the term "smart money clip" on Aroa product pages, which meant that if a person searched for "smart money clip" in Skymall's internal search engine, Aroa's products would appear in the search results. Storus portrayed this as initial interest confusion, but the court wasn't persuaded enough to grant summary judgment. Instead, the court observes that "a page offering an Aroa money clip will appear as a search result solely because the consumer searches using the phrase “money clip,” irrespective of whether the consumer adds the word “smart” to the search term and irrespective of whether the page contains the word “smart.”" Isn't it amazing that a page containing the phrase "smart money clip" would also appear for a search on "money clip"?!
Implications
On the surface, this case looks problematic for the search advertising industry. Any time a search advertising practice is deemed infringing, it should promptly eliminate all similar ads from other advertisers, taking a chunk of revenues out of search engine pockets. Further, when advertisers are liable for trademark infringement, it increases the risk that search engines will be contributorily liable for those infringing ads.
Yet, Aroa’s practices here (displaying a competitor’s trademark in the ad copy) are already restricted by all of the search engine trademark policies. Therefore, this ruling shouldn’t reduce much ad revenue for search engines.
But that raises the obvious question: why didn't Storus just invoke these search engine policies to shut down Aroa? As Dennis Toeppen might have said, perhaps Storus' lawyer wanted a new boat, because this trademark lawsuit made absolutely no financial sense for Storus. The court determines that over 11 months Aroa got 1,374 clicks on its ads (from 36,164 ad impressions, yielding a 3.7% clickthrough rate--not bad). If we value each click at $1/click (a generous amount given that Aroa sells its money clip for $30), Storus could have acquired the "diverted" clicks for $1,374--an amount that is surely no more than 5% (and perhaps even less than 1%) of what Storus spent in this lawsuit. Smart business decision there, guys.
Doctrinally, this case is a textbook example of how the initial interest confusion doctrine is completely bogus. As I’ve said before, a defendant cannot mount an adequate defense against the initial interest confusion doctrine because the doctrine lacks any rigorous definition or normative support in the first place. The defense challenge is especially problematic where, as here, a court improperly puts the burden on the defendant to disprove that consumers experienced initial interest confusion. Exactly what proof would satisfy the court here? I can’t answer this and I bet the court couldn’t either, and I can go further and assert that evidence to disprove initial interest confusion simply does not exist at all.
This court also unfortunately buys into the tired and outdated syllogism that every click on Aroa’s ad was a “diverted” consumer. As I’ve explained here, this massively overstates the quantum of “diversion” (whatever that means) because we don’t know what consumers expected to find when they entered the search term “smart money clip.” The low general risk of diversion is even lower here because consumers saw Aroa’s trademarks in the ad copy, further reducing the risk that anyone was confused by the time they decided to click on the ad.
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