Confusion From Competitive Keyword Advertising? Fuhgeddaboudit

July 8, 2015 · by Eric Goldman · in Evidence/Discovery, Marketing, Search Engines, Trademark

Photo credit: Keyword Advertising 3d render concept with blue and white arrows flying over a white background // ShutterStock

[Note: I wrote this post over the weekend, before the atrocious MTM v. Amazon case. I think virtually all of this post remains current despite that ruling. I’ll blog the MTM case separately.]

I’ve been chronicling the futility of competitive keyword advertising lawsuits for a while. I still believe trademark owners haven’t won such a case in court since 2011. Indeed, most of the recent opinions have been brief and breezy defense wins. That makes the latest ruling refreshing–it’s a thorough and comprehensive opinion analyzing the legitimacy of competitive keyword advertising. Yet, the result is the same as all of the others: the court rejects the trademark owner’s request.

Background

The case involves rival non-profit organizations in the Alzheimer’s community, Alzheimer’s Foundation of America, Inc. (AFA) and Alzheimer’s Disease and Related Disorders Association, Inc. (the Association). The Association is the more venerable organization, while AFA is the new entrant, and the Association’s budget dwarfs the AFA’s by 20x or more. AFA and the Association have been stepping on each others’ toes for a while, and AFA kicked off the litigation because checks made out the “Alzheimer’s Foundation” were being sent to (and cashed by) the Association.

The Association has a registered trademark in “Alzheimer’s Association” and other terms. As early as 2010, AFA bought keyword ads triggered by trademarks registered to the Association, such as “Alzheimer’s Association” and “Memory Walk,” and in some cases the first line of ad copy said “An Association of Care and Support.” The Association objected in 2014.

Use in Commerce

AFA defended on the grounds that buying keyword ads isn’t a trademark use in commerce. We rarely see such defenses any more after the emphatic rejection of this defense in the Second Circuit’s 2009 Rescuecom case. Bound by the Second Circuit precedent, this court quickly shuts down the argument (citing the recent FarePortal case).

Multi-Factor Analysis

Turning to the heart of the trademark infringement analysis, the court starts with a declaratory statement about the presumptive legitimacy of competitive keyword advertising:

Companies can and do regularly purchase other companies’ marks as search keywords and use those companies’ trademarks in the text of their search advertising in order to draw a contrast with the searched-for product and offer their own as an alternative. For instance, a Yahoo! search for the term “Honda Civic” brings up ads linking to websites from Hyundai, Volkswagen, and Toyota, comparing the Civic to their cars and suggesting that the consumer purchase an Elantra, Jetta, or Corolla instead. Although such advertisements use trademarked terms in commerce and are geared toward increasing the ad buyer’s business at the trademark holder’s expense, they do not implicate the Lanham Act because they draw a clear distinction between the products and do not imply the trademark holder’s sponsorship or approval.

Can you imagine a court writing anything like this in 2009? My, how much has changed in the past half-decade. Still, this should give you a sense where this opinion is going….

The court then runs through the traditional Polaroid likelihood of consumer confusion multi-factor test. I am not a fan of using the multi-factor test for keyword advertising, although doing the complete multi-factor analysis is way better than the expedited hacks like the Ninth Circuit’s now-dead Internet troika approach. The court says:

* Mark strength. The Association has strong marks, so this factor weighs in favor of the trademark owner.
* Mark similarity. The court says “AFA’s ad has a strongly similar aesthetic to that of the Association’s organic search engine listing.” (Whatever that means…). I infer this factor weighs in favor of the trademark owner.
* Competitive proximity. The organizations are directly competitive rivals, so this factor weighs in favor of the trademark owner.
* Bridging the gap. Not relevant in this case.
* Good faith. The court says this factor tips towards the trademark owner because AFA marketed the more ambiguous term “Alzheimer’s Foundation” instead of the more distinguishable “Alzheimer’s Foundation of America.”
* Quality. This factor tips towards the advertiser because there’s no contest they do a good job.
* Consumer sophistication. This factor tips towards the trademark owner because most donors are average folks, and some may be suffering from Alzheimer’s.

Wow, it’s looking bleak for the advertiser. Five of the six relevant factors weigh against it, some decisively. Indeed, the court summarizes that “the Association’s case is persuasive, and there is a real possibility that it will prevail on its claims.” Yet, the court denies the preliminary injunction. What gives?

Actual Confusion

The remaining Polaroid factor is actual confusion, and the court analyzes this factor carefully. There’s some evidence of actual confusion among consumers due to the apparently misdirected checks. However, the court wisely expects the trademark owner to connect the dots between the purported consumer confusion and the defendant’s advertising practices being litigated (here, the keyword ad buys). The trademark owner in this case failed to do so. As the court explains, “the Association has failed to causally link AFA’s purchase of Association trademark terms and use of a two-word designation with actual consumer confusion.”

The Association cited a few anecdotes, such as a phone call from an estates lawyer trying to direct a bequest to the right organization who said the search results created some ambiguity. The court says that anecdote actually works in favor of the defense because the search results sufficiently educated the lawyer about the possible ambiguity, and the court says the few anecdotes aren’t really that persuasive in light of the $100M the Association raises annually.

The court then turns to the initial interest confusion doctrine–a doctrine still hanging around in court even though it’s been functionally dead for years. (The court cites the 2011 CJ Products v. Snuggly Plushez case, one of the last plaintiff-favorable initial interest confusion rulings). The court interprets Second Circuit law to require “intentional deception” as a prerequisite for initial interest confusion, and the Association can’t show AFA engaged in “intentional deception.”

The court concludes:

[the Association] failed to establish any actual confusion stemming from the AFA’s internet search engine advertising practices, or to show the intentional deception needed to prevail under the initial interest doctrine.

Thus, effectively due solely to the weakness of the Association’s actual confusion showing, the court says the trademark owner didn’t show a substantial likelihood of success. I interpret this result as a sign the judge simply doesn’t believe consumers were harmed by the competitive keyword advertising because there was no real actual confusion. As I explained in this recent paper, this fundamental lack of actual consumer confusion caused by competitive keyword advertising is driving defendants’ success in keyword advertising cases.

Other Preliminary Injunction Factors

The Association’s delay in pursuing the competitive keyword advertising issue undercut its irreparable harm argument (cites omitted):

the Association has known of the AFA’s use of the two-word designation “Alzheimer’s Foundation” since at least 2010. It also, due to discovery in this case, has apparently known since at least 2012 that AFA was purchasing Association trademark keywords from search engines. Although what appears to have sparked the Association to action was a new AFA advertising campaign which displayed ads, triggered by searches for the Association’s Marks, which included the language “An Association of Care and Support,” the AFA has discontinued that language, and the remaining behavior complained of has been known to the Association for years.

Two factors point towards an injunction. Calculating the losses from the competitive keyword advertising would be uncertain, and an injunction would not be a big hardship because:

Since the purchase of targeted keywords is invisible to the consumer and the AFA could achieve somewhat similar search results without purchasing the Association’s marks as keywords, it is difficult to say that the AFA would suffer significant hardship if it were forced to discontinue purchasing those specific keywords.

This latter point is almost certainly demonstrably false. Each keyword provides access to a different slice of consumers, so giving up specified keywords might effectively foreclose access to that consumer slice.

The court even implies that issuing an injunction might advance the public interest because it might accelerate the parties settling this case.

Nevertheless, the court declines to issue the injunction (cites omitted):

The Association has failed to clearly establish the three most important factors in the preliminary injunction analysis: a likelihood of success on the merits, the prospect of irreparable harm, and the balance of the hardships tipping in its favor. Though the Association makes strong points on several of the Polaroid factors, its case for confusion falls short of the “clear or substantial likelihood of success” required for a preliminary injunction that would alter the status quo. The Association also fails to adequately establish irreparable harm, and its argument on that point is fatally undermined by its delay in seeking relief. The balance of hardships also tips slightly in favor of the AFA. The motion for a preliminary injunction is therefore declined.

Evidentiary Disputes

The judge also cleans up a variety of evidentiary disputes between the parties, including a few of special interest:

* The Association requested information about AFA’s keyword ad purchases. AFA refused, saying keywords themselves could never cause consumer confusion (analogizing to product proximity in grocery stores) and that keyword advertising was a “legitimate business practice.” These arguments go nowhere.

* AFA requested information about the Association’s keyword ad purchases. The Association took the position that such information would only relate to an unclean hands defense, which the Association said AFA couldn’t satisfy. The court says AFA’s request is appropriate:

Evidence of the keywords purchased by the Association and the amounts spent on them would help to demonstrate where the Association’s own advertisements appeared. It is at least arguable that a consumer is less likely to be confused when the Association and the AFA both have ads at the top of his or her search results, as compared to a situation where the AFA’s advertisement stands alone.

I don’t know what happened here, but we’ve repeatedly seen trademark owners suing over competitive keyword advertising have engaged in identical practices, and it’s always an embarrassingly duplicitous revelation.

* AFA requested documents about “any people the Association claims were confused by the AFA’s search engine advertisements, and any instances of confusion between the Association’s marks and those of the AFA.” The Association responded that it disclosed everything about the 3 incidents it knew about, but it couldn’t do anything more because “it has no way of knowing the identity of every single person on the internet who has been confused by the AFA’s ads.” Patiently, the judge says the Association simply has to provide documents in its control. I assume this means AFA has successfully boxed the Association into saying that it has actual knowledge only about 3 incidents of confusion.

Implications

To me, the underlying culprit is the ability to trademark the term “Alzheimer’s Association.” I understand this is a descriptive term, not a generic one, but when we weaponize such highly descriptive terms like this, it creates the potential for lots of mischief.

This case reminds me of the General Steel v. Chumley ruling, where the trademark owner had good bases for being in court but nevertheless lost its arguments about competitive keyword advertising. Here, the Association got so close that surely it could taste victory, yet the court ultimately ruled against it. If the Association can’t win this case, what will it take for a trademark owner to win a future case? I don’t think competitive keyword advertising cases have become categorically unwinnable, but at this point, trademark owners who want to sue over competitive keyword advertising have to feel like they are trying to scale a sand cliff. If you’re a trademark owner who wants to sue over competitive keyword advertising, I think the burden is on you to find competent and convincing evidence that consumers are actually being confused by the practice. At this point in the consumer adoption process, I’m reasonably confident that trademark owners cannot marshal such evidence, and without it, I believe their cases are now doomed. For more confirmation, see Concordia Partners, LLC v. Pick, 2015 WL 4065243 (D. Maine July 2, 2015), also expressing skepticism about consumers’ actual confusion attributable to competitive keyword advertising.

I also have repeatedly questioned the financial prudence of suing over competitive keyword advertising, and the judge excoriates both sides on that issue:

This case presents a unique set of circumstances where the public interest is harmed not by the conduct of one party or another, but by continuation of the litigation itself. The parties in this case are two legitimate and respected charities working to combat a cruel disease that robs its victims of their cognitive ability and sense of self.

Their work is both admirable and desperately needed, yet in this litigation they are spending immense financial resources in order to gain an entirely speculative edge in fundraising. This serves neither their constituencies’ interests nor that of the public at large.

But for the parties’ intransigence and inability to find common ground, resources expended on discovery, summary judgment motions, trial, and appeals would be directed toward providing care and support to people suffering from Alzheimer’s Disease, or toward research that might make progress on finding a cure.