Google Gets Mixed Bag in Latest Ruling in American Blinds Case

By Eric Goldman

Google, Inc. v. American Blinds & Wallpaper Factory, Inc., C 03-5340 JF (N.D. Cal. April 18, 2007)

The lawsuit between Google and American Blinds has been running for 3 1/2 years now, a very long time in the Internet world. Yesterday, Judge Fogel (who also handled the KinderStart and Person lawsuits against Google) issued a technical omnibus ruling that gave a little to each side–exactly the kind of ruling designed to facilitate settlement. We’ll see if the parties take the hint.

The main rulings:

1) Google asked the judge to reconsider if selling keywords constitutes a trademark use in commerce. In March 2005, the judge said it did, but Google pointed to the intervening Merck and Rescuecom decisions saying that it wasn’t. The judge did the best he could to divine the Ninth Circuit’s intent from its garbled Brookfield and Playboy v. Netscape precedents. Based on those, he ultimately concludes that the Ninth Circuit implicitly had concluded in those cases that keyword usage and keyword triggering, respectively, constituted a trademark use in commerce. Thus, he reaffirmed his holding from March 2005. While this is hardly surprising, it does raise a more explicit specter of a circuit split between the Second and Ninth Circuits on what constitutes a trademark use in commerce. We should learn more from the Rescuecom appeal, though the Second Circuit is hardly a rocket docket.

2) The court holds that the terms “American Blinds” and “American Blind” are descriptive, and American Blinds hasn’t shown secondary meaning, so American Blinds has no trademark rights in the terms. Thus, not only does the court dismiss American Blinds’ claims based on Google using those terms as ad triggers, but American Blinds is going to have an uphill battle enforcing those marks in the future. In this respect, the judge’s ruling is a significant loss for American Blinds. Further, I haven’t seen the data, but I suspect a big number of the complained-about ads were triggered by these two terms as opposed to American Blinds’ other TMs (“American Blind Factory,” “Decoratetoday,” and “American Blind & Wallpaper Factory”). If so, as a practical matter, this ruling might substantially depress American Blinds’ hope of getting big damages or an injunction covering lots of competitive behavior. Therefore, by narrowing the amount at issue, this ruling might further encourage the parties to settle.

Despite this ruling, under the new Utah anti-keyword advertising law, American Blinds likely would be able to register the non-trademark “American Blinds” and block competitive keyword advertising.

3) Google argued that it made no sense to apply the Sleekcraft multi-factor test to its behavior. This argument is absolutely correct as a matter of logic, but the judge is bound by the silly Playboy v. Netscape precedent where the Ninth Circuit did a (very messy) Sleekcraft analysis on very analogous facts. Here, the court addresses a few of the Sleekcraft factors and says they generally apply against Google in the context of rejecting Google’s request for summary judgment. Therefore, if the parties don’t settle, there should be a trial on consumer confusion on the remaining three American Blinds trademarks.

4) The court says that American Blinds’ trademarks aren’t famous or distinctive, so the court dismisses the dilution claims.

As you can see, each party got a little from the judge here, as he significantly narrowed the points of dispute. Normally, a mixed ruling like this can help the parties reach a settlement. We’ll see what the parties do.

Meanwhile, this case remains a flagship example of a lawsuit that, from the trademark owner’s standpoint, absolutely makes no financial sense. American Blinds’ legal bills for this lawsuit surely must be in the hundreds of thousands of dollars, and I simply can’t imagine that American Blinds has lost that much profit from customers “diverted” by the keyword advertising. Further, this lawsuit has also established that American Blinds has no protectable trademark in the term “American Blinds,” so American Blinds has also “lost” that asset. All the more reason for them to cut their losses now.