Keyword Ads and Other Marketing Supports Remote Jurisdiction–Market America v. Optihealth

By Eric Goldman

Market America v. Optihealth Products, Inc., 2008 WL 5069802 (M.D.N.C. Nov. 21, 2008)

This lawsuit involves the trademark “OPC-3.” “OPC” is the generic term for “group of antioxidant bioflavonoids” that companies sell as dietary supplements. The plaintiff has obtained a trademark registration for “OPC-3.” Numbers can become trademarks with enough marketing to educate consumers that they have secondary meaning, but I’m pretty suspicious of trademarks that consist of generic term + number. It’s like “Bread 7” for bread.

The defendants sell OPCXtra, a competitive dietary supplement to OPC-3. The defendants deployed some aggressive marketing approaches (which reminded me of the Nowcom case), including registering the domain name, purchasing keyword ads that apparently included opc3 and other plaintiff trademarks as keyword triggers, and including OPC-3 in the metatags (as usual, the court was imprecise about which type of metatag, but I infer it was a keyword metatag). In response, the plaintiff sued for trademark infringement, cybersquatting and other claims.

In this ruling, the court held that the NY-based defendant was subject to jurisdiction in the plaintiff’s home court of North Carolina. That ruling, on its own, isn’t all that interesting. The court found jurisdiction using the standard “minimum contacts” test, but even if it hadn’t, trademark infringement lawsuits support jurisdiction based on the “Effects tests” and this circumstance (with its aggressive marketing) seems particularly well-suited to do so. Unfortunately, the court plotzed in excitement because the case involved the Internet and the analytical rigor suffered accordingly, but it got to the logical result.

More interesting is that to attack jurisdiction, the defendants argued that their metatags didn’t constitute a trademark use in commerce. This is an odd attack on jurisdiction, though it would have been more logical for a 12b6 motion to dismiss. Consistent with courts outside the Second Circuit, the court rejects the defense because metatag usage qualifies as a trademark use in commerce. Frankly, even if the metatags didn’t qualify as a trademark use in commerce, the keyword advertising is probably a use in commerce in all jurisdictions outside the Second Circuit, and the domain name registration presumably qualified as a use in commerce in every court (the domain resolved on comparative reference material with prominent ads for defendants’ products). As a result, the no-use-in-commerce defense to jurisdiction seemed doomed from the get-go..

While I still don’t understand why the defendants tried this substantive doctrinal attack on jurisdiction, the defendants did get some valuable information. The judge clearly signaled no interest in supporting the defendants’ choices, so the defendants got a strong hint to settle up before things get worse.