Keyword Advertiser Mostly Defeats Trademark Lawsuit–Scooter Store v. SpinLife

By Eric Goldman

Scooter Store, Inc. v. SpinLife.com, LLC, 2011 WL 6415516 (S.D. Ohio Dec. 21, 2011). The Justia page.

This is a spirited litigation between two retailers of wheelchairs, motorized scooters and related items. Maybe that retailing sector is so profitable that it warrants a litigation cat-fight, but my guess is these litigants are spending their retirement money beating up each other in court.

Today’s ruling deals with SpinLife’s AdWords advertising triggered on keywords such as “the scooter store,” “scooter store,” “my scooter store” and “your scooter store” as well as the inclusion of such terms in the spinlife.com’s metatags. The plaintiff (let’s call them TSS) has registered trademarks in “The Scooter Store” in certain classes but not for retail stores, because the PTO rejected that usage as generic. TSS asserted that SpinLife’s keyword ads and metatags infringed its trademark rights.

The court ultimately concludes that “The Scooter Store” is generic for retail stores. This isn’t surprising; the PTO had said the same thing to TSS. In fact, I’ve argued that all “[noun] store” marks (where the store sells the noun) are generic. Surprisingly, a different court ruled otherwise with respect to Apple’s claims over “app store.” I still think that court got it wrong.

Weirdly, having held the term generic, the court then spends several pages considering the question: “Can SpinLife’s use of generic phrases cause consumer confusion?” What??? TSS tried to argue that it’s enforcing its trademarks from other classes, not the generic term. The court wisely rejects that. If a term is generic in a class, then it’s free for competitors to use in that class–FULL STOP, end of story.

The weirdness continues when the court doesn’t dismiss the state anti-dilution claim based on TSS’s purported rights in a generic term. WHAT??? Apparently the court is willing to consider TSS’s trademark registrations in the other classes for dilution purposes, even though the court just said the registrations were irrelevant for infringement purposes. I understand that dilution claims cut across classes, so that part makes sense, but it’s crazy to consider that a registered mark could control the term’s use in a class where it’s generic. The federal anti-dilution statute has a number of defenses that would clearly free the defendant, so the court’s ambivalence may just be a quirk of Texas’ anti-dilution statute. In any case, I imagine the judge will get to the right place eventually, but the fact it didn’t get there instantly is puzzling.

Before the court declared TSS’s marks generic, SpinLife argued that buying trademarked keywords is categorically permissible under trademark law per 1-800 Contacts v. Lens.com. The court rejects this strong proposition, saying “this Court will not rely on a single out-of-circuit case to conclude that the Adword purchases are not actionable under any circumstances.” The court’s decision isn’t surprising given the diversity of rulings we’ve seen over trademarked keywords, although I think the world would be a better place if the court did adopt the strong proposition.

In the end, the court says SpinLife is free to use “scooter” and “store” in AdWords and its metatags without restriction. Furthermore, TSS ends up with weaker assets than it thought it had pre-litigation (see, e.g., American Blinds which exited its keyword advertising enforcement case similarly bereft) and a clear signal that it should stop spending money on its lawyers and start investing those dollars towards competing on the merits.

Other cases in the category of irrational enforcement actions against keyword advertisers:

– King v. ZymoGenetics. The defendant advertiser got 84 clicks.

– Storus v. Aroa. The defendant advertiser got 1,374 clicks over 11 months.

– 800-JR Cigar v. GoTo.com. The search engine defendant generated $345 in revenue from the litigated terms.

– Sellify v. Amazon. The defendant got 1,000 impressions and 61 clicks.

– 1-800 Contacts v. Lens.com. 1-800 Contacts spent no less than $650k (and was willing to spend $1.1M) to pursue Lens.com, which made $20 of profit from competitive keyword ads. It also tried to hold Lens.com responsible for affiliate ad buys which generated about 1,800 clicks, which under the most favorable computations were worth about $40k.

– InternetShopsInc.com v. Six C. The defendant got 1,319 impressions, 35 clicks and zero sales.