Cyberlaw Cases

Cases and Courts:

• Rescuecom Corp. v. Google, Inc. (2d Cir.), on remand to (N.D.N.Y).
• Ezzo v. Google, Inc. (M.D. Fla.).
• FPX, LLC v. Google, Inc. (E.D. Tex.).
• John Beck Amazing Profits, LLC v. Google, Inc. (E.D. Tex.).
• Google, Inc. v. John Beck Amazing Profits, LLC (N.D. Cal.).
• Stratton Faxon v. Google, Inc. (New Haven, Conn. Sup. Ct.).
• Soaring Helmet Corp. v. Bill Me Inc. (W.D. Wa.).
• Rosetta Stone Ltd. v. Google, Inc. (E.D. Va.).
• Flowbee Int’l, Inc. v. Google, Inc. (S.D. Tex.).

Background:

Google’s AdWords program, its primary source of revenue, generated over $20 billion in 2008. AdWords allows advertisers to purchase keywords that trigger the display of ads, or “sponsored links,” in response to user search queries. AdWords enables advertisers to purchase not only generic keywords to trigger their ads, but trademarks as well. So Boylan Bottling might purchase both “soda” and “Pepsi” as part of its AdWords buy.

In addition, Google’s Keyword Tool recommends keywords to advertisers; these recommendations likewise include trademarks. And although Google does not permit the use of marks in the titles of sponsored links, it does allow their use in the text of ads under some circumstances. When a mark is used in a descriptive or generic way, rather than as a reference to the trademark owner or its goods or services, its use is permitted. More recently, Google began allowing use of marks in ad text for certain classes of advertisers. Those who resell trademarked goods or services, or sell components, or replacement parts related to trademarked goods or services, or provide non-competitive informational sites that refer to trademarked goods or services are now able to use the relevant marks in the text of their ads.

Trademark holders, unhappy with the use of their marks by both Google and their competitors have filed numerous suits. As a result, AdWords has proven not only a remarkable source of revenue, but a reliable generator of litigation as well. By Eric Goldman’s count, after two recent voluntary dismissals by plaintiffs, there are eight pending AdWords cases.

What’s at stake:

These cases vary in a number of respects: the size and sophistication of the plaintiffs,¹ the strength of the marks, the particular components of the AdWords program to which plaintiffs object, and the constellation of legal claims relied upon to challenge them. Nonetheless, we can make some generalizations about the issues the AdWords cases collectively raise.

At a doctrinal level, these cases are likely to revisit the threshold question addressed in the Second Circuit’s Rescuecom decision, namely whether the inclusion of trademarked terms in the AdWords program constitutes a “use in commerce” under the Lanham Act. There the court rejected Google’s argument that use of marks within its internal coding falls short of “use in commerce.” This holding would seem to seriously undermine Google’s best strategy for disposing of AdWords suits on the pleadings, and open the door to some interesting fights over how to define, measure, and prove consumer confusion in the context of online keyword advertising. A previous AdWords case that reached these issues, GEICO v. Google,² raised as many questions as it answered about the appropriate standards for establishing confusion.

From a practical perspective, these cases have the potential to shape the structure of online advertising. The advertising programs of Google, Microsoft, Yahoo, and AOL have all been crafted, with varying tolerance for risk, with an eye to potential trademark infringement liability. Google’s success or failure in these cases will shape not only its own practices but those of its competitors.

Indirectly, these cases have important implications for consumers as well. The ability to communicate effectively about products and services depends in part on consumers’ ability to unambiguously identify the information they seek and competitors’ ability to unambiguously share that information with consumers. The trademark worries facing Google impede that communication. One need look no further than the absence of comparative advertising within AdWords. If Honda wants to tell consumers searching for the Toyota Prius that its own Insight hybrid is significantly cheaper, it has no easy way of doing so using AdWords.

In this sense, the AdWords cases push on a more fundamental question about the nature of trademark rights. Should we understand trademarks as a tool for consumer protection and empowerment? Or should this traditional justification for trademark law yield to the propertization of marks, the view that all uses of a mark fall within the trademark holder’s exclusive control?

See also:

• Eric Goldman, Flowbee Latest Trademark Owner to Sue Google–Flowbee v. Google, Technology & Marketing Law Blog (Aug. 14, 2009).
• David Johnson, Inside Rescuecom Corp. v. Google, Inc.: Does Google’s Use of Trademarks to Trigger Advertisements from Competitors Violate Federal Trademark Laws?, (Jul. 11, 2009).
• Joe Mullin, Of Patent Trolls and Trademark Champions: A Tale of Two Spangenbergs, The Prior Art (May 15, 2009).

Footnotes

1. Two recent cases have been styled as class actions. [↩]
2. Gov’t Employees Ins. Co. v. Google, Inc., 77 U.S.P.Q.2d 1841 (E.D. Va. 2005). [↩]