United States: District Court Rules Google "Adwords" Program Not Trademark Infringement

In September 2006, Internet giant Google, Inc. scored another legal victory for its controversial "AdWords" program. In Rescuecom Corp. v. Google, Inc., 2006 WL 2811711 (N.D.N.Y. 2006), the U.S. District Court for the Northern District of New York ruled that Google’s practice of selling trademarked words and phrases as keywords does not constitute trademark "use" under the Lanham Act and, thus, is not trademark infringement for purposes of federal law.

Under its AdWords program, Google allows advertisers to bid on terms (keywords) that Internet users might enter when searching for Web sites using the Google search engine. When a user enters the advertiser’s keyword, Google prominently displays a link to the advertiser’s Web site as part of the search result. Controversy has arisen because advertisers participating in the AdWords program can pay for the right to use a competitor’s trademark as a keyword.

The plaintiff in Rescuecom was the owner of a chain of computer repair and consulting franchises, and conducted a significant amount of business over the Internet. The "Rescuecom" trademark was well known in the market and the plaintiff had registered the mark with the United States Patent and Trademark Office.

As part of the AdWords program, Google permitted several of the plaintiff’s competitors to use "rescuecom" as a keyword. The district court noted that Google even recommended to competitors that they use "rescuecom" as a keyword "in order to make plaintiffs’ competitors’ advertising more successful . . . by intercepting and diverting plaintiff’s customers and potential customers." In addition, the court assumed that Internet users entering "rescuecom" as a search term might be confused into thinking that one of Rescuecom’s competitors was the most relevant search result.

Nevertheless, the court dismissed Rescuecom’s trademark infringement suit, finding that Google’s sale of Rescuecom’s trademark as a keyword was not a "use" of the trademark prohibited by federal law. According to the court, the Lanham Act only prohibits use of a trademark that is visible to the public. Google’s use of Rescuecom’s mark was, in the court’s view, solely "internal use" that is not covered by the Lanham Act. The court said it dismissed Resuecom’s suit because there was "no allegation that [Google] places [Rescuecom’s] trademark on any goods, containers, displays, or advertisements, or that its internal use is visible to the public."

Rescuecom is the latest in a growing list of district court decisions that have reached different conclusions about whether Google and its customers may be liable for trademark infringement as a result of the AdWords program. Earlier this year, another district court in New York reached the same conclusion as the court in Rescuecom. See Merck & Co. v. Mediplan Health Consulting, Inc., 425 F. Supp. 2d 402 (S.D.N.Y. 2006). On the other hand, district courts in California, Minnesota, and Virginia have all found that using a competitor’s trademark as a Google keyword could be trademark "use" and could result in liability under the Lanham Act. See Google, Inc. v. American Blind and Wallpaper Factory, Inc., 2005 WL 832398 (N.D. Cal. 2005); Edina Realty, Inc. v. TheMLSonline.com, 2006 WL 737064, 80 U.S.P.Q. 2d 1039 (D. Minn. 2006); Government Employees Ins. Co. v. Google, Inc., 330 F. Supp. 2d 700 (E.D. Va. 2004).

It is important to note that none of the above decisions ruling against Google and its customers on the issue of trademark "use" addressed the issue of whether Google or its customers were actually liable for trademark infringement. Proving trademark "use" is merely a prerequisite to going forward with an infringement claim. Claimants who jump the trademark "use" hurdle still must prove all of the other elements of trademark infringement such as likelihood of confusion. In fact, the plaintiff in Government Employees Ins. Co. v. Google eventually lost on liability due to a failure to prove that Google’s use of the "GEICO" trademark caused a likelihood of confusion among consumers. See 2005 WL 1903128 (E.D. Va. 2005).

To date, no federal court of appeals has addressed this trademark "use" issue. As a result, Google and the trademark owners aggrieved by its AdWords program face an uncertain legal landscape for the near future.

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