Advising Businesses That
Are Advertising and/or
Conducting Business Online
By: Elizabeth P. Hodes
Topics for Discussion
• Jurisdiction Reminder
• The Disagreements Surrounding
Sponsored Linking and Similar
Activities
• New Developments at ICANN
Jurisdiction Over A Business
Operating Online
• No significant changes in recent years
• Traditional Jurisdictional Analysis – focus becomes passive vs.
interactive websites
– Passive: advertising, informational
– Interactive: online sales
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Boschetto v. Hansing, 539 F.3d 1011 (9th Cir. 2008) (sale of an item via eBay is not
sufficient minimum contacts to establish jurisdiction).
Salu, Inc. v. Original Skin Store, 2008 WL 3863434 (E.D.Cal. 2008) (interactive
website and direct sales to Ca. customers sufficient to establish personal jurisdiction
under Ca. long arm statute that allows personal jurisdiction to the extent permitted by
the Due Process Clause of the U.S. Constitution.)
Bird v. Parsons, 289 F.3d 865 (6th Cir. 2002) (registrar of Internet domain names had
insufficient contacts with Ohio to establish general jurisdiction where 4,666 Ohio
residents had registered domain names through its website).
Cybersell, Inc. v. Cybersell, Inc., 130 F.3d 414 (9th Cir. 1997) (“the likelihood that
personal jurisdiction can be constitutionally exercised is directly proportionate to the
nature and quality of commercial activity that an entity conducts over the Internet.”)
Sponsored Linking Is…
• Search engines sell keywords and when those
words are typed into the search engine, the
purchaser’s ad or web link appears as a result
– Google Adwords
– Yahoo Sponsored Search
• This is different from “organic linking” which just
brings up a webpage link based on matches
between search terms and the data on particular
websites
The Legal Issues
• Is this “use” of the trademark?
• Is this fair/nominative use?
• Is this activity likely to cause consumer
confusion?
– Initial interest confusion?
– Actual confusion?
Sponsored Linking And Similar
Activities – The Circuits
• Playboy Enters., Inc. v. Netscape Commc’ns. Corp., 354 F.3d 1020
(9th Cir. 2004) (search engine operator denied summary judgment
where using mark to trigger banner ads).
• 1-800-Contacts, Inc. v. WhenU.com, 414.F.3d 400 (2d Cir. 2005) ("a
company's internal utilization of a trademark in a way that does not
communicate it to the public is analogous to an individual's private
thoughts about a trademark.”)
• Australian Gold, Inc. v. Hatfield, 436 F.3d 1228 (10th Cir. 2006)
(“Initial interest confusion in the internet context derives from the
unauthorized use of trademarks to divert internet traffic, thereby
capitalizing on a trademark holder’s goodwill.”).
• N. Am. Med. Corp. v. Axiom Worldwide, Inc., 522 F.3d 1211 (11th Cir.
2008) (describes 1-800 Contacts as a narrow holding and finds
metatags infringing where search results include a description of
Axioms website using trademarked terms)
Unauthorized Use?
15 U.S.C. § 1114(1)(a)
Any person who shall, without the consent of the registrant—
(a) use in commerce any reproduction, counterfeit, copy, or colorable
imitation of a registered mark in connection with the sale, offering for sale,
distribution, or advertising of any goods or services on or in connection with
which such use is likely to cause confusion, or to cause mistake, or to
deceive; or
(b) reproduce, counterfeit, copy, or colorably imitate a registered mark
and apply such reproduction, counterfeit, copy, or colorable imitation to
labels, signs, prints, packages, wrappers, receptacles or advertisements
intended to be used in commerce upon or in connection with the sale,
offering for sale, distribution, or advertising of goods or services on or in
connection with which such use is likely to cause confusion, or to cause
mistake, or to deceive,
shall be liable in a civil action by the registrant for the remedies hereinafter
provided.
Australian Gold and Axiom cases look to this statutory section in finding that
there was an infringing use.
Use in Commerce?
15 U.S.C. § 1127
For purposes of this chapter, a mark shall be deemed to be in use in
commerce—
(1) on goods when—
(A) it is placed in any manner on the goods or their
containers or the displays associated therewith or on the tags or
labels affixed thereto, or if the nature of the goods makes such
placement impracticable, then on documents associated with the
goods or their sale, and
(B) the goods are sold or transported in commerce, and
(2) on services when it is used or displayed in the sale or advertising
of services and the services are rendered in commerce, or the services are
rendered in more than one State or in the United States and a foreign
country and the person rendering the services is engaged in commerce in
connection with the services.
1-800 Contacts court looks at this subsection and finds there is no “use
in commerce”.
Defenses
• Fair Use: Use that is descriptive of and used fairly and
in good faith only to describe the goods or services. 15
U.S.C. § 1115(b)(4).
• Nominative use: 1) the product or service in question is
not readily identifiable without use of the mark; 2) Def.
uses only so much of the mark as is reasonably
necessary to identify the product or service; and 3) Def.
does nothing that would, in conjunction with the mark,
suggest sponsorship or endorsement by the mark holder.
Playboy, 354 F.3d at 1029–30.
• Functional Use: “parts of a design that have a functional
use may not receive trademark protection” Id. at 1030.
District Courts
• Finance Express v. Nowcom Corp., 564
F.Supp.2d 1160 (C.D. Ca. 2008): Nowcom’s
purchase of a competitor’s mark (“Tracker
DMS”) as a keyword caused consumers
searching for that mark to see an ad for
Nowcom’s product “Dealer Desktop”.
Manage Your Dealership.
Use Just One Software Program.
Get A Free Trial of Dealer Desktop.
www.Nowcom.com
• Is this infringement?
District Courts
• The District Court said yes, infringement.
• “While it is true that a clearly-labeled banner
advertisement might not create initial interest confusion,
Nowcom’s banner advertisement cannot be fairly
characterized as one which ‘clearly identifies its source
with its sponsor’s name.’ . . . A website address located
in small font at the bottom of the advertisement is not
sufficient to overcome the initial interest confusion that
results from Nowcom’s practice of keying.” 564
F.Supp.2d at 1178 (emphasis added) (discussing
unlabeled banner ad in Playboy Enter., Inc. v. Netscape
Communications Corp., 354 F.3d 1020 (9th Cir. 2004)).
• Other infringing activity in the case may have affected
the court’s decision (metatags, domain name squatting).
District Courts
Other Cases Holding Sponsored Linking Is Infringement:
• Boston Duck Tours, LP v. Super Duck Tours, LLC, 527
F.Supp.2d 205, 207 (D. Mass. 2007) (“Because
sponsored linking necessarily entails the “use” of the
plaintiff’s mark as part of a mechanism of advertising, it
is “use” for Lanham Act purposes.”).
• Hysitron Inc. v. MTS Sys. Corp., 2008 WL 3161969
(D.Minn. Aug. 1, 2008) (“‘use in commerce’ is not limited
to affixing another’s mark to one’s own goods but also
encompasses any use of another’s mark to advertise or
sell one’s own goods and services.”)
District Courts
Sponsored Linking is Not Infringement (2nd Circuit view):
• Merck & Co., Inc. v. Mediplan Health Consulting, Inc., 425 F.Supp.2d 402
(S.D.N.Y. 2006) (sponsored linking through Google and Yahoo was not “use
in commerce” pursuant to 15 U.S.C. § 1127).
• Rescuecom Corp. v. Google, Inc., 456 F.Supp.2d 393 (N.D.N.Y. 2006)
(“there is no allegation that defendant places plaintiff’s trademarks on any
goods, containers, displays, or advertisements, or that its internal use is
visible to the public.”).
• Site Pro-1, Inc. v. Better Metal, LLC, 506 F.Supp.2d 123 (E.D.N.Y. 2007)
(“The sponsored link marketing strategy is the electronic equivalent of
product placement in a retail store.”).
• FragranceNet.com, Inc. v. FragranceX.com, Inc., 493 F.Supp.2d 545
(E.D.N.Y. 2007) (noting the internet user “is simply being shown
alternatives” through sponsored linking).
• Tiffany (NJ) Inc., v. Ebay, Inc., 2008 WL 2755787 (S.D.N.Y. July 14, 2008)
(eBay’s purchasing the keyword “Tiffany” as part of its sponsored links is not
“use” under the Lanham Act and the use of the mark in descriptions arising
as a result of a search is nominative fair use).
Sponsored Linking to Cure
Infringement
• Punch Clock, Inc. v. Smart Software
Development, 553 F.Supp.2d 1353,
(S.D.Fla. 2008): Infringement caused
Google search to place infringer above
trademark owner through organic linking.
Court requires 7 years of sponsored
linking (same duration as infringement), in
addition to trebled statutory damages and
attorney fees and costs.
New Opportunities or New
Problems?
• June 26, 2008, ICANN approves
guidelines to allow new “top level
domains”
– Increased choice & opportunity?
• "It's a massive increase in the 'real estate' of the
Internet." Dr Paul Twomey, President and CEO of
ICANN
– Increased expense & inconvenience?