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U.S. Court Issues Decision on Use of a Competitors Trade marks in Online Advertising
According to a January 4, 2007 decision of U.S. District Court, Eastern District of Pennsylvania, Justice O’Neill determined that use of a competitor’s trademark(s) in buying search ads, for example on Google’s AdWords, is not a trademark violation, as long as the trademarks in the resulting ads are not visible to the consumer. The Plaintiff, J.G. Wentworth, a financial trading and settlement funding company, brought a complaint against one of its competitors, Settlement Funding LLC. (“Settlement Funding”), alleging that Settlement Funding’s actions constituted a trademark violation when it bought the keyword ad terms "J.G. Wentworth" and "JG Wentworth" in Google's AdWords program and used the terms in metatags embedded in its webpages. Pursuant to a motion brought by the Defendant, Justice O’Neill dismissed the complaint concluding that the use of keyword-triggered ads and keyword metatags cannot confuse consumers if the resulting ads/search results do not display the Plaintiff’s trademark; however, the Court found such trademark use is “use in commerce” under the Lanham Act.
In its complaint, the Plaintiff did not allege the ads/search results displayed its trademarks, rather the Plaintiff’s case dealt with essentially the “behind the scenes” use of its trademarks as ad/content triggers. In order to bolster its claim of trademark violation, the Plaintiff argued that this was a situation involving “initial interest confusion” whereby Settlement Funding’s use of the Plaintiff’s marks or similar marks allowed the Defendant to lure potential customers away from the Plaintiff by initially passing off its goods/services as those of the Plaintiff, even if ultimately the confusion as to the source of the goods is dispelled. The Court held that since the Defendant’s use of the Plaintiff’s marks in the AdWords programs created “separate and distinct links” on any of the search results pages in question, potential consumers have no opportunity to confuse defendant’s services, goods, advertisements, links or websites for those of plaintiffs.”
The Court rejected the Plaintiff’s “initial interest confusion” argument. However, the Court went on to hold that “by establishing an opportunity to reach consumers via alleged purchase price and/or use of a protected trademark, defendant has crossed the line from internal use to use in commerce under the Lanham Act.” The Court went on to conclude that even though participation in the AdWords program i.e. the purchase of keywords, is not a traditional “use in commerce,” it still satisfies the Lanham Act’s “use requirement.”
For a copy of the decision, visit: