Sponsored Links Spawn More Litigation Woes for Search Engines
December 10, 2004
Jocelyn Brittin- Northern Virginia
The litigation woes for search engines continue and the Internet advertising world is increasingly concerned as a federal judge has ruled that offering sponsored links (placement in search results when a trademark is used in the search engine) may constitute trademark infringement.
In the case of Government Employees Insurance Company v. Google, Inc., brought in the federal district court for the Eastern District of Virginia, Google and Overture were not successful in dismissing trademark infringement claims concerning the mark “GEICO.” The denial of a motion to dismiss does not mean the plaintiff will ultimately be successful in proving that the defendant have committed trademark infringement, but the court’s ruling does signal its proclivity to follow cases finding arguably similar forms of Internet advertising to be infringing.
In its complaint, Government Employees Insurance Company (GEICO) alleges that Google and Overture were liable for trademark infringement, trademark dilution, and false representation by selling to other companies the ability to link their Web sites to results when the term “GEICO” is entered into Google search engine. The court declined to dismiss any of GEICO’s trademark claims. The court acknowledged that there was case law on both sides of the issue, but ultimately concluded that the cases cited by GEICO were better reasoned. The court did dismiss additional state law claims of tortious interference with prospective economic advantage and statutory civil business conspiracy. This aspect of the ruling is not insignificant for the defendants, as the civil conspiracy claim carries the possibility of treble damages and attorneys’ fees.
In allowing GEICO to pursue its trademark claims, the trial judge cited specifically to 1-800 Contacts, Inc. v. WhenU.com, 309 F.Supp.2d 467 (S.D.N.Y. 2003), and People for the Ethical Treatment of Animals v. Doughney, 263 F.3d 359 (4th Cir. 2001). In the WhenU case, the offending software program caused pop-up ads for competitors to be displayed when a URL was typed in by the user of the program. For example, if the URL for the company 1-800-Contacts was typed in, the software would display pop-up ads for 1-800-Contacts’ competitors. Those competitors paid WhenU for such advertising. The court in WhenU considered the activity to be “use in commerce” sufficient to sustain a trademark claim, as WhenU had to use the trademark both in the algorithm that triggered the pop-up, and in the database directory of terms that is utilized by the software.
The People for the Ethical Treatment of Animals (PETA) case did not involve Internet advertising, but rather, an individual who registered the domain name “peta.org,” and posted links to other sites selling leather, advocating hunting and other sites antithetical to the views of PETA. According to the appeals court in PETA, a plaintiff claiming trademark infringement must prove that: (1) the plaintiff possesses a mark, (2) the defendant uses the mark, (3) the defendant’s use of the mark occurs “in commerce,” (4) the defendant used the mark in connection with the sale, offering for sale, distribution or advertising of goods or services, and (5) the defendant used the mark in a manner likely to confuse consumers. Generally, only elements (4) and (5) are at issue in the Internet advertising cases. The PETA court ruled that the defendant had used the PETA mark in connection with the offering of goods because the offending site linked to commercial operations offering goods and services. The court also held that hindering Internet users from accessing the plaintiff’s services on the plaintiff’s own Web site is sufficient to show use “in connection with” goods or services. The court similarly found that Internet users were likely to be confused by the defendant’s use of peta.org as a Web site domain name.
The WhenU and PETA cases arose from factual circumstances that were quite different than those in the GEICO case, but, disappointingly, the court did not discuss those differences in any detail. For example, the WhenU case involved Internet users entering a specific URL and being forced to view advertising for competitors. With sponsored links, however, it is often the case that a user puts a term into a search engine to be linked to a variety of sites, not necessarily to find one Web site in particular. The PETA case similarly involved a particular URL being co-opted, so that individuals who were likely seeking PETA’s Web site ended up at the defendant’s site. There is considerably less likelihood of confusion in the search engine context. If a store clerk is asked by a customer for the aisle with Pepsi, the customer is invariably sent to an aisle which includes competitors of Pepsi. Distributors pay for shelf placement in grocery stores. Is there a likelihood of confusion when a search engine creates similar results? Obviously, in the former case, the clerk is not paid by Coke to send the shopper to an aisle displaying the competing goods; in the latter case, this is what is happening. However, the question remains: are consumers actually confused when search engines, by their very nature, deliver a variety of site options to the user, rather than any one site in particular?
Because the court was considering a motion to dismiss, it was required to accept as true the facts alleged by GEICO; it merely summarized the issue as a complaint that defendants unlawfully used a trademark by allowing advertisers to bid on the trademarks and pay defendants to be linked to the trademarks. But given the caselaw the court cited and followed in its opinion, the fact that this is a preliminary ruling may be little comfort to Google and Overture.
Shortly before the publication of this article, Overture and GEICO settled their dispute but Google was not included in the settlement. GEICO’s case against Google
will go forward.
For more information, e-mail Jocelyn West Brittin at
jocelyn.brittin@hklaw.com or call toll free, 1-888-688-8500.