Google Search Ad Rulings Spur Rethinking of Trademark Precedent

Appeals courts that recently ruled that buying ads linked to Google searches for competitors’ names doesn’t infringe trademarks should go further and find it doesn’t even constitute a use of the marks, practitioners and at least one circuit court judge say.

Judge Roopali Desai pushed her Ninth Circuit colleagues to reject the court’s precedent that bidding on keywords is a “use in commerce” that could trigger infringement claims under the Lanham Act, calling in a concurrence for her court to meet en banc.

Roughly two decades after Google’s launch, as the search tool has become ubiquitous, consumers are less likely to be confused about query results that don’t match the keywords entered, panels at the US Courts of Appeals for the Ninth Circuit and the Second Circuit have said in recent opinions affirming lower courts. But those rulings accepted that purchasing such ad terms is a “use in commerce,” if not infringement, under trademark law.

“At bottom, trademark law is designed to protect parties against infringing uses of their marks,” Desai wrote. “Bidding on and purchasing keyword search terms may not constitute such a use.”

Desai’s concurrence highlights a shifting focus in trademark law toward the aspect of “trademark use,” spurred by two Supreme Court rulings last year in Abitron v. Hetronic and Jack Daniel’s Properties v. VIP Products, attorneys said.

“The concurring opinion is looking for kind of a more careful analysis of trademark use,” said Christine Farley, law professor at American University. “That lines up with what the Supreme Court said in Jack Daniel’s by kind of elevating trademark use as criteria for whether or not a defendant can avail themselves.”

Eric Goldman from Santa Clara University said he was surprised by Desai’s suggestion to resuscitate the “use” question.

“That issue has been settled for over a decade,” he said. “Most judges would just let it go. But to Judge Desai’s credit, she saw a ruling that doesn’t make sense to her, and she called it out.”

Use in Commerce

The Ninth Circuit case centered on law firm Lerner & Rowe’s accusation a competitor infringed its marks when buying the terms “Lerner & Rowe” to prioritize its own ads in search rankings. In the Second Circuit, 1-800 Contacts sued Warby Parker because the search term “1-800 Contacts” prompted the glasses retailer’s website.

Trademark owners in the two cases had argued the third-party ad buys keyed to their marks created “Cyrano de Bergerac”-style confusion, Martin Schwimmer from Leason Ellis said, referencing the 1897 French play in which the title character secretly woos a love interest on behalf of his tongue-tied friend.

That would have been “a much better argument 25 years ago, when Google was young,” Schwimmer said. “You see language in both of these decisions that take notice of the fact that people who use Google are like my kids, who grew up using Google.”

Both circuit courts ultimately reasoned internet shoppers are more “sophisticated” today and aren’t likely to be confused about the mismatching search terms and ads.

“We’re clearing out the backlog of the judicial overreactions to trademark law in the early internet days,” Goldman said.

Desai’s concurrence rekindles a longstanding debate over how thoroughly courts should consider the “use” question before moving on to examine factors like the likelihood of confusion.

Mark Lemley from Stanford Law and Stacey Dogan from Boston University in 2007 favored a trademark use doctrine that would provide a “critical threshold” before an infringement suit proceeds. Meanwhile, Indiana University’s Mark Janis and University of Oxford’s Graeme Dinwoodie argued such an approach would “prevent trademark law from policing new information markets.”

Lemley told Bloomberg Law he agreed with Desai’s concurrence and said keyword bidding should never have been a use in commerce under the Lanham Act. Buying a keyword is no different than strategic product placement on grocery store shelves or placing a generic version of a drug next to a recognizable name, he said.

“The courts would have never said that’s trademark infringement,” Lemley said. “All I’m doing is deciding something based on what your mark is. I’m not actually using your trademark in my advertisement, in my product.”

But that technicality shouldn’t preclude its owner from bringing an infringement action, Janis and Dinwoodie said.

“I’d like to see that mediated through the confusion factors,” Janis said in an interview. “That is when I can detect, when I can make a plausible claim that the alleged infringer is doing something that takes advantage of the plaintiff’s mark.”

Combined with last year’s high court rulings, it appears the trademark use debate was never completely put to bed, Leason Ellis’ Schwimmer said.

“The Lanham Act is 75 years old, and I don’t think we’ve nailed down all of the parameters of ‘use in commerce,’” he said.

Potential Fallout

Adopting Desai’s approach would make search-term related lawsuits ripe for early dismissals, Allison Buchner from Kirkland & Ellis LLP said.

“There are ways plaintiffs could still clearly bring the cases, but they probably would need more than just the purchase of the keyword if that’s the way the Ninth Circuit goes,” she said.

Plaintiffs who can show the competitor’s ad includes their trademark, or the ad infringed the company’s trade dress, would have a stronger case, she said. But some of those activities may fall outside trademark law, she said.

“I don’t think it means you could never sue for an advertisement on the internet,” Lemley said. “It’s that you have to show that the advertisement itself is using the trademark in a way that confuses consumers.”

But that would weaken trademark protections, Janis said.

“All you have to do is make sure that you’re not mentioning the other mark,” he said. “That seems like a really cramped notion of using trademark law to protect consumers and to protect the integrity of the marketplace.”

The cases are:

• Lerner & Rowe PC v. Brown Engstrand & Shely LLC, 9th Cir., No. 23-16060.
• 1-800 Contacts Inc. v. JAND Inc., 2d Cir., No. 22-01634.