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INTERNATIONAL TRADEMARK ASSOCIATION Hot Internet Topics Sheldon H. Klein - Arent Fox PLLC (Moderator) Mark Kudlacik – CheckMark Network Michael Kwun –

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Presentation on theme: "INTERNATIONAL TRADEMARK ASSOCIATION Hot Internet Topics Sheldon H. Klein - Arent Fox PLLC (Moderator) Mark Kudlacik – CheckMark Network Michael Kwun –"— Presentation transcript:

1 INTERNATIONAL TRADEMARK ASSOCIATION Hot Internet Topics Sheldon H. Klein - Arent Fox PLLC (Moderator) Mark Kudlacik – CheckMark Network Michael Kwun – Google Inc. Charles D. Ossola – Arnold & Porter LLP Mike Rodenbaugh – Yahoo! Inc.

2 INTERNATIONAL TRADEMARK ASSOCIATION 2 Hot Internet Topics Business Facts That Drive The Law Schemes Affecting Search Engine Results & Consequences for Trademark Owners Trademarks As Keywords For Paid Results Defenses: First Amendment, Fair Use & Nominative Use (Gripe Sites, Comparative Advertising)

3 INTERNATIONAL TRADEMARK ASSOCIATION 3 Topic A: Business Facts That Drive the Law We are talking about real money –Total U.S. Ad Spending in 2005 $145 Billion –Online advertising in 2005 $12 billion industry 30% increase from 2004 ($9 Billion) $23 to $55 Billion by 2010 –84% of advertisers anticipate increased online advertising in 2006

4 INTERNATIONAL TRADEMARK ASSOCIATION 4 Business Facts That Drive the Law Where is most of this money being spent? –Keyword Advertising Google reported gross revenue of 2.25 Billion for Q Yahoo! reported gross revenue of 1.38 Billion for Q –(this includes other services beyond advertising) Why keyword advertising? –U.S. Consumer Media Time TV51% Radio23% Internet15% –Internet advertising allows for very targeted advertising. Ads match search request

5 INTERNATIONAL TRADEMARK ASSOCIATION 5 Intrinsic/Native Search results The results for your search term as ranked by the search algorithms. Search engines state that advertising has no impact on search results. Some basic definitions Sponsored Links Native Search Sponsored Results/Keyword Ad These are ads triggered by your search term. They are displayed in prominent positions on the search results page

6 INTERNATIONAL TRADEMARK ASSOCIATION 6 Some basic definitions Sponsored Links Native Search

7 INTERNATIONAL TRADEMARK ASSOCIATION 7 What is PPC? Pay Per Click Advertising –These sites often look as if they are search engine results, but are nothing more than links to ads on Yahoo! or Google. –Website owners are paid by Google or Yahoo! for displaying Google or Yahoo! ads on their websites.

8 INTERNATIONAL TRADEMARK ASSOCIATION 8 What is PPC?

9 INTERNATIONAL TRADEMARK ASSOCIATION 9 More about PPC 2 ways people reach PPC sites –Type in traffic. e.g. torontorealestate.com –Intrinsic reach results Typically, the only links PPC sites display are advertisements, even though they look like real search engine results Every time someone clicks on one of these links, the domain owner gets paid –The domain owner (domainer) gets a percentage of what the advertiser pays the search engine.

10 INTERNATIONAL TRADEMARK ASSOCIATION 10 Why these PPC sites exist These sites generate large profits for their owners and foster continued domain registrations. Partner sites generated 928 Million or roughly 41% of all Google revenue in Q1 Marchex purchased 100,000 domain names for $160 Million in 2005 Buy Domains was sold for $80 Million

11 INTERNATIONAL TRADEMARK ASSOCIATION 11 How PPC Impacts TM Owners XYZ Co. Marketing Dept decides to use keywords XYZ Co. pays Yahoo!/Google/MSN $$ for high placement PPC website owners recognize XYZ Co. pays a high $, so they feature XYZ Co ads. The PPC website owner registers more domain names with XYZ to drive more PPC revenue The XYZ Co. legal dept notices that many more typo squatting or infringing domain names are registered The XYZ Co. legal dept bills their marketing dept for the domain enforcement

12 INTERNATIONAL TRADEMARK ASSOCIATION 12 How PPC Impacts TM Owners Over 50% increase in domain registrations from Oct 2004 to Dec 2005 Nearly a 100% increase from Oct 2002 to Dec 2005

13 INTERNATIONAL TRADEMARK ASSOCIATION 13 How PPC Impacts TM Owners Domain Name Taste Testing –Domain registrations appear for a few days only to disappear. Some Domainers register 10,000+ names a week They will track how much traffic (revenue) that name generates They will keep the names that are profitable, and cancel the registrations of the other –5 Day cancellation provision for registrars

14 INTERNATIONAL TRADEMARK ASSOCIATION 14 Topic B: Schemes Affecting Search Engine Results & Consequences for Trademark Owners PPC sponsored search results vs. native results of free web crawl. PPC models constantly evolving, new emphasis on personalized search results.

15 INTERNATIONAL TRADEMARK ASSOCIATION 15 Schemes Affecting Search Engine Results & Consequences for Trademark Owners How do search engines rank native website search results? –Many factors -- proprietary algorithms decide relevance of each indexed site to every query. –Content of the site is key; engines provide guidance to webmasters to make sites easier to index. –Unlabeled paid results (paid inclusion) allowed? –Manipulative techniques are punished when discovered.

16 INTERNATIONAL TRADEMARK ASSOCIATION 16 Schemes Affecting Search Engine Results & Consequences for Trademark Owners Common ways website operators attempt to manipulate rank: –Keyword stuffing in metatags or text –Link Farms –Cloaking

17 INTERNATIONAL TRADEMARK ASSOCIATION 17 Schemes Affecting Search Engine Results & Consequences for Trademark Owners Law on use of others trademarks as metatags –Ordinarily, use of a mark in metatags is permissible if it appropriately relates to the content of a website (fair use). –However, this may not apply to the practice of repeating a term numerous times in metatags. –Metatags no longer affect search results to a significant degree.

18 INTERNATIONAL TRADEMARK ASSOCIATION 18 Schemes Affecting Search Engine Results & Consequences for Trademark Owners Search engine spam – computer generated pages used to generate PPC advertising revenue. Big, growing business that has spawned the domain testing problem for registrars and TM owners. Generally is not valuable content for users, and engines will remove or will lower ranking below original sites. Both Yahoo! and Google have policies to take TM infringements out of their parked page programs.

19 INTERNATIONAL TRADEMARK ASSOCIATION 19 Schemes Affecting Search Engine Results & Consequences for Trademark Owners

20 INTERNATIONAL TRADEMARK ASSOCIATION 20 Schemes Affecting Search Engine Results & Consequences for Trademark Owners

21 INTERNATIONAL TRADEMARK ASSOCIATION 21 Schemes Affecting Search Engine Results & Consequences for Trademark Owners

22 INTERNATIONAL TRADEMARK ASSOCIATION 22 Schemes Affecting Search Engine Results & Consequences for Trademark Owners Are search engines successfully countering the methods used to manipulate results? Domain testing/monetization is the latest new business model, showing growing sophistication of the domainers.

23 INTERNATIONAL TRADEMARK ASSOCIATION 23 Topic C: Trademarks As Keywords For Paid Results And Advertising In Search Engines Current search engine policies re trademarks –Summary of keyword ad programs –Allow use of or prescreen for trademarks as keywords? –Suggest use of trademarks as keywords? –Reactions to complaints by trademark owners

24 INTERNATIONAL TRADEMARK ASSOCIATION 24 Trademarks As Keywords For Paid Results And Advertising In Search Engines Does the sale and use of trademarks as keywords violate U.S. trademark law? –An improper attempt to profit from the good will of others trademarks? Or… –Not commercial (trademark) use and therefore no infringement ? –Even if use, is there a likelihood of confusion?

25 INTERNATIONAL TRADEMARK ASSOCIATION 25 Trademarks As Keywords For Paid Results And Advertising In Search Engines Requirement for commercial (trademark) use by an infringer stems from Lanham Act, Sec. 32(1): 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…(b)…shall be liable in a civil action by the registrant for the remedies hereinafter provided...

26 INTERNATIONAL TRADEMARK ASSOCIATION 26 Trademarks As Keywords For Paid Results And Advertising In Search Engines Requirement for commercial (trademark) use by an infringer may also stem from Lanham Act, Sec. 45: … a mark shall be deemed to be in use in commerce … on goods when … 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 … the goods are sold or transported in commerce, and … on services when it is used or displayed in the sale or advertising of services and the services are rendered in commerce …

27 INTERNATIONAL TRADEMARK ASSOCIATION 27 Trademarks As Keywords For Paid Results And Advertising In Search Engines Key cases have lead to differing rulings: –Merck & Co. v. Mediplan Health Consulting, Inc. (S.D.N.Y. 2006) –Edina Realty v. Themlsonline.com (D. Minn. 2006) –Google v. American Blind and Wallpaper Factory (N.D. Cal. 2005) (still pending) –GEICO v. Google (E.D. Va & 2005)

28 INTERNATIONAL TRADEMARK ASSOCIATION 28 Trademarks As Keywords For Paid Results And Advertising In Search Engines Analogy to pop-up ad cases: –Courts have held that use of others trademark to trigger ads is not commercial use of a trademark: Contacts, Inc. v. WhenU.com, Inc. (2d Cir. 2005) Wells Fargo & Co. v. WhenU.com, Inc. (E.D. Mich. 2003) U-Haul Intl., Inc. v. WhenU.com, Inc. (E.D. Va. 2003)

29 INTERNATIONAL TRADEMARK ASSOCIATION 29 Trademarks As Keywords For Paid Results And Advertising In Search Engines Should there be a distinction between keyword ads that include the trademark in the body of the ad and those that do not? See Geico v. Google, Inc., 2005 WL (E.D. Va. Aug. 8, 2005) (finding a likelihood of confusion only when trademark appears in heading or text of the ad)

30 INTERNATIONAL TRADEMARK ASSOCIATION 30 Trademarks As Keywords For Paid Results And Advertising In Search Engines Likelihood of Confusion Theory –Initial interest confusion: consumers mistakenly believe that a sponsored listing triggered by a trademark search term is sponsored or affiliated by the trademark owner and click on the sponsored link based upon that belief.

31 INTERNATIONAL TRADEMARK ASSOCIATION 31 Trademarks As Keywords For Paid Results And Advertising In Search Engines Under this theory, it is irrelevant whether the consumer remains confused after he opens the landing page on the sponsored link. The initial confusion occurred before he or she clicks on the sponsored link and it is not cured if that confusion is later dispelled.

32 INTERNATIONAL TRADEMARK ASSOCIATION 32 Trademarks As Keywords For Paid Results And Advertising In Search Engines Leading initial interest confusion cases are Playboy Enter., Inc. v. Netscape Comm. Corp., 354 F.3d 1020 (9 th Cir. 2004) and Brookfield Comm., Inc. v. West Coast Entmt Corp., 174 F.3d 1036 (9 th Cir. 1999). But see the Fourth Circuits apparent skepticism about this doctrine expressed in Lamparello v. Falwell, 420 F.3d 309, (4 th Cir. 2005).

33 INTERNATIONAL TRADEMARK ASSOCIATION 33 Trademarks As Keywords For Paid Results And Advertising In Search Engines Dilution Theory –Likelihood of confusion irrelevant. –Theory: Blurring of distinctiveness of the mark as associated exclusively with trademark owners goods or services occurs as a result of sponsored listings triggered off of the trademark when used as a search term.

34 INTERNATIONAL TRADEMARK ASSOCIATION 34 Trademarks As Keywords For Paid Results And Advertising In Search Engines –Proving dilution in court, whether under the federal dilution statute or state statutes, is challenging, especially in Internet context –The Trademark Dilution Revision Act of 2006, HR 683, requires only likelihood of dilution, nullifying the Supreme Courts 2003 ruling in Moseley v. V Secret Catalogue, Inc. –But…the Senate version of the bill (passed March 8, 2006) contains a more broadly defined fair use exemption than the House version, expressly excluding:

35 INTERNATIONAL TRADEMARK ASSOCIATION 35 Trademarks As Keywords For Paid Results And Advertising In Search Engines (A) Any fair use, including a nominative or descriptive fair use, or facilitation of such fair use, of a famous mark by another person other than as a designation of source for the persons own goods or services, including use in connection with (i) advertising or promotion that permits consumers to compare goods or services; or (ii) identifying and parodying, criticizing, or commenting upon the famous mark owner or the goods or services of the famous mark owner. (B) All forms of news reporting and news commentary. (C) Any noncommercial use of a mark.

36 INTERNATIONAL TRADEMARK ASSOCIATION 36 Trademarks As Keywords For Paid Results And Advertising In Search Engines Contributory Infringement –An untested theory as applied to search engines and paid listings. –Requires direct infringement by someone (advertiser?). –Requires knowledge or inducement of infringing activity.

37 INTERNATIONAL TRADEMARK ASSOCIATION 37 Trademarks As Keywords For Paid Results And Advertising In Search Engines –Theory: In establishing and administering a paid advertising program based in part on trademarks triggering sponsored listings, search engines are contributorily liable for advertisers infringement.

38 INTERNATIONAL TRADEMARK ASSOCIATION 38 Trademarks As Keywords For Paid Results And Advertising In Search Engines Non-U.S. cases: –Germany – not infringement: Metaspinner Media v. Google Nemetschek AG v. Google –Austria – not infringement: Longevity Health Products v. Google –France - infringement: Luteciel and Viaticum v. Google Societe des Hotels Meridien v. Google Louis Vuitton Malletier v. Google Accor v. Yahoo! Other cases

39 INTERNATIONAL TRADEMARK ASSOCIATION 39 Trademarks As Keywords For Paid Results And Advertising In Search Engines Search engine liability versus advertiser liability Should search engines be required to prescreen trademarks or merely respond to complaints?

40 INTERNATIONAL TRADEMARK ASSOCIATION 40 Topic D: Defenses: First Amendment, Fair Use, And Nominative Use The First Amendment guarantees US citizens the right to comment and criticize others by name (or trademark). Exceptions: Use of a mark commercially, in a manner which is likely to cause confusion, deception, dilution, or to further unfair competition –Commercial use issue is same inquiry as in keyword, pop-up and metatag cases – correct? State trade libel or defamation law

41 INTERNATIONAL TRADEMARK ASSOCIATION 41 Defenses: First Amendment, Fair Use, And Nominative Use Fair use defense –Lanham Act, Sec. 33(b)(4): descriptive fair use –Nominative use defense (comparative advertising or other legitimate need to refer to trademark owner)

42 INTERNATIONAL TRADEMARK ASSOCIATION 42 Defenses: First Amendment, Fair Use, And Nominative Use Sample case law – gripe sites –When gripers have prevailed, its usually on grounds that site is noncommercial; sometimes on inability of trademark owner to prove likelihood of confusion:

43 INTERNATIONAL TRADEMARK ASSOCIATION 43 Defenses: First Amendment, Fair Use, And Nominative Use Bally Total Fitness Holding Corp. v. Faber (C.D. Cal. 1998) Taubman Co. v. Webfeats (6 th Cir. 2003) Lucas Nursery and Landscaping, Inc. v. Grosse (6 th Cir. 2004) TMI, Inc. v. Maxwell (5 th Cir. 2004) Bosley Medical Institute, Inc. v. Kremer (9 th Cir. 2005) Lamparello v. Falwell (4 th Cir. 2005).

44 INTERNATIONAL TRADEMARK ASSOCIATION 44 Defenses: First Amendment, Fair Use, And Nominative Use –Gripers have not prevailed when a commercial purpose and likelihood of confusion or dilution (or some other wrong, like defamation), can be shown: People for the Ethical Treatment of Animals v. Doughney, (4 th Cir. 2001) Coca-Cola Company, et al. v. Purdy (8 th Cir. 2004)

45 INTERNATIONAL TRADEMARK ASSOCIATION 45 Concluding Thoughts Challenges to maintaining objectivity and value of search results and rank exist – an ongoing battle focusing more on technical than legal remedies for now Issue of whether utilization of trademarks as keywords for ads is commercial use as a trademark still unsettled; liability of search engines and advertisers still unclear Manner of use (i.e., in text of ad or not) of keyword matters True noncommercial gripe sites can rarely be shut down on trademark infringement grounds

46 INTERNATIONAL TRADEMARK ASSOCIATION 46 Concluding Thoughts Thanks for listening! Sheldon H. Klein - Arent Fox PLLC Mark Kudlacik – CheckMark Network Michael Kwun – Google Inc. Charles D. Ossola – Arnold & Porter LLP Mike Rodenbaugh – Yahoo! Inc.


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