ABA’s 25th Annual Intellectual Property Law Conference Google’s AdWords Program: The Current State of the Law in the U.S. and Internationally Presented by James R. Davis, II Arent Fox LLP Washington, DC | New York, NY | Los Angeles, CA April 7, 2010

2 How Google Makes $ “Google AdWords is our advertising solution that lets businesses such as yours promote their products and services alongside or above Google.com search results.” Source: Google.com Google AdWords Disputes

How Advertisers Participate Prospective advertisers must specify:  The words that will trigger their ads; and  The maximum amount they will pay per click. Example: Rosetta Stone language program 3 Google AdWords Disputes

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AdSense A method of placing ads on Web sites that are relevant to the keywords chosen by the advertiser. 6 Google AdWords Disputes

$23,000,000,000 7

Why TM Owners Object Trademarks are “used” several ways  Third parties can buy TMs they want to be associated with their goods/services/sites  The TMs trigger sponsored ads when consumers search for the trademarks on Google.com  The TMs can show up in the text and title of the sponsored ads 8 Google AdWords Disputes

Typical Causes of Action Plaintiffs typically allege the following TM claims:  Direct, contributory and vicarious trademark infringement  False representation  Trademark dilution  Initial interest confusion 9 Google AdWords Disputes

Elements of a TM Infringement Claim  P owns a valid and protectable TM,  D used the TM in commerce,  In connection with the sale or advertising of goods or services,  Without P’s consent, and  The use is likely to cause consumer confusion (But see initial interest confusion) 10 Google AdWords Disputes

Google’s Defenses  Sale does not amount to using the TM if the TM does not appear in the sponsored ads.  Google does not compete with the P’s business: “Google operates a search engine. American flies airplanes.”  Grocery store analogy: “Just as it's reasonable to expect a range of brands on any shelf in a grocery store, providing users on Google with more than one option when they search for a brand name or other trademark helps them to find the best product at the lowest price.”  Communications Decency Act 11 Google AdWords Disputes

Critical TM Issues Is Google “using” the TMs in commerce?  If not, case usually dismissed on summary judgment  Initial Interest Confusion 12 Google AdWords Disputes

Initial Interest Confusion  Infringement caused by temporary confusion that is dispelled prior to sale  Does not require a likelihood of confusion at the time of sale; the mark must only capture the consumer’s initial attention  Particularly applicable to the Internet: domain names, metatags, and search engine keywords 13 Google AdWords Disputes

Litigation  Brookfield; Playboy v. Netscape  U.S. Pending  U.S. Resolved  International 14 Google AdWords Disputes

Initial Interest Confusion Cases Brookfield Communications v. West Coast Entertainment, 174 F.3d 1036 (9th Cir. 1999). Meta-tags “although there is no source confusion in the sense that consumers know they are patronizing West Coast rather than Brookfield, there is nevertheless initial interest confusion in the sense that, by using moviebuff.com or MovieBuff to divert people looking for MovieBuff to its web site, West Coast improperly benefits from the goodwill that Brookfield developed in its trademark.” 15 Google AdWords Disputes

Initial Interest Confusion Cases (cont’d.) Playboy Enterprises, Inc. v. Netscape Comm. Corp., 354 F.3d 1020 (9 th Cir. 2004). Banner ads triggered by trademarks “analogies to Brookfield suggest that PEI will be able to show a likelihood of confusion sufficient to defeat summary judgment” even though consumers will know they are not buying Playboy’s products. 16 Google AdWords Disputes

Pending: Rescuecom Corp. v. Google (N.D.N.Y.)  N.D.N.Y. ruled in favor of Google and held that Google was not using Rescuecom’s trademarks by selling them as keywords because the sponsored ads did not display the trademark.  Second Circuit overturned the district court’s ruling and remanded case. Sale of trademarks as keywords may constitute use in commerce.  Status: Pending 17 Google AdWords Disputes

Pending: Rosetta Stone Ltd. v. Google (E.D.Va.) Court denied Google’s motion to dismiss re:  Lanham Act trademark infringement and dilution;  VA unfair competition Court granted motion to dismiss re:  false endorsement and conspiracy claims Status: Pending 18 Google AdWords Disputes

Pending: Tokyo Broadcasting Sys. v. American Broadcasting Cos. (C.D. Cal.)  P alleged infringement based upon ABC’s purchase of P’s trademarked TV show names as Google AdWords  ABC filed 12(b)(6) motion claiming no initial interest confusion because TMs do not show up in sponsored ads (and ABC does)  Court denied ABC’s motion, citing Brookfield and Playboy Status: Pending 19 Google AdWords Disputes

Pending: Class Action Suits FPX, LLC v. Google (E.D. Tex.) - seeking class action status against Google, AOL, YouTube, Turner Broadcasting System, MySpace, and IAC/InterActiveCorp John Beck Amazing Profits v. Google (E.D. Tex.) - seeking class action status against Google and AOL 20 Google AdWords Disputes

Resolved: Google v. Amer. Blind & Wallpaper (N.D. Cal.) Holding: Google’s AdWords program may violate trademark law because it:  allows advertisers to key their ads to American Blind's trademarks; and  may cause initial interest confusion. Status: Settled 21 Google AdWords Disputes

Resolved: Google v. American Airlines (N.D. Tex.) Google moved to dismiss, claiming: - sales of AA's TM as keyword does not constitute use b/c TM does not appear in sponsored ads; - Google and AA not competitors and Google does not actually provide the keywords. Court denied Google’s motion in a one-page order without analysis. Status: Settled 22 Google AdWords Disputes

Current State of Law Internationally In October 2009, the E.U. Advocate General and Advisor issued formal opinion in Google v. LVMH Moët Hennessy — Louis Vuitton  Held that Google France’s sale of TMs as keywords in its AdWords advertising program did not infringe those marks. Status: Case remanded to the European Court of Justice 23 Google AdWords Disputes

France French courts have tended to find that Google’s sale of trademarks as keywords is a use in commerce, opening Google and its advertisers up to claims of trademark infringement 24 Google AdWords Disputes

Google’s Adjustments Different Policies Around the World “Depending on the regions in which you have trademark rights, we may investigate the use of trademarks in ad text only or in ad text and keywords.” 25 Google AdWords Disputes

Where Google Only Investigates TM Use in Ad Text About 200 countries, including:  U.S.  U.K.  Canada  Mexico Note: in the U.S., Google allows some ads to include TMs if for a reseller or information site. But not for competitors or criticism. 26 Google AdWords Disputes

Where Google Investigates TM Use as Keyword and In Ad Text About 60 countries, including:  Australia  China  Most of Europe (except UK, Switzerland, Ireland) 27 Google AdWords Disputes

URL Displayed in Sponsored Ad In 2008, Google amended its policy and required advertisers to display an accurate URL in sponsored ads “Your display URL must accurately reflect the URL of the website you're advertising. It should match the domain of your landing page so that users will know which site they'll be taken to when they click on your ad.” 28

Presented by James R. Davis, II Arent Fox LLP Washington, DC | New York, NY | Los Angeles, CA April 7, 2010