Out of Sight, Out of Mind – The Secret World of Keyword Ads

Jonathan Moskin
June 5, 2008 — 985 views  

Doubtless only a lawyer could sensibly parse the statement that “commercial use is not the equivalent of ‘use in commerce.’”  To other sentient beings, it might seem that the only way of making “commercial use” of something would be “in commerce.”  Nonetheless, navigating this seeming logical labyrinth, lifted verbatim from a recent decision dismissing a suit concerning internet keyword advertising, may hold the key to what limits henceforth can be placed on such promotional tools – and maybe more important, how other more subtle and possibly insidious secret uses of trademarks to guide or divert Internet traffic can be regulated. 

Keyword ads are, of course, paid links provided or keyed by Internet search engines to given terms (including trademarks), the ads being then presented with other unsponsored or natural search results concerning those keyword terms.  When a car dealer pays to have a search engine, such as Google or Yahoo!, present a link to its website whenever an Internet user searches generic motoring terms, there is no problem.  When the same merchant pays for links to its website whenever someone searches proprietary General Motor–ing terms, the legal question arises whether this is a trademark infringement actionable under the Lanham Act.  The courts are now split whether, as a matter of law, such a use, admittedly commercial in nature, constitutes a use in commerce.  How this question (and its seemingly paradoxical logical underpinnings) is resolved remains very much in doubt, and will likely impact what restraints, if any, can be placed not only on keyword ads but also on the next generation of Internet marketing strategies.

The case quoted above, Merck & Co. v. MediPlan Health Consulting, Inc., 431 F. Supp.2d 425 (S.D.N.Y. 2006), offered a simple, certain solution to the question whether keyword ads risk infringement liability – one that will surely do nothing to slow the growth of keyword advertising, not to mention other so-called search engine optimization techniques (about which more in a moment). The mark and keyword was ZOCOR.  The defendants paid Google and Yahoo! for keyword links to their on-line pharmacies selling generic ZOCOR.  The court reaffirmed its own earlier decision dismissing Merck’s claims and holding that the keyword linking simply was not a “use in commerce” of Merck’s trademark because it was an unseen automated function that did not involve publicly using the mark anywhere on or in connection with the goods.  In so-holding, the court relied in turn upon another recent ruling involving pop-up ads (in many ways similar to keyword ads), in which the Court of Appeals for the Second Circuit held, in essence, that use of trademarks in an automated, machine-linking function, to generate such advertisements was not a use in commerce. 

In that case, 1-800 Contacts, Inc. v. WhenU.com Inc., 414 F.3d 400 (2d Cir. 2005), 1-800 Contacts sued for trademark infringement when WhenU’s adware program caused pop-up ads for its competitor, Vision Direct, to appear when Internet viewers visited its website.   The Second Circuit (consistent with numerous precedents) held that adware companies do not engage in “use in commerce” within the scope of the Lanham Act when, even for a fee, they employ technical means to cause computer users visiting specific Internet shopping sites to see pop-up ads for competing merchants.  1-800 Contacts turned on the Lanham Act requirement for proving infringement of showing that the defendant has used the challenged mark -- or a copy or colorable imitation of it -- “in commerce,” “in connection with the sale, offering for sale, distribution, or advertising of any goods or services.”  15 U.S.C. § 1114.  Relying on the statutory definition of what sort of “use in commerce” is necessary for a claimed trademark owner to establish rights in its mark in the first place, rather than the arguably broader test of infringement (namely, whether a use might be deemed “in connection with … the advertising of goods or services”), the Second Circuit held that the entirely veiled machine-linking function was not a trademark use, since it did not entail having the mark “placed . . . on the goods or their containers or the displays associated therewith.” 15 U.S.C. § 1127.  Part of the same statutory definition of a trademark, which the Court did not address, of course also provides that a mark is used for services when it is “used or displayed in the sale or advertising of services and the services are rendered in commerce …” (emphasis added).

In finding no such use in commerce, 1-800 Contacts correctly explained, in language equally applicable to most keyword ads: “The fact is that WhenU does not reproduce or display 1-800’s trademarks at all, nor does it cause the trademarks to be displayed to a [computer]-user.”   Sponsored keyword ads are essentially no different: they appear alongside native or natural search results, while the keyword search terms and software all function out of sight.  And the ads that are displayed (whether pop-ups or keyword ads) typically do not themselves anywhere use or display the subject mark or a colorable imitation of it.  They are, to the contrary, simply juxtaposed conveniently next to, or over or under the other content of interest. (When a mark is actually used in the visible text of a keyword ad, that presents a simpler case, and a finding of use in commerce is less in doubt – even where the court accepts the basic premise in Merck that sale of keywords does not, in and of itself, entail use in commerce. Hamzik v. Zale Corp., 2007 WL 1174863 (N.D.N.Y 2007).)

As this author suggested in a September 2005 article in Managing IP, The Problem Putting Down Pop-ups, without deciding whether or when (if ever) pop-up ads or keyword ads should be deemed likely to cause confusion, or whether some such uses should be immune from suit under the fair use doctrine, 1-800 Contacts and other like cases (including now various cases such as Merck involving keyword ads), address only half of the statutory test of what is a trademark (or more specifically a service mark).  If the question is whether Google or Yahoo! (or the various adware firms promoting pop-ups) “use or display” the subject trademarks “in the sale or advertising of services”, and whether those services are then “rendered in commerce”, to say the search engines and adware companies do not “display” the trademarks appears to address only half of the statutory test, thus depriving the term “use” of any meaning independent of the term “display.”  No less puzzling is that the courts have focused on the definition of how a trademark owner establishes rights in the first instance, rather than the definition of infringement: namely, whether the marks sold as keywords or employed to generate pop-ups are used “in connection with … the advertising of goods or services”.  It surely seems possible a mark can be used “in connection with” advertising even if it is not “displayed” on goods or services.

Although unassailably true that keyword ads (like most pop-ups) typically do not “display” the subject trademark, it is no less correct that they “use” the trademarks in the common sense meaning of the term “use”.  Indeed, that is how the search engines sell keyword ads.  For just this reason many courts, before and after Merck, have continued to find use in commerce when trademarks are sold as keywords. See, e.g., Google, Inc. v. American Blind & Wallpaper Factory, 2007 WL 1159950 (N.D.Cal. 2007);  J.G. Wentworth, SSC, LP v. Settlement Funding LLC, 2007 WL 30115 (E.D.Pa. 2007); 800-JR Cigar, Inc. v. GoTo.com, Inc., 437 F. Supp.2d 273 (D.N.J. 2006); Edina Realty, Inc. v. TheMLSonline.com, 80 USPQ2d 1039 (D.Minn.), reconsideration denied, 2006 WL 1314303 (D.Minn. 2006); Gov’t Empl. Ins. Co. v Google, Inc., 330 F.Supp.2d 700 (E.D.Va. 2004).  However, Merck has been followed by other recent cases (primarily if not exclusively in the Second Circuit).  See, Site Pro-1, Inc. v. Better Metal, Inc., 2007 WL 1385730 (E.D.N.Y. 2007); Rescuecom Corp. v. Google, Inc., 456 F. Supp. 2d 393 (N.D.N.Y. 2006).

Although the adware companies tend to be a bit more subtle in not expressly selling links to given trademarks, if one excludes those who were born yesterday, it would be hard to believe that the typical business buying “contextual” pop-up ads is unaware that the contexts in which its ads will likely appear include its competitors’ Internet sites.  Rather, it is probably a safe bet that most advertisers would not otherwise pay for the service.  Just so, on January 30, 2007, in what the New York Attorney General states is the first such enforcement activity against internet advertisers themselves, rather than simply the adware firms that place pop-up ads for the advertisers, Andrew Cuomo announced a settlement with three advertisers, Cingular Wireless, Priceline.com and Travelocity.com, requiring them, among other things, to pay fines and, henceforth, to exercise due diligence how their ads are delivered over the internet.

One related form of trademark use, comparable to their unseen presence behind keyword and pop-up ads, has been in metatags: concealed lines of HTML code that identify the contents of  web pages for indexing by search engines.  (Although typically unseen, metatags can of course be viewed by opening the “file” tab on a browser and viewing the “source” data.)  When the competitors’ trademarks have been used out of sight as metatags, most courts have not hesitated to hold that such surreptitious use constitutes “use in commerce”. See, e.g., Brookfield Communs., Inc. v. W. Coast Entm't Corp., 174 F.3d 1036 (9th Cir 1999); Australian Gold, Inc. v. Hatfield, 436 F.3d 1228 (10th Cir. 2006); Tdata, Inc. v. Aircraft Technical Pub., 411 F.Supp.2d 901 (S.D. Oh. 2006).  But see Site Pro-1, Inc. v. Better Metal, Inc., 2007 WL 1385730 (E.D.N.Y. 2007).  Yet, metatags are no more visible to the average Internet user than are the machine linking functions that generate keyword or pop-up ads.  As also noted in the author’s prior Managing IP article on the subject, it may well be that some uses of metatags or other unseen search engine optimization tools are fair and should be deemed lawful.  Indeed, perhaps the clearest example is Bihari v. Gross, 119 F.Supp. 2d 309, 318 (S.D.N.Y. 2000), where the same district court that decided Merck held that unauthorized use of a trademark in metatags was a use in commerce – albeit also a fair use in commerce and hence permissible.  In Bihari, the metatags and the site on which they were used employed the trademarks merely for the descriptive purpose of commenting (negatively) on the plaintiff, trademark owner.  See also Playboy Enterprises, Inc. v. Welles, 279 F.3d 796 (9th Cir. 2002).  However, following the Ninth Circuit’s 1999 ruling in Brookfield, in most of the other decided cases concerning metatags, where there was no such fair use defense, the unseen use has been deemed to be both “in commerce” and a basis for liability.   Just so, one of the grounds identified in Google, Inc. v. American Blind & Wallpaper Factory, 2007 WL 1159950 (N.D.Cal. 2007), for finding that Google’s AdWords program uses trademarks “in commerce” was the Ninth Circuit’s holding in Brookfield that comparable invisible use of trademarks in metatags is within the reach of the Lanham Act.

Without too badly torturing logic or the English language, concealed commercial use of trademarks in connection with Internet advertising and promotion (whether for keyword ads or pop-ups or in metatags) can not both be and not be a form of trademark usage – at least not without some significant differences in the actual nature of the uses.  Factual differences between the way keyword and pop-up ads are sold have certainly explained some of the differing decisions: many courts have noted that although  adware firms, such as the firm involved in 1-800 Contacts, have not offered expressly to link to specific trademarks, the search engines selling keywords typically do.  For this and other reasons, most of the courts to have considered keyword ads (including those cited above) have not followed the newly-emerging reasoning of the pop-up precedents; rather, finding such use to be use in commerce for purposes of the Lanham Act (even if unconventional use), such courts have been prepared to weigh liability for trademark infringement.   
Because many keyword  ads are sufficiently innocuous to present only modest risks of confusing customers; because even those risks that do exist will likely dissipate further as internet users increasingly understand and differentiate keyword ads from native search results; because some such ads are likely fair uses, and because truly misleading advertising should be separately remediable as false advertising, the importance of maintaining analytical clarity regarding what is use in commerce perhaps lies less in how keyword ad cases are resolved now than in how such analytical principles will be applied to already foreseeable future cases involving other similarly surreptitious uses of trademarks to guide traffic (and generate revenue) on the Internet.  Indeed, as Madison Avenue increasingly comes to rule the Internet (advertising revenues being of course a principal driver of so much Internet commerce), courts will likely come to grapple with ways far more subtle (or perhaps sinister) than keywords or pop-ups that can employ recognized trademarks in unseen ways to help promote competing goods or services.  If logical consistency has been somewhat elusive to date, we have yet to see how (or if) courts will regulate such subtler methods, including tools that already exist to optimize the relevancy or prominence of Internet sites as indexed by search engines. 

Sometimes referred to generically as “spamdexing” (which, fortunately, in no way involves attorneys in tight-fitting stretchy clothes), consider only three such search engine optimization techniques that are already in use: cloaking, invisible text and link farms.  Cloaking is a technical means to present to search engines’ spiders (which crawl the Internet to index content), content different from that presented on users' browsers. The search engines are effectively tricked into giving the site connected to the cloaked page a higher relevance ranking than its visible content would warrant.  And search engine users may also be similarly tricked into visiting a site (for example, a pornographic or infected site) when the search engine description differs – perhaps substantially - from what is shown on the user’s browser.  Invisible text similarly may entail unseen uses of protected trademarks to drive internet traffic.  Like unseen metatags, invisible text can be hidden right in the open by presenting words on a website against the same color as the background.  Sometimes referred to as a form of “keyword stuffing”, invisible text can cause a search engine to misread the relevance of a page in response to a given Web search and in this way mislead the unsuspecting human audience.  Unless the viewer happens to highlight the text with his or her browser, it remains unseen to the human eye, yet can mislead the colorblind search engines.  Finally, because search engines often rank sites based on the number of links to the site, so-called link farms, or groups of web pages that are all hyperlinked to one another, have been developed similarly to increase rankings by unseen manipulation of the coding on a site.  Such search engine optimization tools need not employ trademarks any more than metatags, keywords or pop-ups do, but to the extent they all can and do use trademarks in unseen text, how greatly do they differ from one another?  Curiously, the search engines that encourage sales of keywords, discourage such spamdexing techniques and sometimes de-list sites guilty of employing such manipulative tools to enhance relevance and rankings.

If the logic of all this seems a little obscure, perhaps it would be best to step back to ponder media other than the Internet.  Consider perhaps the time shortly after the last great transformation of the information age, when television was new, and a great hue and cry arose over concealed subliminal advertising on the small screen (and in movies).  (Consider as well that the book that initially drew such attention to the issue, Vance Packard’s The Hidden Persuaders, was written in 1957, as close if not closer to the launch of the TV era than are we to the launch of the Internet era.)  The technique typically involved flashing images so quickly the conscious mind could not process them, but the subconscious mind could.  In 1974, the Federal Communications Commission defined this technique as any “attempt … to convey information to the viewer by transmitting messages below the threshold level of normal awareness,”  and concluded that “such techniques are contrary to the public interest” (Public Notice Concerning the Broadcast of Information By Means of “Subliminal Perception” Techniques), 44 FCC 2d 1016 (1974). Another example recently in the news (as it was many years ago) involves legal concerns over surreptitious means to influence listening (and purchasing) habits in the broadcast music industry: namely, “payola”, the secret “pay-for-play” sums record companies pay broadcasters to promote favored songs.  Are either subliminal advertising or payola different in kind from the ever more stealthy techniques employed to drive in Internet traffic?

Keyword ads, pop-ups and other search engine optimization techniques may all prove to be largely harmless – or at worst, minor annoyances.  What is perhaps most troubling about such advertising is the type of software (little different from spyware) used to deliver pop-up ads to the user’s computer, and no such software is involved in keyword advertising.  Solely as a matter of trademark law, many such uses will undoubtedly be deemed permissible fair uses or appropriate forms of comparative advertising under existing legal rules.  Certainly the intellectual property attorneys and other media professionals who devote the most time wrestling with such issues (including those reading this article) are sophisticated enough not to be deceived or misled themselves.  Yet, it is less clear how the vast multitudes of Internet users are affected, and virtually none of the reported decisions to date have been based on admissible survey evidence of consumer impressions.  As such, and because of the ever more stealthy techniques being developed to drive Internet traffic, before bright line rules are implemented barring remedies for all such opaque advertising techniques operating below the threshold level of normal awareness, further consideration may be warranted whether use in commerce really does mean something other than commercial use.

© 2007 Jonathan Moskin

Jonathan Moskin is a partner in White & Case’s Intellectual Property practice in New York where he litigates trademark, copyright and patent cases, as well as contract disputes, trade secret, idea submission and right of publicity cases.  He can be reached at [email protected].

Jonathan Moskin

White & Case LLP