Thursday, April 2, 2009

Massachusetts District Court Finds Keyword Purchase Constitutes Trademark Use

A Massachusetts District Court has held that the purchase of a trademarked keyword to trigger sponsored links constitutes a "use" within the meaning of the Lanham Act. See Hearts on Fire Company, LLC v. Blue Nile, Inc., Case No. 08-cv-11053 (D. Mass. March 27, 2009).

I previously blogged about this case here. Hearts on Fire Company, LLC (“HOF”), the company behind the “Hearts On Fire” diamond (a/k/a The World's Most Perfectly Cut Diamond) (pictured above), filed a trademark infringement lawsuit against Blue Nile, Inc. (“Blue Nile”), an online retailer of certified diamonds and jewelry, based on Blue Nile’s purchase of the mark “Hearts On Fire” as keyword which generated a Blue Nile sponsored link for searchers who searched for “Hearts On Fire”. Blue Nile had filed a Motion to Dismiss HOF’s complaint in part based on the argument that its purchase of the keyword “Hearts On Fire” was not trademark use.

After reviewing the conflicting circuit court decisions on the matter (the First Circuit Court of Appeals has yet to address this issue), United States District Judge Nancy Gertner, in denying Blue Nile’s Motion to Dismiss, decided to follow the Ninth and Tenth Circuit precedents on the purchase of trademarks triggering banner ads as constituting use under the Lanham Act (Playboy Enterprises, Inc. v. Netscape Commc'ns Corp., 354 F.3d 1020 (9th Cir. 2004); Australian Gold, Inc. v. Hatfield, 436 F.3d 1228 (10th Cir. 2006)) which have been applied by other district courts to the purchase of trademarked keywords to trigger sponsored links. See Boston Duck Tours, LP v. Super Duck Tours, LLC, 527 F. Supp. 2d 205, 207 (D. Mass. 2007) (finding keyword-purchasing a "use" for trademark purposes); J.G. Wentworth, S.S.C. Ltd. P'ship v. Settlement Funding LLC, 2007 WL 30115 (E.D. Pa. 2007) (finding trademark use in sponsored linking); Buying for the Home, LLC v. Humble Abode, LLC, 459 F. Supp. 2d 310 (D.N.J. 2006); Gov't Employees Ins. Co. v. Google, Inc., 330 F. Supp. 2d 700 (E.D. Va. 2004).

The Court noted that courts finding the purchase of keywords to be trademark "use" focused more on the broader definition of “use” in 15 U.S.C. § 1114 compared to the definition in the Lanham Act’s definition section (15 U.S.C. § 1127):
Rather than relying only on the Act's definitions section as the Second Circuit has done, see note 5, supra, these courts often look also to its civil remedies provision, which defines "use" more broadly. Compare 15 U.S.C. § 1127 (definitions section), with 15 U.S.C. § 1114 (civil remedies provision); see also Boston Duck Tours, 527 F. Supp. 2d at 207 (finding that "sponsored linking necessarily entails the 'use' of the plaintiff's mark as part of a mechanism for advertising," based on the statute's "plain language"). In particular, the civil remedies provision penalizes the "use in commerce" of "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." 15 U.S.C. § 1114 (emphasis added); see also note 2, supra. The purchase of a competitor's trademark to trigger search-engine advertising is precisely such a use in commerce, even if the trademark is never affixed to the goods themselves. In effect, one company has relied on its competitor's trademark to place advertisements for its own products in front of consumers searching for that exact mark. The Lanham Act's use requirement is not so narrow or cramped that it would fail to treat this conduct as a "use in commerce."
Even the Act's definitions section, which pre-dates the advent of internet commerce and advertising, treats as a "use in commerce" any use of the trademark on "displays associated" with the goods offered for sale. 15 U.S.C. § 1127. On the facts of this case, by contrast to 1-800 Contacts, 414 F.3d 400, a computer user's search for the trademarked phrase necessarily involves a display of that trademark as part of the search-results list. For instance, if a computer user searches for the "hearts on fire" trademark at, the text "Web search results for 'hearts on fire'" is prominently displayed above the search results, including the sponsored links. Indeed, this display is exactly what the Defendant paid for: the association of Blue Nile's sponsored link with the searched-for trademark.
(emphasis in original)

The court held that given the Lanham Act's language and the broader purposes of the trademark statute, “there is little question that the purchase of a trademarked keyword to trigger sponsored links constitutes a ‘use’ within the meaning of the Lanham Act.”

The court went on to find that HOF’s allegations were sufficient at this stage to state a claim for trademark infringement (including a claim of infringement based on initial interest confusion). Even though none of Blue Nile’s sponsored links displayed the “Hearts On Fire” mark, HOF alleged sufficient allegations that consumers would likely to be confused based on the surrounding context in which the results appear.

Another victory for trademark owners looking to go after sponsored link purchasers who buy trademarks as search engine keywords.

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