By Dale C. Campbell

Search engine websites sell keywords as a component of their advertising programs. By purchasing an advertising keyword, a business’s advertisement will appear next to the search results whenever a person enters the advertising keyword as a search term. Trademark questions arise whenever a competitor purchases an advertisement keyword that is confusingly similar to the protected mark of another competitor, thereby causing its advertisement to pop up next to the search results.

The Northern District Court recently addressed this issue in Storus Corp. v. Aroa Marketing (2008) WL 449835 (N.D. Cal.). Storus sells a money clip under the mark “Smart Money Clip.” Defendant Aroa also sells money clips in addition to other luxury personal items. Aroa purchased the advertisement keyword “smart money clip” offered by Google as part of its internet advertising program known as “AdWords.” By typing “smart money clip” in Google’s search engine, Aroa’s advertisement would appear to the right of all other search results. Aroa’s advertisement appeared as:

Smart money clip Elegant Steinhouse accessories. Perfect to add to any collection.

Storus sued, claiming that Aroa had used a mark that was confusingly similar to Storus’s valid, protectable trademark. Storus claimed that Aroa’s use of its mark created “initial interest confusion.”

“Initial interest confusion occurs when the defendant uses the plaintiff’s trademark in a manner calculated to capture initial customer attention, even though no actual sale was finally completed as a result of the confusion.” (Intrastellar Starship Services Ltd. v. Epix, Inc., 304 F.3d 936, 941 (9th Cir. 2002).) Initial interest confusion does not mean that a customer purchases one product, believing that they are actually purchasing the product of another. This is known as “source confusion.” Rather, initial interest confusion occurs when a defendant uses a plaintiff’s mark to divert people looking for the plaintiff’s product to the defendant’s website, thereby inappropriately benefiting from the goodwill plaintiff had established in its mark. (See Brookfield Communications, Inc. v. West Coast Entertainment Corp., 174 F.3d 1036, 1058 (9th Cir. 1999).)

In Storus, the Northern District Court found, without discussion, that Aroa had “used” plaintiff’s mark and focused its analysis on whether there was a likelihood of confusion by utilizing the eight Sleekcraft factors.  (See AMF, Inc. v. Sleekcraft, 599 F.2d 341, 348-49 (9th Cir. 1979).) However, in the context of infringing use on the internet, the Court first evaluates what has been termed the “internet trinity”: (1) similarity of the marks; (2) relatedness of the goods or services; and (3) the parties’ simultaneous use of the Web as a marketing channel. If the “internet trinity” analysis suggests confusion, the burden shifts to the defendant to prove that the remaining Sleekcraft factors “weigh strongly against the likelihood of confusion.” (See v. eBay, Inc., 506 F.3d 1165, 1174-75 (Fed. Cir. 2007).)

The Storus court found a likelihood of confusion after evaluating the internet trinity. The Court also found that defendant had failed to present any evidence concerning a lack of actual initial interest confusion and failed to present any evidence weighing against the likelihood of confusion.

However, the Court came to a different conclusion with respect to the second defendant sued by Storus – SkyMall. Storus contended that SkyMall’s web page infringed its trademark because when a customer typed in the phrase “smart money clip,” the customer was directed to a page showing the Aroa money clip. However, the Court found a lack of factual evidence that SkyMall actually “used” the mark “smart money clip.” The evidence presented to the Court established that the reason the customer was directed to the Aroa money clip was because the search mark phrase “smart money clip” also included the phrase “money clip.” To prevail at trial, Storus will have to prove that SkyMall’s search engine directs a customer searching for “smart money clip” to a page in SkyMall’s electronic catalog that contains the entire phrase “smart money clip.” The evidence presented was insufficient to draw that conclusion at summary judgment.

The findings in Storus are consistent with prior Ninth Circuit opinions prohibiting a defendant from using a plaintiff’s mark in “metatags” by causing initial customer confusion. Although a customer immediately notices upon entering the website that it is not the website of the trademark holder and, therefore, there is no actual source confusion, the misdirection of the user as a result of the embedded metatags violates the initial confusion doctrine.

However, at least one other circuit court comes to a different conclusion. The Second Circuit Court of Appeals that the use of protected marks in metatags does not infringe another’s trademark. The Second Circuit, rather than focusing on the element of confusion, instead focuses on whether a defendant “uses” a mark in commerce by employing hidden metatags. Courts in the Second Circuit have consistently held that there is no trademark “use” if the mark is not placed on any product, good, or service or where the mark is not used in a way that would indicate source or origin. (See 1-800 Contracts, 14 F.3d 400 and, Inc. v., Inc., 493 F.2d 545, 550 (E.D.N.Y. 2007).) The Second Circuit Court has criticized the Ninth Circuit, accusing it of jumping to the “likelihood of confusion” prong without first properly analyzing whether the mark is “used in commerce.”

Defendants who find themselves appearing in courts in the Ninth Circuit need to focus on the “use” element of trademark infringement and encourage the court to heed the viewpoints set forth by Circuit Judge Berzone in his concurring opinion in Playboy Enterprises, Inc. v. Netscape Communications, 354 F.3d 1020, 1034 (C.A. 9 2004). Judge Berzon argues that the “initial interest confusion” doctrine should not be expanded into situations where a party is never confused. For example, Judge Berzon felt that a different result would occur if an internet advertisement, such as in Storus, clearly stated that the ad is not for the trademark owner’s product. Judge Berzon analogized the situation to a department store carrying multiple brands of jeans. If a customer asked the store clerk where she can locate Levi’s jeans, no trademark violation occurs when the clerk directs the customer to the area of the store containing Levi’s jeans as well as Calvin Klein jeans. Judge Berzon cautioned that the initial interest confusion doctrine should not expand to internet advertisements where a potential customer is simply advised of alternative competitive products through advertisements that clearly do not identify themselves with the mark of another.