by David Muradyan

Can an advertiser use a competitor’s registered trademark as a keyword with Google’s  AdWords program to advertise its own product or service? In Binder v. Disability Group, Inc., Case No. CV 07-2760-GHK (Ssx), 2011 U.S. Dist. LEXIS 7037 (C.D. Cal., Jan. 25, 2011) (“Binder”), defendants Disability Group, Inc., a law firm specializing in Social Security benefit claims, and Ronald Miller (collectively, the “Defendants”), used and purchased plaintiff Binder & Binder’s (the “Plaintiffs”) trademark in an advertising campaign through Google AdWords. Google’s AdWords program allows advertisers to purchase targeted ads on the results page of a Google search. In order to have their ads appear on the search results page, Google advertisers select and bid on AdWords (purchased keywords) so that their ad might be displayed on the search results. Defendants used Plaintiffs’ registered trademark—“Binder and Binder”—as AdWords linked to their website. As a result, Plaintiffs brought a trademark infringement claim, among others, under the Lanham Trademark Act of 1946 (“Lanham Act”), 15 U.S.C. § 1114(1).

Background: Trademarks

For background, the Lanham Act prohibits persons from using trademarks, trade names, and trade dress that are likely to cause confusion about the source of a product or service. See 15 U.S.C. §§ 1114(1), 1125(a). The Lanham Act defines a trademark as including "any word, name, symbol, or device or any combination thereof" used by any person “to identify and distinguish his or her goods, including a unique product, from those manufactured or sold by others and to indicate the source of the goods, even if that source is unknown." 15 U.S.C. § 1127. Before claiming trademark infringement, a plaintiff must have a “valid, protectable trademark," and for a trademark to be “valid and protectable,” it must be “distinctive.” Zobmondo Entertainment, LLC v. Falls Media, LLC, 602 F.3d 1108, 1113 (9th Cir. 2010). A trademark’s distinctiveness measures its primary significance to the purchasing public. Quicksilver, Inc. v. Kymsta Corp., 466 F.3d 749, 760 (9th Cir.2006) (quotation marks omitted).

Marks are generally classified in categories of increasing distinctiveness, including (1) generic; (2) descriptive; (3) suggestive; (4) arbitrary; or (5) fanciful. Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 768 (1992). As a general matter, "[t]he more likely a mark is to be remembered and associated in the public mind with the mark’s owner, the greater protection the mark is accorded by trademark laws.", Inc. v. Walt Disney Co., 202 F.3d 1199, 1207 (9th Cir. 2000). As the Ninth Circuit has explained: “A mark’s conceptual strength depends largely on the obviousness of its connection to the good or service to which it refers. The less obvious the connection, the stronger the mark, and vice versa. . . . At one end of the spectrum, generic marks refer to the genus of which the particular product is a species, such as ‘bread’ or ‘door,’ and are not registerable as trademarks. At the other end of the spectrum are arbitrary marks—actual words with no connection to the product—such as Apple computers and Camel cigarettes, and fanciful marks—made-up words with no discernable meaning—such as Kodak film and Sony electronics that are inherently distinctive and therefore receive maximum trademark protection.  In the middle are descriptive marks, which describe the qualities or characteristics of a good or service and only receive protection if they acquire secondary meaning, and suggestive marks, which require a consumer to use imagination or any type of multistage reasoning to understand the mark’s significance and automatically receive protection.” Fortune Dynamic, Inc. v. Victoria’s Secret Stores Brand Management, Inc., 618 F.3d 1025, 1032-33 (9th Cir. 2010) (citations, quotation marks and formatting omitted).

Although the plaintiff in a trademark action bears the ultimate burden of proof that his or her mark is valid, federal registration provides "prima facie evidence of the validity of the registered mark and of the registration of the mark, of the registrant’s ownership of the mark, and of the registrant’s exclusive right to use the registered mark in commerce on or in connection with the goods or services specified in the registration,” and entitles the plaintiff to a “strong presumption” that the trademark is protectable. 15 U.S.C. §§ 1057(b), 1115(a); Zobmondo Entertainment, LLC, 602 F.3d at 1113-14;

Binder v. Disability Group, Inc.: Trademark Infringement

As noted above, Plaintiffs brought a trademark infringement claim under the Lanham Act claiming that Defendants’ use of the "Binder and Binder" trademark—registered under the Plaintiffs—constituted trademark infringement.

A federal trademark infringement claim may be brought by the holder of a registered trademark against any person who shall, without the registered trademark holder’s consent, (1) use any reproduction, counterfeit, copy, or colorable imitation of a registered mark; (2) in commerce; (3) in connection with the sale, offering for sale, distribution, or advertising of any goods or services; (4) where such use is likely to cause confusion, or to cause mistake, or to deceive. 15 U.S.C. § 1114(1)(a); Century 21 Real Estate Corp. v. Sandlin, 846 F.2d 1175, 1178 (9th Cir. 1988). 

In Binder, the United States District Court for the Central District of California (the “Court”) focused on whether Plaintiffs had ownership of the trademarks and whether Defendants’ use of the trademark through Google’s AdWords program was "likely to cause confusion." After rejecting the Defendants’ challenges to Plaintiffs’ ownership of the trademarks, the Court evaluated the likelihood of confusion of Defendants’ use of Plaintiffs’ trademark through Google’s AdWords program. Indeed, “[t]he likelihood of confusion is the central element of trademark infringement, and the issue can be recast as the determination of whether the similarity of the marks is likely to confuse customers about the source of the products.”, Inc., 202 F.3d at 1205 (citations and quotation marks omitted). In evaluating the likelihood of confusion between related goods or services, the following factors (referred to as the Sleekcraft factors) are considered: (1) strength of the mark, (2) proximity or the goods or services, (3) similarity of the marks, (4) evidence of actual confusion, (5) the marketing channels used, (6) the type of goods or services and the degree of care likely to be exercised by the purchasers of the defendant’s product, (7) defendant’s intent in selecting the mark, and (8) the likelihood of expansion of the product lines. AMF, Inc. v. Sleekcraft Boats, 599 F.2d 341, 348-49 (9th Cir. 1979). The Ninth Circuit has stated that in the context of the Web, “the three most important Sleekcraft factors are (1) the similarity of the marks, (2) the relatedness of the goods or services, and (3) the simultaneous use of the Web as a marketing channel.” Id.

After considering all of the evidence and evaluating the various Sleekcraft factors, the Court found that there was a "strong likelihood of confusion.” Plaintiffs’ marks and that used by Defendants were identical because both were Plaintiffs’ registered trademark of "Binder and Binder." Based on testimony that Plaintiffs extensively marketed and advertised their services and worked hard to build their reputation based around their name—Binder and Binder—the Court found that Plaintiffs’ marks were “strong.” The Court also found that the services provided by the two firms were identical, since both firms were competing for clients for social security disability claims cases. Moreover, the Court found that Defendants’ use of the Plaintiffs’ mark was intentional because Defendants used the mark based on the marks’ strength and appeal in the market. With respect to the "marketing channels used" Sleekcraft factor, both Plaintiffs and Defendants marketed their products through the Internet. Furthermore, the Court found that there was evidence supporting “actual confusion” as one witness testified that she believed she had retained Binder and Binder, when in fact she had retained Defendants. There was additional evidence showing that potential clients suffered "actual confusion" because, among other reasons, in one survey, 16 of the 17 individuals polled believed that when they clicked on Defendants’ website following their search, they were actually being brought to Binder and Binder’s website. Further, 15 of the 17 polled thought that when they filled out submission forms on Defendants’ site, they were actually doing so on Plaintiffs’ website (or someone associated with the Plaintiffs). Defendants’ deception continued even during real-time discussions with Plaintiffs. For example, one of the Plaintiffs’ employees contacted the Defendants, and an employee with the Defendants misrepresented Defendants’ relationship with Plaintiffs and claimed that Defendants advertised for Plaintiffs and that Plaintiffs sent them cases—all of which were untrue. Having considered all of the Sleekcraft factors, especially the three pertaining to the Web, the Court concluded that there was a strong likelihood of confusion.

The Court awarded Plaintiffs lost profits totaling approximately $146,000. Further, the Court concluded that Defendants’ conduct was willful especially because Defendants knew that the registered trademarks of a competitor were being used by Defendants and actually directed and caused them to be used. Under 15 U.S.C. § 1117(a), when a defendant acts willfully in its infringement of another’s trademark, the Court may award up to treble damages to the plaintiff if it finds that lost profits are inadequate. Taco Cabana Int’l Inc. v. Two Pesos, Inc., 932 F.2d 1113, 1127 (5th Cir. 1991). In this case, the Court "enhanced" the damages award to approximately $292,000, due to the willfulness of the infringement. Finally, the court awarded reasonable attorneys’ fees and costs after it determined that the trademark infringement case was "exceptional" under 15 U.S.C. § 1117(a).

After Binder, advertisers should be careful not to purchase and use a competitor’s registered trademark as a keyword with Google AdWords to advertise their own product or service. Otherwise, they run the risk of being exposed to damages in the form of “lost profits” and, depending on the “willfulness” of their infringement, up to treble damages.