Advertising Law Blog

Just last week, the Second Circuit Court of Appeals issued an important trademark ruling that affects how businesses can advertise with Internet search engines. The Second Circuit held that the plaintiff, Rescuecom, had properly stated a claim for Lanham Act trademark infringement against Google because Google allowed the ads of Rescuecom's competitors to appear when people typed in Rescuecom as a search term. The decision reversed a Northern District of New York holding that when a business pays for a search engine to display an ad every time an Internet reader entered a competitor's trademark, there was no use of that trademark in commerce, and therefore no infringement.

The district court judge, Chief Judge Mordue, dismissed Rescuecom's complaint because he believed a prior Second Circuit case, 1-800 Contacts v. WhenU.com, Inc., 414 F.3d 400 (2d Cir. 2005) required him to do so. The Second Circuit distinguished the prior ruling, saying that using a competitor's trademark in spyware was different from a search engine. The spyware caused pop-up ads to appear in response to competitor's web address being typed in, which is not necessarily the same as the trademark. Also, the pop-ups were clearly advertisements. In this case, the Second Circuit found it significant that Google not only recommends using competitor's trademarks but it also "fails to label the[resulting] ads in a manner which would clearly identify them as purchased ads rather than search results."

Although the ruling is good news for trademark owners, this case is far from over. The case now heads back to district court to begin the discovery process. The Second Circuit cautioned, "we express no view as to whether Rescuecom can prove a Lanham Act violation."