New Jersey Law Journal

December 8, 2003

LENGTH: 1990 words

HEADLINE: Exploitation of Trademarks on the Internet;

No statutory bar exists for holding search engines liable for either direct or contributory trademark infringement

BYLINE: By Jonathan Bick; Bick is of counsel to WolfBlock Brach Eichler of Roseland and is an adjunct professor of Internet law at Pace Law School and Rutgers Law School. He is also the author of 101 Things You Need To Know About Internet Law [Random House 2000].

BODY:

While the Anticybersquatting Consumer Protection Act adequately addresses the legal difficulties associated with bad faith registration of trademarked names by nontrademark holders, e-exploitation of trademarks is still a problem for trademark holders.

Unlawful e-exploitation of trademarks arises in a number of ways outside of cybersquatting from the use of the Internet to infringe and dilute traditional trademarks.

In the case of unlawful e-exploitation of trademarks, as it is in the case of traditional unlawful trademark exploitation, the threshold question is whether there is a likelihood of confusion and whether there is dilution. Unfortunately, these questions are difficult to answer simply by applying traditional trademark doctrines.

For example, does an unlawful use of a trademark as part of a meta tag yield sufficient confusion so as to satisfy a trademark infringement finding? Does the fair-use defense apply to the unauthorized use of a trademark in a URL and therefore result in a noninfringing use?

In Qualitex Co. v. Jacobson Prods. Co., Inc., 514 U.S. 159 [1995], the Supreme Court set forth basic objectives of trademark law that are helpful in applying traditional trademark law to unlawful trademark e-exploitation. It stated that trademark law should simply protect consumers and prevent competitors from unfairly taking advantage of a trademark.

The Court's conclusions are bolstered by both a long history of judicial finding that emphasizes that trademarks protect consumers and legislative additions to the Lanham Act, such as the Federal Dilution Act, 15 U.S.C.A. §[1125[c], which is primarily concerned with free riding.

More precisely, the Lanham Act seeks to protect consumers by preventing the use of trademarks that are "likely to cause confusion." See 5 U.S.C.A. §[1114. This provision covers confusion as to source of the good or service in question, and also confusion as to sponsorship and/or endorsement by the trademark holder.

Additionally, the so-called unfair competition provision of the Lanham Act provides a similar protection from the use of an unregistered mark that is likely to cause confusion.

The application of the "likely to cause confusion" test to Internet trademarks is the same as the test for traditional trademarks and normally involves seven factors: [1] the strength of the mark; [2] the proximity of the goods; [3] the similarity of marks; [4] evidence of actual confusion; [5] possibility of bridging the gap; [6] sophistication of the consumer; and [7] good faith on the part of the alleged infringer.

Courts usually refer to these tests as either the Polaroid test or the Sleekcraft test. See Polaroid Corp. v. Polarad Elect. Corp., 287 F.2d 492 [2d Cir. 1961] and AMF Inc. v. Sleekcraft Boats, 599 F.2d 341 [9th Cir. 1979].

In short, while the Internet may bring a novel fact into a case, traditional trademark case law is sufficiently relevant to properly assess whether an unauthorized use of a trademark on the Internet is an infringement.

It should be noted that the Lanham Act also requires that in order to find a violation of the act, the mark use must also be in commerce. Thus, the unauthorized use of the mark must normally be used in connection with a sale of goods or services.

Normally, a trademark holder is most interested in preventing a competitor from using a mark without authorization. However, a trademark holder is also interested in preventing both competitors and noncompetitors from diluting the effectiveness of his or her mark, both on the Internet and in traditional commerce. The Federal Dilution Act applies where unauthorized trademark users cause actual "dilution of the distinctive quality of the mark."

In Ringling Bros. Barnum & Bailey Combined Shows, Inc. v. Utah Div. of Travel Dev., 170 F.3d 449 [4th Cir. 1999], the court found that to establish dilution, a trademark holder must show that:

§* an unauthorized use of a mark was made that was sufficiently similar to the famous mark to evoke in a relevant universe of consumers a mental association of the two;

§* such a use has caused economic harm; and

§* such actual economic harm to the famous mark's economic value by lessening its former selling power as an advertising agent for its goods and services.

However, to find dilution in an Internet case, a court need not even rely on the traditional definitions of "blurring" and "tarnishment." See Panavision Int'l, L.P. v. Toeppen, 141 F.3d 1316 [9th Cir. 1998].

In the past, similar trademarks could exist in different geographic areas at the same time without infringement. Due to the Internet's virtual elimination of geographical limitations for the purpose of e-commerce, similar trademarks cannot co-exist without a high likelihood of business and consequential legal difficulties.

Meta Tags and Deep Linking

One unique matter related to the unlawful e-exploitation of trademarks arises from using trademarks in software which may not be visible to an Internet user but which may result in consumer confusion. In particular, this problem arises from the use of trademarks in meta tags.

Meta tags are software codes that provide information about the content of Internet sites. The unlawful e-exploitation of trademarks arises when meta tags are used to lure or deceive search engines by confusing Internet users into thinking that by visiting a particular Internet site they will find information related to the trademark set forth in the meta tag.

In Brookfield Communications v. West Coast Entertainment Corp., 174 F.3d 1036 [9th Cir. 1999], the Ninth U.S. Circuit Court of Appeals found that unauthorized use of another's trademark in a meta tag is unlawful.

However, in Playboy Enter., Inc. v. Welles, 279 F.3d 796 [9th Cir. 2002], the court found that the meta tags were a nominative use, and therefore not infringing. The court did not accept the argument that the use of "Playboy" diluted the Playboy trademark and reasoned that the nominative use of a trademark causes no harm.

Another uniquely Internet related unlawful e-exploitation of trademarks arises from Internet linking. An Internet link is a software connection from one part of the Internet to another. Thus, linking may fool Internet users as to the source of content. This is particularly true of deep linking -- linking from one Internet site into a page other than the home page of another's Internet site].

The case of Ticketmaster Corp. v. Tickets.com Inc., 2000 U.S. Dist. LEXIS 12987 [C.D. Cal. 2000], involved deep linking. Two companies were in the business of providing tickets [or information on how to obtain tickets] and one company used content from the other company's Web site to help sell its goods.

Regarding the relevant Lanham Act claims that arose from this matter, the court held that since no "pass off" occurred, the use of deep linking alone would not yield a successful claim associated with an unlawful trademark use.

It should be noted that trespassing tort claims and copyright claims would likely be sustained by a court. See eBay Inc. v. Bidder's Edge, Inc., 100 F. Supp. 2d 1058 [2000] [regarding applying trespass law to the Internet].

The use of trademarks as Internet search terms for search engines may also constitute unlawful e-exploitation of trademarks. While an Internet search engine provider may register with the U.S. Copyright office as an Internet Service Provider and, hence, receive limited protection from copyright liability under the Digital Millennium Copyright Act, 17 U.S.C. §[512d [1998], and protection from defamation and other nonintellectual property state law claims arising from third-party content under the Communications Decency Act, 47 U.S.C. §[230 [1996], no such immunity is given from trademark liability.

While a search engine is provided with a safe harbor from copyright liability under the DMCA and from defamation [and more] under good Samaritan Immunity [Communications Decency Act] in Gucci America, Inc. v. Hall & Assoc., 135 F.Supp.2d 409 [S.D.N.Y. 2001], no statute has dealt with trademark infringement-related immunity. Consequently, no statutory bar exists for holding search engines liable for either direct or contributory trademark infringement.

In particular, the use of trademarks as Internet search terms by search engine providers constitutes unlawful e-exploitation of trademarks when a search engine provider receives consideration for placing a link to a site that has no connection with the trademark used by the search engine user in a search. [For example, if Pepsi paid Yahoo to return a Pepsi link when a Yahoo search engine user used COKE as a search term.]

In such an instance, a court would most likely find that if the practice of misleading paid placement is likely to confuse consumers into thinking that there is a relationship or affiliation between the trademark searched for and the sponsored link, it should be unlawful. However, many search engines are aware of the legal difficulties that may arise from the potentially unlawful e-exploitation of trademarks and have used their Internet terms of use agreements to diffuse potential legal difficulties.

Recently, the makeup firm Graftobian Makeup Co. of Madison, Wis., paid the search engine firm Overture to display its link when an Overture search engine user requested the name MEHRON. The name MEHRON is the trademark of a competitor.

A representative of Mehron wrote to Overture search services saying that he learned that a "Graftobian Makeup Co. of Madison, Wis., has registered our trademark -- Mehron -- as a search term for directing Internet inquiries to their Web site." He stated that his attorney advised him that both Overture Services and Graftobian Makeup Co. are most likely in violation of the Lanham Act [unfair trade practices] and of trademark infringement. Finally, the Mehron representative demanded that Overture confirm in writing, within 72 hours, that they have ceased allowing Graftobian Makeup Co. to use the trademark -- Mehron.

Overture removed the misleading search engine results and wrote back, in part, as follows:

Overture does not approve of or condone Web sites that infringe trademarks. However, Overture generally has no control over the content presented by the advertisers who list their Web sites on our search engine. Overture does require that the Web site be relevant under our guidelines. For example, an advertiser who refers to another company's trademark in a search term must be using that trademark fairly on its Web site.

While we are not in a position to arbitrate trademark or other intellectual property disputes between third parties, if a trademark owner brings a Web site to our attention that it believes does not contain relevant content, we will review the Web site for compliance with our guidelines.

After careful review, we have determined that one or more listings under the referenced search term were not in compliance with our internal relevance guidelines. Those listings have therefore been removed. Please note that the listings may be resubmitted by the advertiser, and included in our search results, if changes are made to the title or description of the listings, or the content of the website, to bring the listings into compliance with our relevance guidelines.

If you have further concerns about any remaining listings, we suggest you contact the advertiser with whom you have a dispute directly.