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Yes, the man telling us we "have enough to worry about" is wearing a cowboy hat. In the middle of NYC.

In his January 25, 2011 decision in the Central District of California, District Court Judge George H. King held that the targeted use of a third party’s trademark in a Google AdWord advertising campaign can constitute trademark infringement and can also leave advertisers open to an award of enhanced damages, attorneys fees and costs.  (Binder v. Disability Group, Inc., Case no. cv 07-2760-GHK)

The holding is a warning to advertisers that Google’s (current) placement and color of ads is insufficient by itself to avoid trademark infringement.  Accordingly, care must be taken to ensure that such ads are carefully worded, particularly since it appears that the infringed trademark in Binder was not even in the text of the offending ads.

Trademark infringement

In relation to the trademark infringement claim under 15 U.S.C. § 1114(1)(a), the Court noted:

“Moreover, ‘[i]n the context of the Web in particular, the three most important Sleekcraft factors [the 'Internet trilogy'] are (1) the similarity of the marks, (2) the relatedness of the goods or services, and (3) the simultaneous use of the Web as amarketing channel.’  GoTo.com, Inc. v. Walt Disney Co., 202 F.3d 1199, 1205 (9thCir.2000).”

The Court found a “strong” likelihood of confusion due to the strength of Plaintiff’s mark, identity of the marks, identity of services and identity of commercial channels (i.e. the Internet).  Accordingly, the Plaintiff’s registered marks were found to have been infringed by the Defendants’ AdWords ads.  There was also evidence of actual confusion among users viewing Google’s search results (which the Court described as the result of the Defendants’ “deception”), though the Court notes that evidence of actual confusion was not necessary.

False advertising

The Court also held that the Defendants’ use of Plaintiff’s trademarks as part of their AdWords campaign meant they were also liable for false advertising under 15 U.S.C. §1125(a), saying:

“Defendants used Plaintiff’s mark in their advertising campaign through Google to market their business in a manner that was likely to confuse potential clients and that decieved potential clients into thinking they were being led to Plaintiff’s website”. [Emphasis added.]

The indication is that the Defendants’ wrongful act was the very leading of users to their website, and was not in any way dependent on what appeared on said website.

Damages

The Court held that the Defendants’ intentional use of their competitor’s registered marks amounted to willful misconduct and a “deliberate intent to deceive”.  Accordingly, the Court awarded enhanced damages under 15 U.S.C. § 1117(a) in the amount of double the Plaintiff’s lost profits.

Furthermore, the Court held that this type of trademark infringement is the sort of “exceptional” infringement referred to in the Lanham Act, and awarded the Plaintiff additional orders of attorneys’ fees and costs.  The Court also found one of the Defendants’ officers personally liable since he had “directed, authorized or participated in” the infringement.  In a small victory for the Defendants, the Court declined Plaintiff’s claim for prospective corrective advertising costs, citing the passage of time (the judgment came a little over four years after the last infringement) and a lack of specificity in Plaintiff’s pleadings.  So make sure to start claims sooner rather than later.

Finally, the Court left the door open for a future litigant to argue that the failure of a mark owner to preemptively register their mark with Google (to prevent its selection as an AdWord) meant the owner has failed to mitigate its losses.  The argument failed in Binder partly because the evidence presented by the Defendant was vague, but the Court didn’t completely rule out the possibility that it could apply on different evidence (though it seems unlikely).

The full decision can be read below.
Binder v. Disability Group