A District Court in New York has become the latest to find that using a competitor’s trademark in Google’s AdWords program can be trademark infringement. District Judge Roslynn R. Mauskopf found that the Defendants’ selection of “PILLOW PETS” and similar marks as a trigger for Google Ads is likely an infringement of the Plaintiff’s registered trademarks “MY PILLOW PETS” and “IT’S A PILLOW, IT’S A PET”, and granted Plaintiff’s motion for a preliminary injunction. The case is CJ Products LLC v. Snuggly Plushez LLC, 11-CV-0715 (RRM)(SMG), NYLJ 1202512398696, at *1 (EDNY, Decided August 22, 2011). Continue reading »
While the Wall Street Journal (initially, at any rate) declared outright victory for Google’s AdWords service after the Court of Justice of the European Union (“ECJ” or “CJEU”) ruled that the sale of keywords to advertisers did not constitute “use” of those keywords within the meaning of the Trade Marks Directive (89/104/EEC), most of us were more cautious from the outset.
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.
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.
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.
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).
No cigar for Tiffany in any of its claims against eBay
BREAKING NEWS: The District Court for the Southern District of New York has today ruled that Tiffany’s false advertising claim against eBay has failed. Judge Richard Sullivan issued a seven page order to address whether certain of eBay’s advertisements were likely to mislead or confuse consumers, after all other aspects of Tiffany’s appeal against his 2008 decision had been dismissed by the Second Circuit in April 2010.
Tiffany’s remanded claim rested on section 43(a)(1)(B) Lanham Act, which forbids any false or misleading descriptions or representations of fact concerning “the nature, characteristics, qualities, or geographic origin of … goods, services or commercial activities” (15 U.S.C. § 1125(a)(1)(B)). This can be proved in one of two ways: either the claims are literally false; or they are likely to mislead or confuse customers. (Tiffany (NJ), Inc. v. eBay, Inc., 600 F.3d 112, quoting Time Warner Cable, Inc. v. DIRECTV, Inc., 497 F.3d 114, 153 (2d Cir. 2007)).Since the claims in this case were not literally false, Tiffany had to “demonstrate, by extrinsic evidence that the challenged commercials tend to mislead or confuse consumers” and that “a statistically significant part of the commercial audience holds the false belief allegedly communicated by the challenegd advertisement” (Tiffany, 600 F.3d at 112-113, quoting Johnson & Johnson, Merck Pharm. Co. v. Smithkline Beecham Corp., 960 F.2d 294, 297, 98 (2d Cir. 1992)). It was “for the limited purpose of the District Court’s re-examination of the false advertising claim” that the Second Circuit had remanded the case to the District Court.Denying Tiffany’s petition, Judge Sullivan stated:
“For the reasons that follow, and by Plaintiff’s own admission, the Court concludes that there is insufficient evidence in the extensive trial record to support a finding that the challenged advertisements were misleading or confusing. The Court further rejects Plaintiff’s post-appeal argument that the limited remand from the Circuit left open alternative theories of liability under the Lanham Act.” (Internal quotations omitted.)
The Order shows that although the evidence presented by Tiffany demonstrated confusion on the part of at least some consumers, there was no evidence of their statistical significance and no proof that they had been confused by the advertising at the center of Tiffany’s complaint. In fact, the testimonies of Tiffany’s witnesses seemed to indicate the opposite, i.e. that the “Tiffany on eBay” advertising had played no part in their confusion.
Finally, Tiffany argued that its false advertising claim could succeed where it could adequately demonstrate that eBay had “intentionally set out to deceive the public”, and that eBay’s “deliberate conduct in this regard is of an egregious nature” (Merck 960 F.2d at 298). Judge Sullivan rejected this argument for two reasons. First, it was not raised until after the Second Circuit had remanded the false advertising issue back to the District Court, and therefore it was not admissible. Second, even if it had been admissible, “nothing in the trial record indicates that eBay was aware [this is what the Order says, but should it say “intended”?] that consumers were being misled by eBay advertisements”.
This decision does not create new law. It is unlikely to surprise many and is even less likely to have any significant impact on brand protection policies, given that the suit was filed in response to eBay’s 2004 practices. Internet service providers have evolved significantly since then and currently offer a variety of rights protection programs that seem to be helping them survive lawsuits quite well. Even if online businesses, including auction houses, will have no reason to change their current practices as a result of today’s ruling, brand owners will always be well advised to bear in mind that working with ISPs to tackle counterfeiting will often be a cost-effective alternative to litigation.