Second Circuit Revisits Key Word Debate

Breaking News (if you consider it still “breaking” when in fact it occurred a couple of days ago).

The Second Circuit – the only court to firmly hold that key word advertising does not constitute trademark infringement – has overturned a lower court’s decision to dismiss Rescuecom Corp.’s trademark infringement claim against Google based on precisely such facts (e.g. selling the term Rescuecom as a keyword to Rescue’s competitors), and remanded the case for further proceedings. (Rescuecom Corp. v. Google Inc., case number 06-4881).

In making this ruling, the Second Circuit stated that, by selling the Rescuecom’s mark as a keyword to advertisers, Google’s conduct was likely to cause confusion, at least with respect to search-engine users who searched for Rescuecom’s trademark on Google. This, the Court found that Rescuecom had adequately alleged a Lanham Act claim. The Court however did not express any opinion as to whether Rescuecom could prevail on that claim.

You will recall, the Second Circuit previously ruled in 1-800 Contacts Inc. v. WhenU.com Inc. that WhenU’s triggered pop-up adds touting 1-800s competitors did not constitute trademark infringement because it was not a “use in commerce” as required under the Lanham Act. To a large degree, that case turned on the fact that WhenU did not use, display, or sell the 1-800 trademark to competitors. Here, however, Google is alleged to do all this and more.

We’ll see where this goes. It will be particularly interesting given the fact that the Second Circuit has been in the minority with respect to key word cases.