E-Commerce Law: Court Holds that Purchase of Trademarked Keywords is a Use in Commerce Under the Lanham Act but No Confusion is Likely

On January 4, 2007, the United States District Court for the Eastern District of Pennsylvania issued its opinion granting the motion to dismiss filed in J.G. Wentworth v. Settlement Funding, LLC, 2007 WL 30115 (E.D. Pa. 2007). Plaintiff alleged causes of action for trademark infringement based upon Defendant’s use of Plaintiff’s trademarks in Google’s AdWords program and in the meta-tags for Defendant’s website. Defendant filed a motion to dismiss, arguing that Defendant’s use of the marks was not a "use in commerce" under the Lanham Act and challenging Plaintiff’s claim on "likelihood of confusion" grounds.

Use in Commerce

Defendant argued that the alleged use of the marks for the purpose of triggering Internet advertising through Google’s AdWords program amounted to the sort "pure machine-linking function," detailed in U-Haul Int’l, Inc. v. WhenU.com, Inc., 279 F.Supp.2d 723, 725-36 (E.D. Va. 2003), a non-trademark use of another’s mark that does not identify the source of a product. In rejecting this argument, the Court relied upon the decision in Buying for the Home, LLC v. Humble Abode, LLC, 2006 WL 3000459 (D.N.J. 2006) in which that court held that, though participation in the AdWords program is not a traditional "use in commerce," it still satisfies the Lanham Act’s "use" requirement.

The Court specifically rejected the Second Circuit’s holding that such use was "analogous to ‘an individual’s private thoughts about a trademark.’" See 1-800 Contacts, Inc. v. WhenU.com, Inc., 414 F.3d 400, 409 (2d Cir. 2005). Instead, the Court held that "[b]y establishing an opportunity to reach consumers via alleged purchase and/or use of a protected trademark, the defendant has crossed the line from internal use to use in commerce under the Lanham Act."

Likelihood of Confusion

The concept of "initial interest confusion" applies where similar marks allow the defendant to lure potential customers away from a producer by initially passing off its goods as those of the producer, even where confusion as to the source of the goods is ultimately dispelled. In keyword trademark cases, attorneys often rely upon an initial interest confusion theory to establish the likelihood of confusion element of a trademark infringement claim.

In J.G. Wentworth, the Court rejected the initial interest confusion argument, noting that "initial interest confusion must create in consumers confusion as to the source of the goods or services or a misunderstanding as to an association between the mark holder and the mark user." The Court held that, since the Defendant’s use of the Plaintiff’s marks in the AdWords program created "separate and distinct" links "on any of the search results pages in question, potential consumers have no opportunity to confuse defendant’s services, goods, advertisements, links or websites for those of plaintiff." After noting that "no reasonable factfinder could find a likelihood of confusion under the set of facts alleged by plaintiff," the Court granted the motion to dismiss.

For more information on trademark infringement claims based upon keyword advertising programs, see Jonathan D. Frieden and Sean Patrick Roche, E-Commerce: Legal Issues of the Online Retailer in Virginia, 13 RICH. J.L. & TECH. 5 (2006), http://law.richmond.edu/jolt/v13i2/article5.pdf.