American Conference Institute’s Corporate Counsel Forum Brand Protection in the World of Keyword Advertising Mike Rodenbaugh – Yahoo! Inc. Scott Hervey – Weintraub Genshlea Chediak

American Conference Institute’s Corporate Counsel Forum 2 Brand Protection in the World of Keyword Advertising Business Facts That Drive The Law Schemes Affecting Search Engine Results & Consequences for Trademark Owners Trademarks As Keywords For Paid Results Defenses: First Amendment, Fair Use & Nominative Use (Gripe Sites, Comparative Advertising) Spyware as a Tool for Advertisers

American Conference Institute’s Corporate Counsel Forum 3 Topic A: Business Facts That Drive the Law Big $$ –Online advertising industry $16.8 Billion revenue in 2006 (per IAB/PWC) 34% increase from 2005 Should exceed $55 Billion by /3 spent on top 4 portals in ‘07, up from 48% in ‘04

American Conference Institute’s Corporate Counsel Forum 4 Business Facts That Drive the Law Where is most of this money being spent? –Search Marketing –Display Advertising Why keyword advertising? –Allows for very targeted advertising. Ads match search request. –Billions of searches conducted daily –750 million people used the internet in January

American Conference Institute’s Corporate Counsel Forum 5 Intrinsic/Native Search results Some basic definitions Sponsored Links Native Search Sponsored Results/Keyword Ad

American Conference Institute’s Corporate Counsel Forum 6 Some basic definitions Sponsored Links Native Search

American Conference Institute’s Corporate Counsel Forum 7 Domain Parking

American Conference Institute’s Corporate Counsel Forum 8 More about PPC Main ways people reach PPC sites –Type in traffic. e.g. torontorealestate.com –Intrinsic search results –Links from content sites –Spam, Spim, Adware Every time someone clicks on one of these links, the domain owner gets paid –The domain owner (domainer) gets a percentage of what the advertiser pays the search engine.

American Conference Institute’s Corporate Counsel Forum 9 Domain Registration growth Nearly a 100% increase in gTLD registrations from Oct 2002 to Dec 2005 Another 40% increase in 2006, to 80 million Plus 22.5 million in top 6 ccTLDs (.de,.uk,.nl,.eu,.it and.fr) Plus 250+ other TLDs, with.asia,.tel and many more to come

American Conference Institute’s Corporate Counsel Forum 10 How PPC Impacts TM Owners Domain Name ‘Taste Testing’ –Domain registrations appear for a few days only to disappear. Some Domainers register 10,000+ names a week They will track how much traffic (revenue) that name generates They will keep the names that are profitable, and cancel the registrations of the other –5 Day cancellation provision for registrars

American Conference Institute’s Corporate Counsel Forum 11 Schemes Affecting Search Engine Results & Consequences for Trademark Owners

American Conference Institute’s Corporate Counsel Forum 12 Schemes Affecting Search Engine Results & Consequences for Trademark Owners

American Conference Institute’s Corporate Counsel Forum 13 Schemes Affecting Search Engine Results & Consequences for Trademark Owners

American Conference Institute’s Corporate Counsel Forum 14 Schemes Affecting Search Engine Results & Consequences for Trademark Owners Search engine spam – computer generated pages used to generate PPC advertising revenue. Big, growing business that has spawned the ‘domain tasting’ problem affecting TM owners. Generally is not valuable content for users, and engines will remove or will lower ranking below ‘original’ sites. Both Yahoo! and Google have policies to take TM infringements out of their parked page programs.

American Conference Institute’s Corporate Counsel Forum 15 Topic C: Trademarks As Keywords For Paid Results And Advertising In Search Engines Current search engine policies re trademarks –Summary of keyword ad programs –Allow use of or prescreen for trademarks as keywords? –Suggest use of trademarks as keywords? –Reactions to complaints by trademark owners

American Conference Institute’s Corporate Counsel Forum 16 Trademarks As Keywords

American Conference Institute’s Corporate Counsel Forum 17 Why are Sponsored Ads a trademark issue? Trademark owners do not like to see competitors’ advertisements appear Some trademark owners object to resellers using the mark as a keyword Some trademark owners do not allow franchisees or affiliates to use the mark to advertise in competition to the trademark owner

American Conference Institute’s Corporate Counsel Forum 18 Google’s trademark policy – general principles Google provides advertising space; it does not “sell keywords” Advertisers are responsible for their choice of ad text and keyword triggers Google created TM complaint procedure to try to balance the interests of TM owners, advertisers, internet users

American Conference Institute’s Corporate Counsel Forum 19 Google’s trademark complaint procedure Upon receipt of a reasonable complaint from a trademark owner, Google will conduct a limited investigation, US/Canada:and disable use of the term in ad text Outside US/Can:and disable keywords and/or ad text

American Conference Institute’s Corporate Counsel Forum 20 Yahoo!’s trademark policy Yahoo!’s relevancy guidelines for advertisers allow an advertiser to bid on a third party trademark ONLY IF –the advertiser’s website contains content relevant to the trademark AND the trademark as used in the ad: constitutes nominative fair use (either a reseller, or NON- COMPETITIVE information site, such as product reviews, comparisons, commentary, or news information); or is in a generic or merely descriptive manner; The trademark must be included in the ad itself in a way which makes clear to the user the nature of the relevant content on the advertiser’s website and why the listing appeared in response to the query.

American Conference Institute’s Corporate Counsel Forum 21 Yahoo!’s trademark complaint procedure US: Upon receipt of a trademark complaint in the U.S., Yahoo! will delete the ad if the advertiser does not comply with Yahoo! relevancy guidelines. Outside U.S.: Yahoo! applies local country fair use principles.

American Conference Institute’s Corporate Counsel Forum 22 Microsoft’s trademark policy An advertiser may use a third party's trademark as a keyword only when that use is truthful and lawful. Examples of use that may be appropriate include: –Resellers. Advertisers who sell authentic goods or services that are lawfully distributed under the trademark. –Information Sites. Advertised sites whose purpose is to provide information (for example, product reviews) about goods or services represented by the trademark, and the Advertiser does not sell or facilitate the sale of any product or service that competes with the goods or services represented by the trademark. –Dictionary Terms that are Trademarks. The Advertiser is clearly using a term only to convey its ordinary meaning in accordance with its dictionary definition, and the Advertiser's site does not sell products or services that compete with those offered under that term when it is used as a trademark by another party.

American Conference Institute’s Corporate Counsel Forum 23 Microsoft’s trademark complaint procedure Upon receipt of a sufficiently detailed trademark complaint, Microsoft will conduct a limited investigation and remove ads that do not comply with our policies. Due to the differences in national trademark laws, the assessment of complaints and the resultant actions may vary from country to country.

American Conference Institute’s Corporate Counsel Forum 24 Working with Ad Networks and Portals to Police Infringement Notice and Takedown procedures for Domain Parking and Keyword Advertising complaints mtrademarks.phphttp://searchmarketing.yahoo.com/legal/d mtrademarks.php htmlhttp:// html

American Conference Institute’s Corporate Counsel Forum 25 Trademarks As Keywords For Paid Results And Advertising In Search Engines Does the sale and use of trademarks as keywords violate U.S. trademark law? –An improper attempt to profit from the good will of others’ trademarks? Or… –Not commercial (trademark) “use” and therefore no infringement ? –Even if “use,” is there a likelihood of confusion?

American Conference Institute’s Corporate Counsel Forum 26 Trademarks As Keywords For Paid Results And Advertising In Search Engines Requirement for commercial (trademark) use by an infringer stems from Lanham Act, Sec. 32(1): “Any person who shall, without the consent of the registrant – (a) use in commerce any reproduction, counterfeit, copy or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive…(b)…shall be liable in a civil action by the registrant for the remedies hereinafter provided...”

American Conference Institute’s Corporate Counsel Forum 27 Trademarks As Keywords For Paid Results And Advertising In Search Engines Requirement for commercial (trademark) use by an infringer may also stem from Lanham Act, Sec. 45: “… a mark shall be deemed to be in use in commerce … on goods when … it is placed in any manner on the goods or their containers or the displays associated therewith or on the tags or labels affixed thereto, or if the nature of the goods makes such placement impracticable, then on documents associated with the goods or their sale, and … the goods are sold or transported in commerce, and … on services when it is used or displayed in the sale or advertising of services and the services are rendered in commerce …”

American Conference Institute’s Corporate Counsel Forum 28 Trademarks As Keywords For Paid Results And Advertising In Search Engines Key cases have lead to differing rulings: –Merck & Co. v. Mediplan Health Consulting, Inc. (S.D.N.Y. 2006) –Edina Realty v. Themlsonline.com (D. Minn. 2006) –Rescue Com v. Google (N.D.N.Y 2006) –Buying for the Home v. Humble Abode (D. New Jersey 2006) –800-JR Cigar v. Goto.com (D. New Jersey 2006)

American Conference Institute’s Corporate Counsel Forum 29 Trademarks As Keywords For Paid Results And Advertising In Search Engines Analogy to pop-up ad cases: –Courts have held that use of others’ trademark to trigger ads is not commercial “use” of a trademark: Contacts, Inc. v. WhenU.com, Inc. (2d Cir. 2005) Wells Fargo & Co. v. WhenU.com, Inc. (E.D. Mich. 2003) U-Haul Int’l., Inc. v. WhenU.com, Inc. (E.D. Va. 2003)

American Conference Institute’s Corporate Counsel Forum 30 Trademarks As Keywords For Paid Results And Advertising In Search Engines Likelihood of Confusion Theory –Initial interest confusion: consumers mistakenly believe that a sponsored listing triggered by a trademark search term is sponsored or affiliated by the trademark owner and click on the sponsored link based upon that belief.

American Conference Institute’s Corporate Counsel Forum 31 Trademarks As Keywords For Paid Results And Advertising In Search Engines Under this theory, it is irrelevant whether the consumer remains confused after he opens the landing page on the sponsored link. The initial confusion occurred before he or she clicks on the sponsored link and it is not “cured” if that confusion is later dispelled.

American Conference Institute’s Corporate Counsel Forum 32 Trademarks As Keywords For Paid Results And Advertising In Search Engines Leading initial interest confusion cases are Playboy Enter., Inc. v. Netscape Comm. Corp., 354 F.3d 1020 (9 th Cir. 2004) and Brookfield Comm., Inc. v. West Coast Entm’t Corp., 174 F.3d 1036 (9 th Cir. 1999). But see the Fourth Circuit’s apparent skepticism about this doctrine expressed in Lamparello v. Falwell, 420 F.3d 309, (4 th Cir. 2005).

American Conference Institute’s Corporate Counsel Forum 33 CourtActivityInfringement? 2 nd Cir Contacts v. WhenU.com, Northern Dist. of NY Merck & Co. v. Mediplan Rescuecom v. Google Sale of marks for pop- ups Purchasing ZOCOR as a keyword Sale of marks as keyword Not use in trademark sense Does not constitute a trademark use. Not use – no allegation of use of mark on goods, etc., or that D’s internal use is visible to the public

American Conference Institute’s Corporate Counsel Forum 34 CourtActivityInfringement? 9th Cir Playboy Enterprises v. Netscape Minnesota Edina Realty v. TheMLSonline.com Sale of mark as keyword for sponsored links Purchase of marks as keywords Defendant used mark in commerce when it sold sponsored links for terms playboy and playmate While not conventional, D’s purchase of search terms that includes P’s marks = use in commerce

American Conference Institute’s Corporate Counsel Forum 35 CourtActivityInfringement? New Jersey Buying for the Home v. Humble Abode 800-JR Cigar v. Goto.com Purchase of mark as keyword. Sale of mark as keyword for sponsored links Defendant’s use was “in commerce” and “in connection with goods or services” as required by the Lanham Act. “trademark use” of P’s TM found where D (1) accepted bids on P’s TM from P’s competitor’s; (2) ranked paid advertisers before non paid listings among the search results, thereby acting as a conduit to steer competitors away from P; (3) suggested search terms inc. P’s TMs to P’s competitors.

American Conference Institute’s Corporate Counsel Forum 36 CourtActivityInfringement? Virginia GEICO v. Google Sale of mark as keyword for sponsored links Allegations that D allowed advertisers to bid on TM as search terms and to pay for advertising linked to TMs were sufficient to establish TM use.

American Conference Institute’s Corporate Counsel Forum 37 Trademarks As Keywords For Paid Results And Advertising In Search Engines Should there be a distinction between keyword ads that include the trademark in the body of the ad and those that do not? See Geico v. Google, Inc., 2005 WL (E.D. Va. Aug. 8, 2005) (finding a likelihood of confusion only when trademark appears in heading or text of the ad)

American Conference Institute’s Corporate Counsel Forum 38 Trademarks As Keywords For Paid Results Trademark Dilution Dilution Theory –Likelihood of confusion irrelevant. –Theory: “Blurring” of distinctiveness of the mark as associated exclusively with trademark owner’s goods or services occurs as a result of sponsored listings triggered off of the trademark when used as a search term.

American Conference Institute’s Corporate Counsel Forum 39 Trademarks As Keywords For Paid Results Trademark Dilution –The Trademark Dilution Revision Act of 2006 (HR 683) allows a claim likelihood of dilution, “regardless of the presence or absence of actual or likely confusion, or competition, or the presence or absence of actual economic harm.” Nullifies the Supreme Court’s 2003 ruling in Moseley v. V Secret Catalogue, Inc.

American Conference Institute’s Corporate Counsel Forum 40 Trademarks As Keywords For Paid Results Trademark Dilution –The TDRA allows for a claim of “dilution by tarnishment” arising from an “association arising from the similarity between a mark or trade name and famous mark that harms the reputation of the famous mark.” –The TDRA also allows for dilution by blurring; the “association arising from the similarity between a mark or trade name and a famous mark that impairs the distinctiveness of the famous mark.”

American Conference Institute’s Corporate Counsel Forum 41 Trademarks As Keywords For Paid Results Trademark Dilution No dilution by blurring or dilution by tarnishment for: (A) Any fair use, including a nominative or descriptive fair use, or facilitation of such fair use, of a famous mark by another person other than as a designation of source for the person's own goods or services, including use in connection with-- (i) advertising or promotion that permits consumers to compare goods or services; or (ii) identifying and parodying, criticizing, or commenting upon the famous mark owner or the goods or services of the famous mark owner. (B) All forms of news reporting and news commentary. (C) Any noncommercial use of a mark.

American Conference Institute’s Corporate Counsel Forum 42 Trademarks As Keywords For Paid Results And Advertising In Search Engines Contributory Infringement –An untested theory as applied to search engines and paid listings. –Requires direct infringement by someone (advertiser?). –Requires knowledge or inducement of infringing activity. Search engine liability versus advertiser liability

American Conference Institute’s Corporate Counsel Forum 43 Topic D: Defenses: First Amendment, Fair Use, And Nominative Use The First Amendment guarantees US citizens the right to comment and criticize others by name (or trademark). Exceptions: “Use” of a mark commercially, in a manner which is likely to cause confusion, deception, dilution, or to further unfair competition –“Commercial use” issue is same inquiry as in keyword, pop-up and metatag cases – correct? State trade libel or defamation law

American Conference Institute’s Corporate Counsel Forum 44 Defenses: First Amendment, Fair Use, And Nominative Use Fair use defense –Lanham Act, Sec. 33(b)(4): descriptive fair use –Nominative use defense (comparative advertising or other legitimate need to refer to trademark owner)

American Conference Institute’s Corporate Counsel Forum 45 Topic F: Spyware as a Tool for Advertisers Spyware - Any software that covertly gathers user information through the user's Internet connection without his or her knowledge, usually for advertising purposes. Spyware applications are typically bundled as a hidden component of freeware or shareware programs that can be downloaded from the Internet. Once installed, the spyware monitors user activity on the Internet and transmits that information in the background to someone else. Spyware can also gather information about addresses and even passwords and credit card numbers. Also called adware

American Conference Institute’s Corporate Counsel Forum 46 Spyware as a Tool for Advertisers Specific Laws Addressing Spyware –California (Bus & Prof §22947); Texas (Bus. & Comm. §48.001); Washington (Rev. Code §19.270) Other Applicable Statutes –New York Gen. Business Law § & common law trespass to chattels; Texas Deceptive Trade Practices / Consumer Protection Bus. & Comm. §17.47; California Penal Code §502 and B&P §17500 (false advertising); Washington Consumer Protection Act

American Conference Institute’s Corporate Counsel Forum 47 Spyware as a Tool for Advertisers Applicable Federal Law –18 U.S.C. § 2511; 18 U.S.C. § U.S.C. § 1030;

American Conference Institute’s Corporate Counsel Forum 48 Spyware as a Tool for Advertisers FTC Action –In re Advertising.com: consent order against company who did not adequately disclose adware which collects user information and serves substantial pop-up ads. –FTC v. Odysseus Marketing: settlement with company who did not adequately disclose adware which collects user information, replaces search engine results and serves substantial pop-up ads.

American Conference Institute’s Corporate Counsel Forum 49 Spyware as a Tool for Advertisers State Action –New York’s lawsuit against DirectRevenue and the settlement of Cingular Wireless, Priceline.com and Travelocity.com –Texas and California’s lawsuit against Sony BMG Music Entertainment

American Conference Institute’s Corporate Counsel Forum 50 Thank You