Company Buys Competitor's Trademark as Google AdWord. Another Scuffle Ensues.
We recently reported on a case where competing law firms were involved in a tussle over the use by one of the law firms of the other law firm's name as a Google AdWord. The California court in that case found trademark infringement.
Now, another case from the Ninth Circuit comes along where one software company bought the name of the other company's product as a Google AdWord. Advanced System Concepts licensed a product under the registered trademark "ActiveBatch". Network Automation (whose own product is called "AutoMate") bought ActiveBatch as a Google AdWord (doesn't anyone own a space bar?). Advanced System Concepts brought suit against Network Automation and was granted a preliminary injunction prohibiting the use of ActiveBatch in this way by Network Automation. Network Automation appealed to the Ninth Circuit.
The District Court applied the Sleekcraft test first espoused in AMF Inc. v. Sleekcraft Boats,
599 F.2d 341 (9th Cir. 1979), which set out eight factors in determining infringement. The District Court held that the three most important factors in the Sleekcraft test in cases relating to the internet were: (1) the similarity of the marks; (2) the relatedness of the goods; and (3) the marketing channel used.
The Ninth Circuit held: "Mindful that the sine qua non of trademark infringement is consumer confusion, and that the Sleekcraft factors are but a nonexhaustive list of factors relevant to determining the likelihood of consumer confusion, we conclude that Systems’ showing of a likelihood of confusion was insufficient to support injunctive relief." (Emphasis added)
The Court then went on to say:
"Given the nature of the alleged infringement here, the most relevant factors to the analysis of the likelihood of confusion are: (1) the strength of the mark; (2) the evidence of actual confusion; (3) the type of goods and degree of care likely to be exercised by the purchaser; and (4) the labeling and appearance of the advertisements and the surrounding context on the screen displaying the results page.
The district court did not weigh the Sleekcraft factors flexibly to match the specific facts of this case. It relied on the Internet “troika,” which is highly illuminating in the context of domain names, but which fails to discern whether there is a likelihood of confusion in a keywords case. Because the linchpin of trademark infringement is consumer confusion, the district court abused its discretion in issuing the injunction."
It's important to note that the Court did not say that there was no infringement here, merely that the factors to be considered were not limited to those in the Sleekcraft case and they had to be applied in a flexible manner and therefore, the Ninth Circuit remanded for further consideration in line with these factors.
In my conversations with communications and advertising people, it is apparent that purchasing competitor's trademarks and names as SEO enhancers is a common and accepted practice. Therefore, this emerging area of the law will be developing for several years. So, as usual, stay tuned.
