Brand Protection in the World of Keyword Advertising

1. Brand Protection in the World of Keyword Advertising Mike Rodenbaugh – Yahoo! Inc. Scott Hervey – Weintraub Genshlea Chediak

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

3. Topic A: Business Facts ThatDrive the Law • Big $$ • Online advertising industry • $16.8 Billion revenue in 2006 (per IAB/PWC) • 34% increase from 2005 • Should exceed $55 Billion by 2010 • 2/3 spent on top 4 portals in ‘07, up from 48% in ‘04

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

5. Some basic definitions • Intrinsic/Native Search results Sponsored Results/Keyword Ad Sponsored Links Native Search

6. Some basic definitions Sponsored Links Native Search

7. Domain Parking

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.

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

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

11. Schemes Affecting Search Engine Results & Consequences for Trademark Owners

12. Schemes Affecting Search Engine Results & Consequences for Trademark Owners

13. Schemes Affecting Search Engine Results & Consequences for Trademark Owners

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.

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

16. Trademarks As Keywords

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

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

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

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.

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.

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.

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.

24. Working with Ad Networks and Portals to Police Infringement • Notice and Takedown procedures for Domain Parking and Keyword Advertising complaints • http://searchmarketing.yahoo.com/legal/dmtrademarks.php • http://www.google.com/tm_complaint_afd.html

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?

26. Trademarks As Keywords For Paid Results And Advertising In Search Engines • Requirement for commercial (trademark) useby 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...”

27. Trademarks As Keywords For Paid Results And Advertising In Search Engines • Requirement for commercial (trademark) useby 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 …”

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)

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: • 1-800 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)

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.

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.

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 (9th Cir. 2004) and Brookfield Comm., Inc. v. West Coast Entm’t Corp., 174 F.3d 1036 (9th Cir. 1999). But see the Fourth Circuit’s apparent skepticism about this doctrine expressed in Lamparello v. Falwell, 420 F.3d 309, 316-17 (4th Cir. 2005).

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 1903128 (E.D. Va. Aug. 8, 2005) (finding a likelihood of confusion only when trademark appears in heading or text of the ad)

38. Trademarks As Keywords For Paid ResultsTrademark 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.

39. Trademarks As Keywords For Paid ResultsTrademark 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.

40. Trademarks As Keywords For Paid ResultsTrademark 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.”

41. Trademarks As Keywords For Paid ResultsTrademark 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.

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

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

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)

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 e-mail addresses and even passwords and credit card numbers. Also called adware

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 §349.350 & 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

47. Spyware as a Tool for Advertisers • Applicable Federal Law • 18 U.S.C. § 2511; 18 U.S.C. § 2512 18 U.S.C. § 1030;

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.

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

50. Thank You