Google Keyword Advertising Lawsuit

In a what could be a potentially serious blow to Google's AdWords business, and to consumers''' ability to find information about competing offerings on the Internet, the Second Circuit Court of Appeals ruled that a trademark owner can sue Google for trademark infringement for selling its mark as a keyword as part of the AdWords program.

This is likely to have a chilling effect on Internet intermediaries generally, as they will likely fear the costs of trademark litigation if they use marks to help speakers find their audiences. In 2006, a district court ruled that Google's AdWords program, which allows advertisers to buy search terms (including trademarks) that trigger their ads, did not violate trademark law. Following Second Circuit precedent (EFF participated as amicus in that case), and in line with other decisions around the U.S., the lower court held that this type of sale did not involve a '''use''' of the trademark within the meaning of trademark law, any more than strategically placing a generic brand of cough syrup next to Robittussin might. The U.S. Court of Appeals for the Second Circuit in New York rejected a ruling by a U.S. District Court dismissing Rescuecom's litigation against Google. "The complaint's allegations that Google's recommendations and sale of Rescuecom's mark to Google's advertisers, so as to trigger the appearance of their advertisements and links in a manner likely to cause consumer confusion when a Google user launches a search of Rescuecom's trademark, properly alleges a claim," under trademark law known as the Lanham Act, the three- judge panel said in a written decision. Google senior litigation counsel Catherine Lacavera said the company believed the claims were without merit and would continue to defend against them. "We are disappointed with this early-stage decision, but we remain confident that our trademark policy strikes the proper balance between trademark owners' interests and consumer choice," Lacavera said in a statement.

Eric Goldman discusses the implications with Scott Drake.