California District Court Holds That Google’s Sale of Trademarked Terms In Its AdWords Program is a Use in Commerce for Purposes of the Lanham Act

Case: Google Inc. v. American Blind & Wallpaper Factory, Inc. (N.D. Cal. C.V. 03-5340 JF 4/18/07)

The Short Summary: Google filed for declaratory relief that its “AdWords” advertising program did not infringe on trademarks of American Blind and Wallpaper Factory (“ABWF”). In an opinion, not for citation, Northern District of California District Court Judge Jeremy Fogel held the sale of trademarked items in Google’s AdWorks program is a use in commerce for purposes of the Lanham Act. (The remainder of the Court’s opinion addressed Google’s summary judgment motion arguments as to the enforceability of ABWF’s trademarks, sufficiency of evidence of likelihood of confusion based on the “initial interest confusion” doctrine, lack of sufficient evidence as to trademark dilution and unclean hands.)


California District Court Holdings: The Court’s opinion is divided into five areas: (1) trademark “use” in Google’s AdWords program; (2) enforceability of American Blinds trademark; (3) trademark infringement and confusion; (4) trademark dilution; and (5) unclean hands.

• The Court first considered Google’s defense that as a matter of law its sale of trademarked key words did not constitute a “use in commerce” under the Lanham Act. As support, Google cited two Second Circuit District Court opinions that relied on 1-800-Contacts v. WhenUCom, Inc., 414 F. 3d 400 (2nd Cir. 2005), in which the Second Circuit concluded a company’s internal use of a trademark in a way that does not communicate it to the public is analogous to an individual’s private thoughts about a trademark and not a “use of the mark in a trademark sense.” Judge Fogel reviewed and agreed with contrary decisions from other district courts that use of the key words was a “use” under the Lanham Act. The Court examined Playboy Enterprises, Inc. v. Netscape Communications Corp., 354 F. 3d 1020 (9th Cir. 2004), which it characterized as the leading Ninth Circuit case in the area, and noted that the Ninth Circuit in that case had not questioned whether the practice of keying sponsored banner ads to Playboy’s trademarks involved a use in commerce under the Lanham Act.
• The Court next examined Google’s summary judgment claim that ABWF’s marks were unenforceable. It first found that as to two marks, registration had occurred after the first allegedly infringing use and so the presumption of ownership under 15 U.S.C. §1115(a) did not apply. As to those marks, ABWF had to establish it held an enforceable commercial law trademark. The Court held ABWF did not present sufficient evidence to create a triable issue whether the mark “American Blinds” was “inherently distinctive”, so the Court held it was “descriptive.” The Court further found that under Ninth Circuit cases ABWF’s general declarations did not provide sufficient detailed information regarding the use of the mark.
• As to three remaining marks of ABWF, Google’s summary judgment motion also required the Court to discuss whether ABWF could prove a likelihood of confusion, which ABWF based on the “initial interest” confusion doctrine. To decide this mixed question of law and fact, the Court found that turn to the Sleekcraft factors, AMF v. Sleekcraft Boats, 559 F. 2d 341, 348-49 (9th Cir. 1979). While it discussed each factor, the Court saw “evidence of confusion” as the most significant. In that regard, the Court considered and rejected Google’s attack on ABWF’s reliance on an expert survey report. The Court found the survey relevant admissible and relevant and that Google’s attacks went to the survey: weight. The Court’s opinion is interesting as to its analysis of how the evidence was sufficient to create a triable issue of fact on the likelihood of confusion. The Court noted that the future application of the initial interest confusion doctrine as to identified, sponsored links is an unsettled question in the Ninth Circuit.
• The Court next addressed ABWF’s trademark dilution claim. Here the Court sided with Google that ABWF did not present evidence that its marks were famous. ABWF did not conduct a fame survey, and the Court found that the declarations offered were not sufficient evidence.
• Finally, the Court rejected Google’s argument that all ABWF’s claims were barred by the unclean hands doctrine, as Google argued ABWF purchased trademarks of its competitors as key words under Google’s AdWords program. However, the Court noted ABWF had offered to agree with competing companies to refrain from buying each other’s trademarks as key words under the AdWords program. The Court found that the large number of buyers and users affected by the AdWords program indicated a significant public interest in determining whether the AdWords program violated trademark law an additional reason to reject Google: unclean hands defense.