I agree with Prof. Goldman that keyword buys should be treated as noninfringing. I'm not sure that "use in commerce" is the right answer, because of the definition in 15 U.S.C. § 1127:
a mark shall be deemed to be in use in commerce—
Judge Chin’s opinion, following 2d Circuit law, treats “use in commerce” the same for goods and services, yet it seems to me that keyword buys relating to services may well be “used or displayed in the … advertising of services,” even if the statutory definition excludes keyword buys from “use in commerce” of goods. The distinction is not accidental; it stems from lawmakers' desire to require a strong goods-mark connection and the inability to brand a service directly; a mark can only be used on the goods used to identify and advertise the service, such as uniforms and delivery vans. To date, the different definitions have rarely generated different results (except in special cases, as in extraterritorial uses), but internet advertising may be a big breaking point.
The 1-800 decision finesses the issue by treating "use" (or possibly
"place[ment]" -- it's not clear) as equivalent to "reproduction or display." If "use" is the same as "reproduction or display," then maybe you can treat goods and services the same. (Some of the Second Circuit's reasoning -- especially that WhenU was using a website address, .com included, and not the bare trademark -- wouldn't apply to the keyword situation, but the definition of "use" would, as Merck recognized.)
The benefit of "use in commerce" for those of us who consider keyword buys noninfringing/nondiluting is that it avoids (1) expensive and therefore suppressive fights over the confusion/dilution factors and (2) manipulation of those factors, especially by the surveyors' black arts. It also maintains good consumer expectations: As long as consumers regularly see competitors' ads when they enter keywords, just as they regularly see store brands shelved next to national brands, it will be less reasonable to be confused about the source of search engine-sponsored results. Is a quick doctrinal shortcut to allow this pro-competitivepractice worth a little hand-waving about the meaning of "use"? Maybe so.