Keyword buys and use in commerce

Eric Goldman’s post on JR Cigar’s keyword advertising case and the still-unsettled state of the law got me to try to organize my own thoughts.

“Use in commerce,” under the Lanham Act, requires use on goods or in the sale or advertising of services. As I’ve said before, I find it plausible that selling a keyword to advertisers meets that requirement, though I wouldn’t fight you too hard on the opposite conclusion either. The way I’d frame the counterargument: A search engine selling a trademarked term is not using the mark in the “sale or advertising” of its services. The services themselves might include use of the mark in internal server operations, but we can distinguish that from normal use of the mark to identify or explain the services, the way standard trademark use and comparative advertising, respectively, work.

So far, so good. Then, infringement of a registered mark requires use in commerce of the 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” (emphasis added). Infringement under §43(a) likewise prohibits uses that are “likely to cause confusion … as to the origin, sponsorship, or approval of [the infringer’s] goods, services, or commercial activities.”

Does the identified use in commerce – use in the service of selling advertising – cause confusion among purchasers about source or sponsorship? The suggestion that competing advertisers might be confused is laughable, though there are nonetheless traces of it in the JR Cigar opinion, when the judge hints that advertisers might think that JR Cigar gave Overture permission to sell its mark as a keyword. If you agree with me that there’s no likelihood of this type of confusion, then the activities that give rise to the jurisdictional “use in commerce” are unproblematic.

But not so fast! The part of the transaction that isn’t a use in commerce of a mark – the delivery of targeted ads to consumers – may or may not cause confusion about the source of the advertisers’ goods. At the extreme, an ad whose text said “JR Cigars Here” and led to a counterfeiter’s site would be pretty basic infringement.

The real question – one which the Lanham Act naturally didn’t anticipate – is whether a court can take one from column A (jurisdiction) and one from column B (possible confusion) and come up with a complete cause of action. The failure to recognize that this is the crucial issue accounts for a lot of incoherence in the JR Cigar opinion and elsewhere about use in commerce, initial interest confusion, and what exactly the defendant’s goods and services are for purposes of whether the goods and services are similar.

The proper resolution, as the court in JR Cigar almost concluded, is to apply standard principles of contributory liability, rather than engage in a hobbled and self-contradictory confusion analysis stacking search engine against cigar store. This would take some of the silliness of initial interest confusion and “diversion” out of the picture, and focus analysis on the specific ads at issue.

I’ve been thinking about whether there’s a possible statutory fix – say, defining “use in commerce” in the current limited manner for purposes of establishing ownership, but expansively for purposes of infringement. But that would generate lots of First Amendment problems and frivolous litigation. Trademark owners don’t like comparative advertising, but it’s legal in the US, and keyword buys are just another kind. When intermediaries like search engines have a limited ability to detect and prevent infringement and when most of their activities are legitimate, imposing gatekeeper liability on them through an expansive theory of “use in commerce” is a mistake.