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Online sales are booming.They increased 17% in Q1 and are projected to exceed $200 billion this year.High gas prices are favoring online sales, as more consumers decide to shop from home and as a result visit more social networking, shopping, and other websites.
It is not surprising that most of the cutting edge issues in advertising and intellectual property law are coming from the online world.
This article addresses two questions frequently asked by our clients; whether they can be liable:(1) for trademark infringement if they bid on a competitors trademark as a keyword search term on search engines, and (2) for copyright infringement, libel, or other torts if they allow third parties to post content on their websites and the content that they post (known as user-generated content) violates someones rights.

Trademark Infringement Issues in the Use of Search Engine Keywords

A consumer looking for fitness equipment, for example, by typing a query on a search engine may type in fitness equipment or, perhaps, if he wants to buy the Bowflex product he saw on television in an infomercial, may type in Bowflex.In the latter case, the consumer then would see links selling the Bowflex, but also would see, in the list of Sponsored Results, links from various competitors advertising their own fitness products or programs.How did the competitors listings get there?The answer is, by bidding on Bowflex as a keyword search term with the search engine.
Is that trademark infringement?The answer is, it depends.Not only does it depend on the facts of each case but, because different courts currently view this practice in different ways, it also depends on what court you are in.
Outside of the Internet, trademark infringement occurs when a competitor uses a trademark owners trademark on a product, on a package, or in an ad.It is a use in commerce that is seen by the consumer.But online, when a competitor bids on anothers trademark as a keyword, it is not using the mark in a way that anyone sees.It is the consumer, not the competitor, who types in the mark as a search term and, thus, uses it online.
Some courts have ruled that, based on these facts, there can be no trademark infringement because there is no use in commerce, no trademark use. See e.g., RescueComcorp v. Google, Inc., 456 F.Supp.2d 393 (N.D. N.Y. 2006).
Other courts disagree, ruling that this is a use in commerce and concluding that, depending on the content of the link that comes up in response to the search, this practice can cause confusion.See e.g., Storus Corp. vs. Aroa Marketing, Inc., 2008 WL 449835 (N.D. Cal. 2008); Google, Inc. vs. American Blind & Wallpaper Favorty, Inc., 2007 WL 1159950 (N.D. Cal. 2007).For these courts, the key issue is whether the consumer is likely to be confused by the link.If the link uses its own trademark rather than the plaintiffs, these courts tend to conclude that confusion is not likely because, in their view, consumers understand that the link, if clicked upon, will lead not to the trademark owner but rather to a competitor.See e.g., J.G. Wentworth vs. Settlement Funding, LLC, 85 U.S.P.Q.2d 1780 (E.D. Pa. 2007).
Even if a defendant has bid on a plaintiffs mark and has used the mark in the sponsored link itself, its conduct still could be held lawful if the court finds that it is a fair use under the Constitution, e.g., if it is in a comparative advertisement.
Similar legal issues can arise for unpaid or natural search engine optimization techniques (for instance, the use of anothers trademark in meta-tags, the hidden code written into website pages used to determine search results).See e.g., North American Medical Corp. vs. Axiom Worldwide, Inc., 522 F.3d 1211, (C.A. Ga.) (11th Cir. 2008).

Liability Issues for User-Generated Content

Websites featuring user-generated content are all the rage now:from E-bay and other auction sites, to blogs, to social networking sites like My Space and You Tube, the Internet now is dominated by individuals posting content for other members of the public.Some of that content, however, is copyrighted and some of it may constitute libel or otherwise cause someone harm.
If a company operates a website that includes user-generated content, can it be held liable for what the users have posted on it?The answer is, Congress has passed two statutes which immunize companies from at least some forms of liability for user-generated content, but many legal issues remain unresolved.
The first statute is the Communications Decency Act (CDA), 47 U.S.C. 230.It provides:No provider of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.Thus, for example, the CDA insulates website operators from liability for libel posted by users of their sites.Zeran v. America Online, Inc., 129 F.3d 327 (4th Cir. 1997).The CDA, in fact, provides immunity from any wrong, so long as the wrong arises from online content posted by a user, rather than by the website operator; this even has been applied to user-generated content posted by a sexual predator which resulted in actual harm to a child.Doe v. MySpace, Inc., 474 F.Supp.2d 843 (W.D. Tex. 2007).
There is an exception to the CDA, and it is for infringement of intellectual property, such as copyrights and trademarks.The CDA does not provide immunity against that.Thus, subject to other statutes which may provide protections (such as the DMCA, discussed below), website operators can be held liable if user-generated content infringes a copyright or trademark.
It should be noted that one court recently made an exception to this exception, holding that, while the CDA provides no immunity from federal intellectual property infringement, it does provide it for state intellectual property infringement, e.g., violation of someones right of publicity.Perfect 10 v. CCBill LLC, 488 F.3d 1102 (9th Cir. 2007).Another court, however, recently held the opposite. Universal Communications Systems, Inc. v. Lycos, Inc., 478 F.3d 413 (1st Cir. 2007).
Importantly, the CDA provides no immunity if the website operator also is deemed to be a provider of the content.This raises several questions. What if a website operator does not author the content, but edits or adds to it?In this situation, the CDA does allow website operators to edit user-generated content while still retaining their immunity, if they do the editing in good faith to restrict access to obscene, lewd, lascivious, filthy, excessively violent, harassing, or other objectionable content.But, this can be a trap for the unwary, as website operators can lose their immunity if they take an action that does not fall within this safe harbor, or, if they add their own content such as headings, notes, or comments.See, e.g., Hy Cite Corp. v., 418 F. Supp. 2d 1142 (D. Ariz. 2005); Anthony v. Yahoo! Inc., 421 F.Supp.2d 1257 (N.D. Cal. 2006).
Depending on the website, it is not always easy to determine whether its operator is a content-provider and, thus, not shielded by the CDA.
In Fair Housing Council of San Fernando Valley v., LLC, 521 F.3d 1157 (9th Cir. 2008), for example, the court considered whether the CDA should shield the operator of from liability for violations of the Fair Housing Act (FHA), a statute which prohibits discrimination in housing.The website was an online matching service for people seeking roommates.The operator of the site had authored and posted a questionnaire for users to complete, denoting preferences in the kind of person they were looking for as a roommate.Some of the questions were about sexual orientation; others were about race, religion, or familial status.As a result, the user-generated content in response to the questionnaire could be: I only will consider renting to a roommate who is Caucasian, heterosexual, and with no kids, a housing preference that violates the FHA. The court held that, as the author of the questionnaire, was a content provider and therefore not protected by the CDA.Having contributed materially to the FHA violation, it was too involved in the content to receive immunity.
The second federal statute that protects websites against certain claims based on user-generated content is the Digital Millennium Copyright Act (DMCA), 17 U.S.C. 512.Under certain conditions, it provides website operators with immunity from liability for copyright infringement (note: not trademark infringement).Those conditions include the reasonable implementation of policies that provide for the taking in of claims submitted by copyright owners who complain of infringement, the taking down of infringing content in response to such claims, and the termination of users who are repeat infringers.There are numerous exceptions to the statute, and the case law is only now beginning to flesh out these matters.See, e.g., Perfect 10 v. CCBill LLC, 481 F.3d 751 (9th Cir. 2007).
Given the evolving case law related to these issues, it is advisable to consult with legal counsel on a regular basis regarding online advertising and intellectual property activities.