Purchasing keywords in a search engine’s advertising program to gain a higher search result in the search engine’s sponsored links listings has become commonplace for businesses seeking to reach new consumers. An example of such a program is Google’s AdWords program. AdWords is a keyword-activated advertising program that generates the Sponsored Links section on Google’s search results screen. Advertisers participate in the AdWords program by bidding on or purchasing certain keywords, and such advertisers pay Google to have links to their websites displayed in the Sponsored Links section whenever an internet user types in those particular keywords.

Several cases have been brought by trademark owners against defendants, who purchased keywords bearing the plaintiffs’ marks. To prevail on a Lanham Act claim, it must be shown that the defendant “used” the plaintiff’s mark “in commerce.” Courts have been split as to whether this type of use is a “use in commerce” as required by the Lanham Act.

In FragranceNet.com, Inc. v. FragranceX.com, Inc., 2007 WL 1821153 (E.D.N.Y. June 12, 2007) the court held that buying keywords is not a use in commerce. Other district courts in the Second Circuit have also held that buying keywords is not a use in commerce. Merck & Co. v. Mediplan Health Consulting, 425 F.Supp.2d 402 (S.D.N.Y. Mar. 30, 2006); Hamzik v. Zale Corp., 3:06-cv-1300, 2007 WL 1174863 (N.D.N.Y. April 19, 2007).

However, courts outside of the Second Circuit have held that, although such use is not a conventional “use in commerce,” the use is still commercial. Edina Realty, Inc. v. TheMLSonline.com, Civ. 04-4371JRTFLN, 2006 WL 737064 (D.Minn. March 20, 2006); Buying for the Home, LLC v. Humble Abode, 459 F.Supp.2d 310 (D.N.J. 2006); J.G. Wentworth SSC Ltd. v. Settlement Funding LLC, No. 06-0597, 2007 WL 30115 (E.D. Pa. Jan. 4, 2007).

We believe the Second Circuit courts are correct. Use of trademarks by purchasing keywords is not the type of “use” contemplated by the Lanham Act. A trademark is “used in commerce” in connection with goods when it is “placed in any manner on the goods or their containers or the displays associated therewith or on the tags or labels affixed thereto, or if the nature of the goods makes such placement impracticable, then on documents associated with the goods or their sale.” 15 U.S.C. § 1127(1). In connection with services, a trademark is “used in commerce” when the trademark is “used or displayed in the sale or advertising of services and the services rendered in commerce.” 15 U.S.C. § 1127(2).

In the keyword-buy cases, the defendants’ use of the plaintiffs’ trademarks is strictly internal and is not communicated to the public. This is quite different from displaying a competitor’s logo on one’s website, for example. Furthermore, when a user types in a search string, the search generally produces a wide array of alternatives for the potential consumer to investigate. The user is not automatically transported to the keyword buyer’s site and must actively choose which links to follow. In the keyword-buy cases, use of the marks does not indicate the source or origin of the marks. Therefore, such use is not the type of “use” contemplated by the Lanham Act.