In a recent case, T.D.I. International, Inc. v. Golf Preservations, Inc., No. 6:07-313-DCR, 2008 WL 294531 (E.D. Ky. Jan. 31, 2008), the Eastern District of Kentucky held, however cautiously, that keyword advertising might be a Lanham Act “use in commerce,” thereby declining to dismiss the Lanham Act claims there at issue.

In T.D.I. International, the Defendants had purchased Plaintiff’s trademark “XGD” as a keyword in order to improve the Defendants’ placement in search engine results.

The court stated the following: “In light of the uncertain state of the law on the specific issue presented in this case, the Court does not find the Defendants’ arguments sufficient to warrant dismissal of the Plaintiffs’ Lanham Act claims at this stage in the proceedings. Accordingly, the Court finds that the Plaintiffs have alleged facts sufficient to state a claim to relief that is plausible on its face.” Id. at 4.

In a footnote, the court did mention that although the Plaintiffs’ trademark claims mostly relate to search engine keyword advertising, the Plaintiffs “have explicitly alleged that the Defendants have otherwise used the XGD trademarks in a manner that violates the Lanham Act.” Id. The court did not describe the nature of these allegations, thus allowing for the possibility that these other allegations are supported by facts illustrating a use in commerce that does not involve keyword advertising.

In any event, the Second Circuit, contrarily, has held search engine keyword-buys are not a “use in commerce.” See, for example, FragranceNet.com, Inc. v. FragranceX.com, Inc., 2007 WL 1821153 (E.D.N.Y. June 12, 2007) and Merck & Co. v. Mediplan Health Consulting, 425 F.Supp.2d 402 (S.D.N.Y. Mar. 30, 2006).

Courts in other Circuits have held the opposite. See, for example, 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); and J.G. Wentworth SSC Ltd. v. Settlement Funding LLC, No. 06-0597, 2007 WL 30115 (E.D. Pa. Jan. 4, 2007).

Notably, the defendants did not appear to cite FragranceNet.com or Merck & Co., cases that stand for the proposition that buying another’s trademark as a keyword for improved search engine placement is not a “use in commerce.” T.D.I. International was filed 9/11/2007, so FragranceNet.com, Merck & Co., and Hamzik were available to be cited.

Accordingly, while the T.D.I. International case does not explicitly and unequivocally state that keyword advertising is a “use in commerce,” the court does leave the issue open, at least in the Eastern District of Kentucky, which is within the Sixth Circuit.

American Airlines has sued Google over keyword-triggered advertisements. In light of the issues discussed in the previous post, bringing this case outside of the Second Circuit was a wise move. However, even if the complained-of use of the marks is considered a “use in commerce” American Airlines still has a tough case to win. Some of the allegations may not, well… fly.

For example, in Government Employees Insurance Company v. Google, Inc., 330 F.Supp.2d 700 (E.D. Va. 2004), the court held that using another’s trademarked term as a keyword is a “use in commerce.” However, in a later proceeding, the court held that despite being a use in commerce, such use does not cause a likelihood of confusion when the mark does not appear in the text accompanying the advertisement. Government Employees Ins. Co. v. Google, Inc., No. 1:04CV507, 2005 WL 1903128 (E.D.Va. August 8, 2005). In other words, when the keyword merely triggers a result in the paid links section, and the trademarked term does not appear in the result, there is no likelihood of confusion and therefore, no trademark violation. One of American Airline’s arguments is that, upon typing in the search term “American Airlines,” links to some of its competitors appear in the paid search results with no mention of the American Airlines mark. If the Northern District of Texas adopts the Geico court’s reasoning, this type of use is fine.

Another argument that American Airlines makes is that typing in a search term containing one of its trademarks takes the user to sites selling American Airlines tickets. However, an advertiser is allowed to advertise that it sells tickets for American Airlines. Such use constitutes nominative fair use, as long as the advertiser does not say something that denotes sponsorship or endorsement, such as “We are the only authorized seller of American Airlines tickets on the web!” when it has not been so authorized.

However, there is no clear case law in the Northern District of Texas on keyword-triggered advertisements, so we’ll just have to wait and see how this case turns out.