In a recent decision, the Second Circuit reversed a district court's grant of a motion to dismiss in a trademark infringement case. The district court, relying on the Second Circuit's 2005 decision in 1-800 Contacts, Inc. v. WhenU.com, Inc., held Google's use of its Adwords and Keyword Suggestion Tool to cause advertising to appear when certain trademarked words and phrases are searched did not constitute a "use in commerce" as defined in § 1127 and required for a claim of trademark infringement under § 1114.
On appeal, the Second Circuit reversed, holding this practice did constitute a use in commerce. The court distinguished the 1-800 Contacts case, observing in that case, the advertisements were in response to visiting a website, not the entry of a trademark. Further, in that case, advertisers could not "purchase" a competitors keyword, so even if an advertiser wanted its ads to appear when a user visited a competitor's site, the defendant did not offer such a service.
In contrast, here Google not only keys the advertisements to the trademark itself (rather than as a result of visiting a website), but also permits anyone to pay to have its advertisements shown when a trademark is searched. The Keyword Suggestion Tool will also suggest that advertisers key their advertisments to trademarked terms. Based on these allegations (taken as true in the context of Google's motion to dismiss), the Second Circuit held there was a use in commerce, and reversed the district court's dismissal of the case.
More detail of Rescuecom Corp. v. Google Inc. after the jump.