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Court questions Zale's use of trademark in paid search text

Buying trademarked search keywords may not be illegal, but using the term in ad text generated by search may be, judge says.

A federal court judge has ruled that referencing a trademarked term in ad text generated by a Web search may violate trademark rights.

John Hamzik, who holds the trademark for "The Dating Ring," filed suit alleging that Zale jewelry company violated his trademark by purchasing the keywords "dating ring" for purposes of advertising via paid searches on Google, Yahoo and other search engines. He also alleged that Zale violated his trademark because jewelry items were displayed when a user searched on "dating ring" on the Zale Web site.

Zale filed a motion to dismiss on the grounds that it never placed the trademarked term on any of its products or used the term "dating ring" on its Web site. The court said the fact that the Zale Web site displayed back results on the search phrase does not transform Zale's action into a use of the trademark under law. However, the court let stand the trademark infringement claim with respect to the purchase of the keyword phrase "dating ring" on search engines; when a searcher typed in "dating ring" on Google or Yahoo, results were returned under paid listings that displayed "Dating Ring-Zales."

While other plaintiffs have lost on trademark infringement claims involving rivals purchasing keywords using their trademark, this lawsuit differs because the plaintiff's trademark is referenced in the ad copy. "In this case there may be facts demonstrating that plaintiff's trademark does appear on the displays associated with the good or documents associated with the goods or their sale," the court said.

So, Judge Thomas J. McAvoy in U.S. District Court in New York last week granted in part and denied in part the trademark infringement claims. The court also denied the defendant's motion to dismiss a counterfeiting claim, but granted a motion to dismiss a false advertising claim.

"I think this ruling implicitly validates Google's policy of letting advertisers buy trademarked keywords (which the court says isn't trademark use) but letting trademark owners block ad copy referencing their trademark (which the court says is a trademark use)," said Eric Goldman, assistant professor at Santa Clara University School of Law and director of the High Tech Law Institute, who wrote about the decision on his Technology and Marketing Law Blog. "This ruling would be mooted by Utah's new anti-keyword advertising law, which allows plaintiffs to sue competitors for buying their trademarks as keywords regardless of what the competitors say in their ad copy," Goldman added.

Also last week, U.S. District Court Judge Jeremy Fogel in San Jose, Calif., refused to dismiss a lawsuit filed by American Blind & Wallpaper Factory that alleges that Google's AdWords pay-per-click advertising system violates trademark law by allowing rivals of a company to buy ads that appear when people search for information on American Blind & Wallpaper Factory.

Google has prevailed in prior trademark lawsuits filed against its pay-per-click ads over trademarks used in ad keywords--involving auto insurer GEICO and a suit filed by computer repair firm Rescuecom. Those outcomes are in accordance with another case not naming Google as a defendant in which a judge said the purchase by Canadian pharmacies of keywords using the name of rival Merck's "Zocor" drug did not constitute trademark infringement.

However, Google lost a related case in a European court last summer. A French court of appeals affirmed a lower court ruling that Google infringed on Louis Vuitton's trademark by selling search-related keyword ads to competitors of the fashion company.