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Ruling adds to confusion over legality of keywords

In ruling that counters findings in other cases, court says pharmacies didn't infringe on Merck trademark through use of "Zocor" keyword.

Contradicting earlier decisions, a U.S. federal court ruled this week that the purchase by Canadian pharmacies of search engine keywords using the name of rival Merck's "Zocor" cholesterol reduction drug does not constitute trademark infringement.

Merck sued a handful of online pharmacies last year, alleging trademark infringement based on the use of the Zocor trademark on Web sites and in keywords designed to turn up sponsored links on search results pages. The lawsuit also alleged trademark dilution and false advertising.

On Thursday, the U.S. District Court for the Southern District of New York refused to dismiss the claims of trademark dilution and false advertising but dismissed the trademark infringement claim related to the keyword purchases.

The decision contradicts an earlier ruling in which a court held that Google's sale to car insurance providers of "Geico" as a keyword to trigger their ads constituted "use in commerce," and was thus trademark infringement. Geico settled that case with Google in September, but other cases against the search behemoth are pending.

The New York court referenced the Geico decision in its Merck ruling but disagreed with the reasoning. In the Merck v. Mediplan Health Consulting case, the New York court said there was nothing improper with the defendants' purchase of "Zocor" as a keyword because the term used in that way does not constitute a trademark "use." A trademark is legally "used in commerce" when it is placed on a product or label or displayed in the sale of services, the court said.

"The 'Zocor' mark is 'used' only in the sense that a computer user's search of the keyword 'Zocor' will trigger the display of sponsored links to defendants' Web sites," the court said. "This internal use of the mark 'Zocor' as a key word to trigger the display of sponsored links is not use of the mark in a trademark sense."

Eric Goldman, assistant professor of law at Marquette University Law School, said the decision also conflicts directly with a March 20 ruling that a similar case should proceed to trial. In that case, the U.S. District Court in Minnesota found that there was cause to believe that the use of the "Edina Realty" name in keywords purchased by a rival was causing confusion among consumers.

In the Merck and the Edina Realty cases, the lawsuits were brought against the advertisers purchasing keywords, while the Geico case named Google as the defendant.

"So this case is good news for search engine advertisers (and, as a result, search engines)," Goldman wrote on his blog Friday. "However, because this ruling directly conflicts with the Edina Realty ruling, we're in legal limbo. We need more courts to weigh in before this issue becomes predictable."

The New York court has yet to set a date for considering the remaining trademark dilution and false advertising claims.