Search Engines Under Siege: Do Paid Placement Listings Infringe Trademarks? by F

Search Engines Under Siege: Do Paid Placement Listings Infringe Trademarks? by F. Gregory Lastowka

April 2002

Copyright 2002 Dechert. All rights reserved. Materials have been abridged from laws, court decisions and administrative rulings and should not be considered as legal opinions on specific facts or as a substitute for legal counsel. xc

Search Engines Under Siege: Do Paid Placement Listings Infringe Trademarks?

by F. Gregory Lastowka*

BOSTON forthcoming, Vol. 13 Intellectual Property & Technology Law Journal, Issue 5 (May 2002)

BRUSSELS Consider the following scenario: your client is the purveyor of a soft drink called 1 FRANKFURT “Gnucola.” The Gnucola company has used your law firm to register the “Gnucola” mark with the United States Patent and Trademark Office, and has also used your law HARRISBURG firm to assist it in obtaining the registration of several Internet domain names including the term “Gnucola.” Your client has built an Internet website at these HARTFORD domains from whence it promotes and sells its flavorful amber beverage. Gnucola’s customer base is rapidly expanding and its revenues are strong. LONDON One day, during an idle minute, the president of Gnucola searches for “gnucola” on a LUXEMBOURG popular Internet search engine, “E-Pointer.” She finds, much to her surprise and chagrin, that the website for the archrival “MicroCola” is returned on the first page of NEW YORK results. The Gnucola website, on the other hand, is nowhere to be seen. It can only

NEWPORT BEACH be found after clicking through several pages of results. The Gnucola president calls you for an explanation. You call the E-Pointer company, only to have a sales

PARIS representative politely inform you that if you had paid attention to the fine print on its site, you would have seen that E-Pointer is a “paid placement” search engine.

PHILADELPHIA MicroCola has paid a substantial sum to appear prominently in the listings under the term “Gnucola.” If Gnucola would like to appear on the first page of listings, E- PRINCETON Pointer tells you, it needs to pay for placement. You convey this to your client, who is outraged. She wants to know: Can Gnucola prevail against E-Pointer and WASHINGTON MicroCola on a claim of trademark infringement?

* F. Gregory Lastowka is an attorney at Dechert in Philadelphia, PA, practicing in the area of intellectual property litigation. He can be reached at [email protected]. He would like to thank Danny Sullivan and Brian Hirsch for sharing their insights on this topic. 1 The names of the various parties in this hypothetical situation are wholly fictional, with any resemblance to real business entities being purely coincidental.

Courts are not strangers to litigation over the use of Internet search engines.2 Search engines are arguably the most important applications on the Internet. Although the Internet, as the Supreme Court has noted, is much like a “vast library”—it is unfortunately a library with no card catalog. 3 When Internet users wish to explore the Web, they normally turn to search engines, which provide a quick, free, and reliable way to locate information or products available for purchase on the Web. Though the term “search engine” is most often associated with applications that index and query the entire World Wide Web, courts have also used the term to describe other search applications (like the search function of Napster) which index only a portion of the Internet or a private network.4 Generally speaking, search engines provide a query window into which a user types a word or phrase, and for which the search engine returns a list of hyperlinks or “results” which, if selected, will direct the user to a specific website address. Often, advertisements are interspersed with the results listings. These advertisements provide a source of revenue for the search engine.

The early Internet business giants, such as Yahoo and Excite, were predominantly search engines, and owed their importance in the early Internet to their role as guides in the new cyberspatial environment. People turned to Yahoo and Excite to explore the Internet. Today, in the aftermath of the dot-com collapse, search engine companies are more aware of the need for workable business models to meet the substantial costs of maintaining the freshness of their databases and improving their

2 Nissan Motor Co., Ltd. v. Nissan Computer Corp., 204 F.R.D. 460 (C.D. Cal. 2001). See, e.g., Florists’ Transworld Delivery, Inc. v. Originals Florist & Gifts, Inc., 57 U.S.P.Q. 2d (BNA) 1079 (N.D. Ill. 2000) (“when Internet users wish to explore or ‘surf’ the Web, they normally turn to search engines.”); Interstellar Starship Servs. v. Epix, Inc., 125 F. Supp. 2d 1269, 1279 (D. Or. 2001) (“Today’s Internet user knows that search engines, such as ‘Hotbot,’ ‘Lycos,’ and ‘Google,’ provide a quick, free, and reliable way to locate a business’ web site when its exact Internet address is not known.”); Imon, Inc. v. ImaginOn, Inc., 90 F. Supp. 2d 345, 352 n.2 (S.D.N.Y. 2000).

3 Reno v. ACLU, 521 U.S. 844, 853 (1997). Actually, of course, most libraries today use electronic databases and search engines to help their patrons search their contents. The idea of the “card catalog” is foreign to many younger patrons.

4 See A&M Records, Inc. v. Napster, Inc., 114 F. Supp. 2d 896, 920 (N.D. Cal. 2000) (finding Napster’s “search engine” material in its finding of contributory infringement); Register.com v. Verio, 126 F. Supp. 2d 238, 242 n.2 (S.D.N.Y. 2000) (describing a domain name registry query as a “search engine”); A&H Sportwear Co., Inc. v. Victoria’s Secret Stores, Inc., 134 F. Supp. 2d 668 (E.D. Pa. 2001) (describing an in-site query as a “search engine.”).

Page 2 Dechert Search Engines Under Siege: Do Paid Placement Listings Infringe Trademarks? search technologies. Advertising revenues, their prior mainstay, have grown scarce. As a result, many search engines have started to aggressively market their ability to channel consumers to specific e-commerce locales, blending the line between their “results” and their “advertisements.”5 Somewhat like tour guides who supplement their income by business arrangements with restaurants or gift shops, many search engines now actively direct users to those websites that pay for placement on results pages. As a business strategy, this model has been generally successful. E- commerce sites are hungry to connect with customers and are willing to pay search engines to appear in listings under popular search terms such as “toys,” “flowers,” or “sex.” Web users who are actively looking for the precise thing that a business sells are an ideal target audience.

The paid placement business model, however, has been criticized by some. Last summer, Commercial Alert, a consumer protection organization associated with Ralph Nader, filed a complaint with the Federal Trade Commission alleging that the business of selling paid listings is deceptive to consumers, who assume search engine results to be unbiased.6 A recently filed lawsuit against some “paid placement” search engines raises a private intellectual property variant of this same issue, namely: Can search engines freely sell placement in search results for terms that are protected as trademarks?7 So far, no court has held a search engine liable for trademark infringement by selling paid placement listings. However, prior cases have explored the issue of trademarks and search engines in some detail and suggest that paid placement search engines may be vulnerable to legal attack. n Meta-tag Cases

One practice that raises concerns similar to paid placement is the use of trademarks in meta tags. Keyword meta tags are lines in a web page’s underlying code which can be used to describe the page’s contents. Because a web page’s code is generally not visible when viewing the page through a standard browser (such as Microsoft’s Internet Explorer), keyword meta tags have been characterized by some courts as “invisible.”8 Some web designers use keyword meta tags to provide search engines

5 See Danny Sullivan, Buying Your Way In To Search Engines, at (visited April 2, 2002).

6 See July 16, 2001 Letter from Gary Ruskin, at (visited April 2, 2002).

7 See Mark Nutritionals, Inc. v. Alta Vista Co., Civil Action No. SA-02-CA- 0087 EP (W.D. Tex. 2002). Mark Nutritionals simultaneously filed three similar suits against other search engines: Findwhat, Kanoodle, and Overture (which was formerly GoTo.com).

8 See Bahari v. Gross, 119 F. Supp. 2d 309, 312 n.3 (S.D.N.Y. 2000).

Dechert Page 3 Search Engines Under Siege: Do Paid Placement Listings Infringe Trademarks? with descriptions of the contents of their sites. In the past, search engines used these meta tags to help determine the ranking of pages. Pages that claimed to be about “Gnucola,” for instance, would be ranked higher in searches for Gnucola. Some courts have noted the interesting symbiotic relationship between meta tags, search engines, and domain names, by suggesting that ownership of a particular trademark- related domain name (e.g. “gnucola.com”) may not be a practical necessity if a search engine can discover a business’s website by typing the equivalent term into a search engine.9

Today, however, the majority of search engines claim that they do not recognize keyword meta tags. This is because, on one hand, many website designers have failed to use meta tags at all, while on the other hand, many other website designers have used them improperly, claiming relevance to any search terms which would afford them high traffic. This has not put an end to legal disputes over meta tags, however, which are still frequent. In the vast majority of these disputes, a competitor has used a trademark holder’s marks in meta tags. Microcola, for instance, might use “Gnucola” in its meta tags in order to appear higher in the results for a “gnucola” query. Early decisions considering meta tags generally held their use by competitors to be unlawful as trademark infringement. The search engines in these cases were characterized usually as passive conduits “duped” and “outwitted” by the infringing meta tags. Notably, no recorded decision ever held a search engine liable for recognizing a website’s meta tags, despite the fact that all meta tag cases involved search engines. n Two Influential Ninth Circuit Meta Tag Decisions: Brookfield and Welles

The leading case involving meta tags is the Ninth Circuit’s decision in Brookfield Communications, Inc. v. West Coast Entertainment Corp.10 District courts prior to Brookfield had treated the issue of meta tags fairly briefly, finding the use of trademarks in meta tags to be especially pernicious evidence of trademark infringement under the standard “likelihood of confusion” analysis, and frequently demonstrating a misunderstanding of the function of meta tags. In Brookfield , Judge Diarmuid F. O’Scannlain treated the meta tag issue much more carefully, adopting a pioneering “initial interest confusion” analysis.

The facts in Brookfield presented some close questions. Brookfield Communications had obtained a federal registration of the term “MovieBuff” as a trademark for

9 See, e.g., National A-1 Advertising, Inc. v. Network Solutions, Inc., 121 F. Supp. 2d 156, 179 (D.N.H. 2000); Chatam Int’l, Inc. v. Bodum, Inc., 157 F. Supp. 2d 549, 554 n.10 (E.D. Pa. 2001).

10 173 F.2d 1036 (9th Cir. 1999). See also Eli Lilly & Co. v. Natural Answers, Inc., 233 F.3d 456 (7th Cir. 2000) (finding meta tags strong evidence of deceptive intent, and relying heavily on Brookfield).

Page 4 Dechert Search Engines Under Siege: Do Paid Placement Listings Infringe Trademarks? movie-related computer software. West Coast owned a prior federal registration on a phrase employing the words “Movie Buff” for video products and had also registered the domain name “moviebuff.com.” West Coast intended to open a web site at moviebuff.com with a movie database similar to Brookfield’s. Brookfield brought suit seeking an injunction to stop West Coast from using the term “moviebuff” in commerce, including in West Coast’s meta tags.

The Ninth Circuit first concluded that West Coast was not permitted to use the “moviebuff.com” domain. The court then turned to West Coast’s use of “moviebuff” meta tags. The court noted that the issue of the meta tags was quite different, because it involved intermediary search engines. The court noted that search engines generally display results pages with a great number of listings, presenting their users with an array of choices. Because users would have the opportunity to select the Brookfield site, the court found it was difficult to believe that a consumer would be likely to be confused about whose site he had ultimately reached or to think that Brookfield somehow sponsored West Coast’s web site.11 Nevertheless, the Ninth Circuit found that the use of trademarked terms in meta tags could be actionable as trademark infringement, because the “moviebuff” meta tags resulted in the ultimate diversion of consumers to West Coast’s site based on an initial search for the “moviebuff” mark. In reaching this conclusion, the Ninth Circuit applied the doctrine of “initial interest confusion.”

The doctrine of initial interest confusion is of recent origin and essentially recognizes a trademark holder’s right to prevent against confusion that diverts consumer interest based on the holder’s mark, even if such confusion is no longer present when a sale is consummated. For instance, if a bookseller uses a red and white crumpled hat (a trademark of Dr. Seuss) on the cover of its book, trademark infringement may occur when this generates initial consumer interest in the book based on the mark, even though consumers may be likely to realize, upon closer examination, that the book is not sponsored by or affiliated with Dr. Seuss.12

The Ninth Circuit reasoned that if a “moviebuff” meta tag placed West Coast’s site among “moviebuff” results, this might divert consumers searching for Brookfield’s products to West Coast’s products instead. The court analogized the meta tag to a misleading billboard that directed consumers to exit a highway at the wrong place, or to posting a sign with another’s trademark in front of one’s store.

There were significant limits on the Brookfield decision, however. Despite finding that infringement existed, the Ninth Circuit noted that West Coast would be permitted to use the generic term “movie buff” in its meta tags, which it found to be a “descriptive term… routinely used in the English language to describe a movie

11 Id. at 1062.

12 See Dr. Suess Enterprises, L.P. v. Penguin Books USA, Inc., 109 F.3d 1394, 1405 (9th Cir. 1997).

Dechert Page 5 Search Engines Under Siege: Do Paid Placement Listings Infringe Trademarks? devotee.” But this was not true for Brookfield’s mark, which omitted the space between the two words. The court found that in light of the fact that “MovieBuff” was not a word in the English language, when the term “MovieBuff” was employed, it was used to refer to Brookfield’s products and services.13 The court noted, however, that West Coast was not absolutely barred from using Brookfield’s mark in its pages, as it would be fair use for West Coast to compare its services with Brookfield’s product by name in the pages of its website. The court held, however, that it would not be fair use of the mark to use the “moviebuff” in meta tags to attract consumers to its website.

In a recent decision, Playboy Enterprises, Inc. v. Welles,14 the Ninth Circuit further clarified that in certain circumstances, a trademark can also be used in meta tags by a competitor if the mark is used “nominatively” to describe characteristics of the competitor’s site. In the Welles case, Terri Welles, a former Playboy model, had used several trademarks of Playboy Enterprises in her adult entertainment website’s meta tags. The Ninth Circuit found that Welles’ use of Playboy’s terms “accurately describe the contents of Welles’ website, in addition to describing Welles. Forcing Welles and others to use absurd turns of phrase in their meta tags . . . would be particularly damaging in the Internet search context.” The Ninth Circuit agreed with the district court’s decision that it would be both impractical and ineffectual for Welles to describe herself in her meta tags without making reference to Playboy’s marks, i.e., to employ a meta tag describing herself as “nude model selected by Mr. Hefner’s magazine as its number-one prototypical woman for the year 1981.” The court also suggested that the “playboy” meta tag might also be used by websites which would provide “critiques” of Playboy—affirming in dicta the results of several other district court cases allowing the use of trademarks in meta tags of sites offering criticism of the trademark holder.15

Thus, Brookfield and Welles provide a general rule disallowing competitor use of trademarks in meta tags—with significant broad exceptions for descriptive and nominative uses of trademarks. They suggest that while a competitor’s use of trademarks in meta tags may be actionable as infringement, use of trademark in meta tags may be allowed if the term is 1) not used in its trademark sense (i.e., “movie buff”), or 2) must be used to fairly describe the actual contents of a site so that the site might be located by search engines.

13 Id. at 1066.

14 279 F.3d 796 (9th Cir. 2002).

15 See, e.g., Bahari v. Gross, 119 F. Supp. 2d 309 (S.D.N.Y. 2000) (meta tags used in site complaining about mark holder); Bally Total Fitness Holding Corp. v. Faber, 29 F. Supp. 2d 1161 (C.D. Cal. 1998) (meta tags used in site claiming that mark holder “sucks”).

Page 6 Dechert Search Engines Under Siege: Do Paid Placement Listings Infringe Trademarks? n Meta Tags vs. Paid Placement: The Nissan Case

In terms of the behavior of MicroCola, there are strong similarities between the keyword meta tag cases and the paid placement scenario. In both cases, MicroCola intentionally appears in the results listing for the search terms of the trademark holder. Indeed, to a consumer searching for “Gnucola,” the results of successful competitor meta tags and the results of paid placement may look exactly the same. Since the test for trademark infringement looks to the consumer’s likelihood of confusion, it is hard to see why the result of an infringement lawsuit should differ depending upon whether meta tags or paid placements were used to create the situation.

The first case to directly consider the issue of competitor purchases of paid placement listings was Nissan Motor Co., Ltd. v. Nissan Computer Corp.,16 which essentially adopted an analysis of the issue similar to meta tag cases. Nissan Motor Company had originally brought suit to evict the Nissan Computer Corporation from the domain name “Nissan.com.” This effort proved unsuccessful, probably due to the fact that Nissan Computer’s president was one Uzi Nissan, who had been using his surname in relation to his businesses since 1980. Nissan Computer fired back with several counterclaims, and later sought to amend those counterclaims to charge Nissan Motor with various state and federal trademark and unfair trade practice violations based on its purchase of paid-placement search listings for “Nissan” and “Nissan.com.”

After a brief discussion of the function of search engines, the nature of intellectual property rights, and the application of trademark law to the Internet, Judge Dean D. Pregerson noted how prior decisions had found traditional trademark law to be applicable to Internet domain names and meta tags. After discussing meta tags, the court stated that there was no good cause for not extending the protections afforded in meta tag cases to cases where a company infringes a mark by purchasing a search term. However, the court found the Nissan case was not such a case, as Nissan could not infringe upon its own mark.17

The Nissan case suggests that the understanding of trademarks and search engines applied to mega tag cases can be transferred without difficulty to paid placement cases. It thus provides some good authority for a lawsuit against a competitor who

16 204 F.R.D. 460 (C.D. Cal. 2001).

17 The court noted that pursuant to Ninth Circuit precedent, the “Nissan.com” was indistinguishable from “Nissan” as a matter of law, and that Nissan Computer therefore had no separate intellectual property rights to the address “Nissan.com.” The Court made short work of Nissan Computer’s argument that people searching for Nissan.com would be misdirected, finding that the act of entering a domain name as a search term was analogous to calling a business to ask for its phone number.

Dechert Page 7 Search Engines Under Siege: Do Paid Placement Listings Infringe Trademarks? purchases search terms that the competitor could not use as meta tags.18 A lawsuit against MicroCola, therefore, may be promising for Gnucola, as MicroCola is apparently using the “gnucola” mark in its trademark sense, and apparently has no “nominative use” defense for using the “gnucola” mark to describe the contents of its site.

A lawsuit against E-Pointer might, therefore, be premised on E-Pointer’s complicity in placing MicroCola in the “gnucola” results listings and directly benefiting from MicroCola’s infringement.19 In the meta tags cases, however, it is notable that search engines have not been sued or held liable—in fact, they have been generally perceived as the targets of the deceptive behavior. In the hypothetical presented, however, E-Pointer actively participated in placing MicroCola in the results listings for the Gnucola search. Is it possible that this involvement by the search engine might actually work against Gnucola’s claims? n Playboy v. Netscape: Keyed Banners

The first trademark lawsuit directed at the search engines proved to be a disappointment for trademark holders and a substantial victory for search engines. The case, Playboy Enterprises, Inc. v. Netscape Communications Corp.,20 involved not “results listings,” but rather banner advertisements. A “keyed” banner advertisement is an advertisement that is displayed only alongside the results for certain search terms. In Netscape, the search engines sold advertisement banner placements in results listings for a group of 450 “playboy” and “playmate” related search terms. The advertisement were sold specifically to purveyors of “adult entertainment.” Thus, Playboy’s competitors paid the search engine so that their advertisements appeared on the same page as results for the term “playboy.” Playboy brought suit against the Excite and Netscape search engines, alleging trademark infringement and dilution.

Interestingly, the Netscape court did not seem to attribute much to the fact that the advertisements were not, strictly speaking, “results.” Perhaps this makes sense, since the Brookfield decision, upon which the District Court arguably relied, seemed to find the legal harm from keyword meta tag practices in the initial diversion of interest following a term search, not in any direct confusion based on the contents of results listings. The Netscape court did note that Playboy had not claimed that the search

18 Cf. DeVry/Becker Educ. Dev. Corp. v. Totaltape, Inc., No. 00 C 3523, 2002 U.S. Dist. LEXIS 1230 (N.D. Ill. January 22, 2002) (finding that an order forbidding meta tag uses did not encompass paid placement purchases, but clarifying its order to forbid paid placement purchases as well.)

19 See Inwood Labs. v. Ives Labs., 456 U.S. 844, 854-55 (1982) (setting forth requirements of contributory trademark infringement).

20 55 F. Supp. 2d 1070 (C.D. Cal. 1999).

Page 8 Dechert Search Engines Under Siege: Do Paid Placement Listings Infringe Trademarks? engines’ results listings infringed, and also noted that the case was not literally a meta tag case.21 The decision came out in favor of the search engines based primarily on the Brookfield court’s suggestion that the word “movie buff” was non-infringing because “movie buff” had a non-trademark meaning in the English language. Much of the court’s opinion reflects an apparent conviction that because the search engines could never be sure that a user was looking for Playboy™ (and not for information on the generic word “playboy”) that search terms, even when apparently sold to competitors for their trademark value, were incapable of possessing a trademark meaning.

The Netscape decision is currently under appeal in the Ninth Circuit. The International Trademark Association (“INTA”) has filed an amicus brief urging the Ninth Circuit to reverse or clarify the holding on appeal. INTA’s argument is that the Netscape bright line rule is contrary to established trademark law. It is undoubtedly true that a person might search for “Nike” or “Apple” in an effort to locate the Greek goddess or the fruit—not the footwear or computer companies. Yet Netscape suggests that terms which are English language words can never be capable of trademark meaning in the context of search engines, an argument which goes too far, and which would effectively deny protection to a vast number of marks.

If the term “apple” is sold to a fruit merchant, it is clear that the term is not sold for its trademark value. Selling the search term “apple” to IBM, however, is likely to be a sale based on the trademark function of the word, designed to divert Apple computer customers to IBM products.22 Such diversion (under the initial interest theory of Brookfield at least), should be actionable under trademark law. Judge Stotler’s opinion suggests that because it will be practically impossible in most cases to determine whether a user’s query is directed toward finding Apple™ or the fruit, the search term can never have a trademark meaning. However, what if a trademark holder, like Playboy, can produce evidence demonstrating that the vast majority of persons searching for “Playboy” are in fact searching for content associated with its mark and that the search engine’s sales of the term “Playboy” are made exclusively toward its direct competitors in that market? And even if term sales in such a case do not infringe under a Brookfield analysis, what if Playboy produces evidence that the results of these sales create actual consumer confusion as to the sponsorship of the advertisements and websites displayed by the search engine? It is notable that Playboy apparently failed to produce such evidence.

21 Id. at 1072-73 & 1076.

22 The “apple/Apple” example is taken from the International Trademark Association’s amicus brief filed in the appeal of Playboy v. Netscape, Nos. 00-56648, 00-56662 (9th Cir.).

Dechert Page 9 Search Engines Under Siege: Do Paid Placement Listings Infringe Trademarks? n Other Arguments for Search Engines

Other portions of the Netscape decision suggest alternative arguments a search engine might make to protect a pay-for-placement business model. For instance, the Netscape case suggested that a free speech argument existed for the search engines, observing that “First Amendment interests are at stake,” and that a decision for the trademark holders risked “Internet users… losing their ability to obtain information about words which also happen to be trademarks.”23 In other words, if trademark holders can, through legal means, dictate how a search engine ranks its results listings, is this not analogous to telling newspapers what to say and how to order their headlines? Should trademark holders have the final say as to what must come first and what must be excluded in results listings? Certainly most trademark holders would like to require search engines to place their own website as the first listed result for associated search terms. But if a search engine does not wish to provide a link to Playboy’s website, but instead only wishes to provide links to sites critical of Playboy or related to the dictionary meaning of “playboy,” is this actionable as trademark infringement? Pay-for-placement search engines would probably counter that, in fact, markets for placement actually increase the relevance and usefulness of results listings.24

E-Pointer might also argue that trademark holders can’t expect search engines to direct customers to them for free. The Yellow Pages aren’t forced to carry advertisements for local business without compensation, so why should search engines be forced to give prominent placement to websites without some compensation?25 And by extension, shouldn’t the search engines have control over how they guide users who visit their proprietary pages? This “my property, my rules” argument has support in the Netscape decision, where the court grappled with the Brookfield analogy of a diverting sign and concluded (essentially) that “if the same entity owns the [page] on which both the [link to the trademark holder] and the

23 55 F. Supp. 2d at 1083.

24 For instance, Overture.com states that its business method addresses “three fundamental problems . . . with Internet search [:] poor quality results, random ordering of listings and a weak advertising revenue model.” Pay-for- performance “solves these problems by working directly with businesses to ensure relevant and up-to-date listings, and by creating a real-time market for consumer attention based on advertiser bidding.” See Overture’s Corporate Overview, (visited April 2, 2002).

25 Danny Sullivan, the editor of a well-known publication “Search Engine Watch,” and expert witness in Playboy v. Netscape, has suggested this analogy will probably be employed. See Lawsuit Over Paid Placements To Define Search Engines, at (visited April 2, 2002).

Page 10 Dechert Search Engines Under Siege: Do Paid Placement Listings Infringe Trademarks? competitor’s [advertisement] stand, should that entity be liable to the [trademark holder] for diverting the [consumer]?”26 The Netscape court answered in the negative.

While courts may conclude that a trademark holder doesn’t have an affirmative right to be listed by a search engine, there is a strong argument that a trademark holder is at least entitled to protection against search engine working with its competitors, like MicroCola, who would purchase the company’s own trademark to compete against it. Still, in many cases, it may be hard to establish that the search engine was aware a mark was purchased in bad faith, and thus the search engine might be characterized as an innocent infringer under 15 U.S.C. § 1114(2).

As an example of the practical difficulties involved in requiring a search engine to police term sales, what if a seller of yams or handkerchiefs wanted to purchase placement under the “playboy” search term? Most people would assume this purchase might be unusual, but not actionable as trademark infringement. Yet, the Netscape court observed that valid trademark registrations exist for Playboy yams and sweet potatoes, Playboy handkerchiefs, and Playboy soft drinks. Should a search engine be required to perform trademark searches for all terms it sells and their variants? And what of the many marks in use that are not registered? Outside cyberspace, identical trademarks often co-exist by occupying different geographic locations or markets. The Playboy yams example demonstrates that requiring search engines to police search terms sales against every possibly infringing search term purchase would prove a difficult, perhaps impossible, administrative task. n Conclusion

Anecdotal evidence suggests that at least some search engines respond well to informal complaints about competitor purchases of search terms. Gnucola might therefore take the cost-effective initial step of sending a pointed letter to E-Pointer, making E-Pointer aware of Gnucola’s potential legal claims, and demanding that E- Pointer de-list MicroCola from its results for the “gnucola” search term. If such a letter would works in practice, it would certainly be less expensive than a lawsuit.

The viability of claims based on paid placement listing will only be worked out gradually. Hopefully, the Ninth Circuit may offer some guidance on the issue when the Playboy v. Netscape appeal is decided. Whatever the ultimate shape of the law, however, it will have a powerful effect on search engines, their business models, and Internet commerce generally. As e-commerce becomes more prevalent, users will turn to search engines as a primary source for locating products and information. Hopefully, the courts considering paid placement will be able to achieve a legal balance that protects the rights of trademark holders, ensures the public’s access to

26 55 F. Supp. 2d at 1075.

Dechert Page 11 Search Engines Under Siege: Do Paid Placement Listings Infringe Trademarks? reliable listings and diverse information, and promotes the integrity and usefulness of search engine results.

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