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I debated with myself whether to blog about this on TechHui and as you can tell now, I've decided to do it although with reservations. Please see disclaimer at the end of this posting before reading. I've read the recent Rescuecom v. Google decision from the U.S. Court of Appeals for the Second Circuit and thought a posting on the topic might be of interest to some TechHui members. Be sure to read the disclaimer below the actual posting.

Anyone else who is interested in this case can read the actual opinion by CLICKING HERE.

Legalese is not easy to read at first so, reading the case without certain contextual understandings may prove useless. In an attempt to help readers better understand the issues in the case, I highly recommend reading the following: Now from what I've learned, one of the best things you can do as an attorney, when claims are filed against your client, is to get the case thrown out or dismissed as early as possible before the actual trial begins. An attorney can start this by raising certain defenses to claims filed against his client. I mention all this because the court's decision in Rescuecom v. Google, at this point, is more about legal procedure. But, language in the appeals court's opinion begins to look at the merits of the actual issue as it relates to Google's defense.

Rescuecom v. Google is on appeal to the U.S. Court of Appeals of the Second Circuit, a federal court. Rescuecom made the appeal because it "lost" in the lower court. Google apparently filed a defense to Rescuecom's claims against Google. These claims against Google are for
  • trademark infringement
  • false designation of origin, and
  • dilution under the Lanham Act.
The lower federal court ruled against Rescuecom "pursuant to Federal Rules of Civil Procedure 12(b)(6) for failure to state a claim for relief on the grounds that Google did not use Rescuecom's trademark in commerce within the meaning of the Lanham Act." Basically, at the lower court, Google was successful and the lower court found that the case should be dismissed. Rescuecom had to show that the lower court was wrong in its ruling in order to have the case proceed and not be dismissed.

My girlfriend (yes, that's me with the mosaic-ed face) was somewhat more familiar with this case than I (before I read it) because of her particular line of work. Anyway, if you're unfamiliar with the facts of the case, I'll try my best to explain it. Rescuecom is a computer franchise company and I assume TechHui members are familiar with Google enough for me to not have to explain what Google does. Anyhow, through Google Adwords, Google, also allows advertisers to buy keywords and as this particular case illustrates, Google also allows (or allowed) advertisers to to buy trade names and trademarks among keywords.

One such trademark was Rescuecom. In other words, competing businesses of Rescuecom were able to purchase the trademark name of "Rescuecom" and as a result, when interested customers did a google search for "Rescuecom," an advertiser (or more accurately, a competing business to Rescuecom) previously made arrangements with Google to have their own (the competitor) advertisement and company name at the top of the search results or significantly close to those search results in a manner that might confuse people, according to Rescuecom.

Only having read the decision, and not the legal briefs, I assume that perhaps a competitor to Rescuecom, that we can refer to as XYZ paid Google to have its business listed when a customer did a google search for the term "Rescuecom." The problem is, after doing such a search for "Rescuecom", XYZ seems to have appeared at the top of the google search. Rescuecom asserted that, in doing so, a person could be mis-led or confused into thinking that the XYZ's website was Rescuecom's website. Google also had/has a Keyword Suggestion Tool that recommends/recommended trademarks for advertiser's to buy. In this case, the tool seems to have recommended to advertisers the keyword and trademark "Rescuecom." This may be easily understandable when we consider a scenario where someone goes to google.com and in the search field, types in "Rescuecom" and then gets results that take them to another site that offers the same goods and/or services by a competitor XYZ. This scenario may help us to understand why Rescuecom might be concerned that Google was infringing on its trademark.

Again, without having read the legal briefs of both parties and only relying upon my understanding of the court's decision, I assume that in defending its actions, Google's attorneys argued that there was no trademark infringement and that in a previous case at the same appeals court, a case known as, 1-800 Contracts, Inc. v. WhenU.com, Inc., the court ruled that there was no trademark infringement. But the Appeals Court seemed to have distinguished the 1-800 case from the Rescuecom case. One of the main differences was that the defendant in 1-800 did not sell trademarks, but advertisements were based on category rather than trademarks. Additionally, in 1-800 the defendant provided pop-up ads that were completely separate from
  1. the search engine's findings,
  2. a company website, and
  3. perhaps most importantly, in a different browser window.
Rescuecom argued in its complaint, that "Google fails to label the ads in a manner which would clearly identify them as purchased ads rather than search results." The court seems to believe that there was a lot less confusion in advertisements in the 1-800 case than from what Google provided because google ads are on the same page as the search engine findings. The lower court thought that 1-800 provided it with the basis in its ruling supporting Google, but again, the appeals court thought differently.

The issue of this particular case, at this stage, seems to be hinged on whether or not Google used the trademark "Rescuecom" "in commerce." The lower district federal court said Google did not, but on appeal, the Appeal's court agreed. The lower court believed that, Google's use of "Rescuecom" was not used "in commerce" under the Lanham Act because "the competitor's advertisements triggered by Google's programs did not exhibit Rescuecom's trademark."
The appeals court referred to Sections 32 and 43 of the Lanham Act, which imposes "liability for unpermitted 'use in commerce' of another's mark which is 'likely to cause confusion, or to cause mistake, or to deceive . . . as to the affiliation . . . or as to the origin, sponsorship or approval of his or her goods [or] services by another person." The appeals court found that "Google is recommending and selling to its advertisers is Rescuecom's trademark . . . ." and that "Google displays, offers, and sells Rescuecom's mark to Google's advertising customers when selling its advertising services. In addition, Google encourages the purchase of Rescuecom's mark through its Keyword Suggestion Tool.

The appeals court concluded that, "Google's utiliziation of Rescuecom's mark fits literally within the terms specified by the codified version of the Lanham Act, because as Rescuecom's Complaint provides, "Google uses and sells Rescuecom's mark 'in the sale ... of [Google's advertising] services ... rendered in commerce.'"

This case will be returned to the lower district court and cannot be dismissed on the grounds of the 12(b)(6) motion by Google. It will be interesting to see what the lower court does with this case when it gets it back.


**Disclaimer: I am not a licensed attorney and the above blog post is not (and should not be considered as) legal advice. I do have a juris doctorate degree. Anything I post here is done so in my personal capacity and not in any other capacity as an employee, fellow, member, etc., of any other organization, institution or entity.

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Comment by Derek on April 8, 2009 at 11:24am
Hey Scott, thanks for the Wired story. Todd Cochrane mentioned on one of his recent podcasts about copyrights on Twitter! If I recall correctly, the scenario he described on the Geek News Central Podcast was that someone ReTweeted something from ESPN and he then asked whether it was copyrighted. It'll definitely be interesting to see how those issues develop. It may be a good time to be an IP attorney during these bad economic times.
Comment by Scott Murphy on April 8, 2009 at 10:19am
It seems like there are lots of areas that are still vague with electronic/internet law. Google seems to be in the news often as they naturally are the big player but in the end, there never seems to be a case that really sets precedence and draws a line through the grey zone of the laws governing the internet.

I saw this recently, http://blog.wired.com/27bstroke6/2009/04/murdoch-says-go.html. Is RSS aggregation illegal? I certainly hope not.
Comment by Derek on April 8, 2009 at 7:01am
Mahalo for the comment Dan.

The earliest legal filings I was able to find regarding this case was from November 2004. I assume that the actual legal work leading up to the case was at least a few months before that. It will definitely be interesting to see how the case develops when it goes back down to lower court for further proceedings. I'll try to post more on techhui as information comes out.
Comment by Daniel Leuck on April 8, 2009 at 6:44am
I think analysis of a case involving two tech companies, one of which is Google, is definitely fair game for TechHui. This is especially true when the case has the potential to set precedence with wide ranging implications. I found this post very interesting!

re: Rescuecom's assertion in their complaint that "Google fails to label the ads in a manner which would clearly identify them as purchased ads rather than search results."

It says "Sponsored Links" at the top of all paid results. How much clearer can they be? From a legal layperson's perspective, Rescuecom comes off as one of those litigious companies that monkeys up the system. If they cause "Sponsored Links" to grow to 24 points of blinking red text I'm going to be very unhappy. :-)

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