Hidden Use of Competitors’ Trademarks on the Internet The Second Circuit’s Minority Approach

A website consists of a home page and, usually, additional pages. One factor that determines whether the results of a search-engine inquiry include a particular webpage (whether a website’s homepage or one of its additional pages), and where the webpage appears in those results, is the webpage’s use of metatags. A metatag is a piece of text, such as a word, that is embedded in a webpage’s HTML (hypertext markup language) code and is read by search engines but is not visible to internet users.
When a website belonging to “Company A” includes, in its metatags, a trademark of its competitor, “Company B,” a search-engine inquiry for Company B will produce results that include one or more webpages of Company A, perhaps leading the internet user to Company A’s website, where he then makes a purchase that he might otherwise have made from Company B. In such an instance, does Company B have a trademark-infringement claim against Company A under the Lanham Act, 15 U.S.C. §§ 1051-1128? To have a cause of action under the Act, “a plaintiff must establish that (1) it has a valid mark that is entitled to protection under the Lanham Act; and that (2) the defendant used the mark, (3) in commerce, (4) “in connection with the sale … or advertising of goods or services,” 15 U.S.C. § 1114(1)(a), (5), without the plaintiff’s consent. In addition, the plaintiff must show that defendant’s use of that mark “is likely to cause confusion … as to the affiliation, connection, or association of [defendant] with [plaintiff], or as to the origin, sponsorship, or approval of [the defendant’s] goods, services, or commercial activities by [plaintiff].” 1-800 Contacts, Inc. v. WhenU.Com, Inc., 414 F.3d 400, 406-407 (2d Cir. 2005).
Several federal appellate cases have addressed the issue of whether one’s use of a competitor’s trademark in its metatags violates the Lanham Act and held that it does: Venture Tape Corp. v. Mcgills Glass Warehouse, 540 F. 3d 56 (1st Cir. 2008); Promatek Industries, Ltd. v. Equitrac Corp., 300 F.3d 808 (7th Cir. 2002); Brookfield Communications, Inc. v. West Coast Entertainment Corp., 174 F.3d 1036 (9th Cir.1999); Australian Gold, Inc. v. Hatfield, 436 F.3d 1228 (10th Cir. 2006); and North American Medical Corp. v. Axiom Worldwide, Inc., 522 F.3d 1211 (11th Cir. 2008).
Among this group, the most detailed analysis is provided by the Ninth Circuit in the Brookfield case, in which the parties were competitors in gathering and selling information about the entertainment industry. Brookfield owned the trademark “MovieBuff,” but the website of West Coast was www.moviebuff.com, which West Coast claimed was based on its service mark, “The Movie Buff’s Movie Store.” After West Coast rejected a cease-and-desist demand from Brookfield, the latter brought suit in federal court in California under the Lanham Act, 15 U.S.C. §§ 1114, 1125(a), and sought to enjoin West Coast from, inter alia, using the term “moviebuff” in its website address as well as in its website’s metatags. The District Court for the Central District of California denied Brook­field’s request, and Brookfield appealed to the Ninth Circuit. With respect to West Coast’s website address, the Ninth Circuit was “left with the definite and firm conviction that … the district court[] [erred in] conclu[ding] that the evidence of likelihood of confusion … was slim,” Brookfield, 174 F.3d at 1061, and therefore reversed the District Court’s refusal to grant Brookfield’s request for a preliminary injunction. With respect to West Coast’s use of the term “moviebuff” in its metatags, on the other hand, the Ninth Circuit found that the confusion caused by West Coast’s use of the term “moviebuff” in its metatags “is not as great as where West Coast uses the ‘moviebuff.com’ domain name.” Brookfield, 174 F.3d at 1062. First, when one searches the term “moviebuff,” the result “is likely to include both West Coast’s and Brookfield’s websites[,] [so that] the web user will often be able to find the particular website he is seeking,” i.e., Brookfield’s site. Id.
Second, the court found an Internet user who, in his search results, clicks on a link to a West Coast webpage, “will see that the domain name of the website he selected is ‘westcoastvideo.com.’ Since there is no confusion resulting from the domain address, and since West Coast’s initial webpage prominently displays its own name, it is difficult to say that a consumer is likely to be confused about whose site he has reached or to think that Brookfield somehow sponsors West Coast’s website.” Id.
Notwithstanding the court’s finding that West Coast’s use of Brookfield’s trademark in West Coast’s metatags would not likely cause confusion among internet users, the court found, under a different rationale, that West Coast had likely violated the Lanham Act: “West Coast’s use of “moviebuff.com” in metatags will still result in what is known as initial interest confusion. Web surfers looking for Brookfield’s ‘MovieBuff’ products who are taken by a search engine to “westcoastvideo.com” will find a database similar enough to ‘MovieBuff’ such that a sizeable number of consumers who were originally looking for Brookfield’s product will simply decide to utilize West Coast’s offerings instead. … [B]y using ‘moviebuff.com’ or ‘MovieBuff’ to divert people looking for ‘MovieBuff’ to its website, West Coast improperly benefits from the goodwill that Brookfield developed in its mark … [T]he use of another’s trademark in a manner calculated to capture initial consumer attention, even though no actual sale is finally completed as a result of the confusion, may be still an infringement.”
Id. at 1062. For the proposition that one’s use of another’s trademark might violate the Lanham Act when that use causes initial-interest confusion, the court cited, inter alia, the Second Circuit case of Mobil Oil Corp. v. Pegasus Petroleum Corp., 818 F.2d 254 (2d Cir. 1987.)
The Second Circuit Takes a Different Approach
In 1-800 Contacts, Inc. v. WhenU. com, Inc., 414 F.3d 400 (2d Cir. 2005), whose facts were similar to those in Brookfield, the Second Circuit departed from the Brookfield line of cases. In 1-800, “WhenU” was an Internet-marketing company that provided, to Internet users, free software that, based on the websites that an Internet user visits, causes an advertisement to appear in one of three types of windows, each of which is “separate from the particular website or search-results page the [computer] user has accessed,” id. at 405: a pop-up window in the bottom right-hand corner of the screen, a pop-under window (i.e., below the webpage), or a panoramic window across the bottom of the screen. The advertisement that appears is based on its categorical relevance to the website being visited but is otherwise selected randomly.
The plaintiff in 1-800, a distributor that sold contact lenses and related products, “allege[d] that [the defendant]’s conduct infringes [the plaintiff]’s trademarks … by delivering advertisements of [the plaintiff]’s competitors … to [computer] users who have intentionally accessed [the plaintiff]’s website.” Id. The Second Circuit heard an appeal of the Southern District of New York’s (Batts, J.) issuance of a preliminary injunction prohibiting “WhenU” from utilizing 1-800’s trademarks, which the District Court issued upon finding that 1-800 had demonstrated a likelihood of success on its Lanham Act claims.
The Second Circuit reversed the District Court ruling, finding that “WhenU” had not “used” 1-800’s trademarks. The Lanham Act itself provides that: “a mark shall be deemed to be in use in commerce – (1) on goods when – (A) it is placed in any manner on the goods or their containers or the displays associated therewith or on the tags or labels affixed thereto, or if the nature of the goods makes such placement impracticable, then on documents associated with the goods or their sale, and (B) the goods are sold or transported in commerce, and (2) on services when it is used or displayed in the sale or advertising of services and the services are rendered in commerce. …” 15 U.S.C. § 1127 (emphases added).
The Second Circuit found that the name of the plaintiff’s website, i.e., www.1800contacts.com, was not a trademark, and that, therefore, any “use” of that web address was not covered by the Lanham Act. However, the court also made, quite clear, its view that dismissal would have been required even if “WhenU”‘s metatags had contained the plaintiff’s trademark:
“‘WhenU’ does not ‘use’ 1-800’s trademark in the manner ordinarily at issue in an infringement claim: it does not ‘place’ 1-800 trademarks on any goods or services in order to pass them off as emanating from or authorized by 1-800. The fact is that ‘WhenU’ does not reproduce or display 1-800’s trademarks at all, nor does it cause the trademarks to be displayed to a [computer] user. Rather, ‘WhenU’ reproduces 1-800’s website address, <>, which is similar, but not identical, to 1-800’s 1-800CONTACTS trademark.”
“The district court found that the differences between 1-800’s trademarks and the website address utilized by ‘WhenU’ were insignificant because they were limited to the addition of the ‘www.’ and ‘.com’ and the omission of the hyphen and a space. We conclude that, to the contrary, the differences between the marks are quite significant because they transform 1-800’s trademark – which is entitled to protection under the Lanham Act – into a word combination that functions more or less like a public key to 1-800’s website.” Id. at 408-409.
Further suggesting that “WhenU” could have chosen to include 1-800’s trademark in “WhenU’s” metatags, the court observed that, “[a]lthough the directory resides in the [computer] user’s computer, it is inaccessible to both the [computer] user and the general public. … Thus, the appearance of 1-800’s website address in the directory does not create a possibility of visual confusion with 1-800’s mark.” Id. at 409. Insofar as the Second Circuit found that the invisibility of metatags precluded the possibility of confusion on the part of internet users, such possibility would, of course, also have been precluded if “WhenU’s” metatags had contained 1-800’s trademark. In any event, the court reverted to its focus on its finding that www.1800contacts.com was not a trademark in the first place: “More important, a ‘WhenU’ pop-up ad cannot be triggered by a [computer] user’s input of the 1-800 trademark or the appearance of that trademark on a webpage accessed by the [computer] user. Rather, in order for ‘WhenU’ to capitalize on the fame and recognition of 1-800’s trademark – the improper motivation both 1-800 and the district court ascribe to ‘WhenU’ – it would have needed to put the actual trademark on the list.” Id. However, a footnote that immediately followed noted that “[t]his observation, however, is not intended to suggest that inclusion of a trademark in the directory would necessarily be an infringing ‘use.’ We express no view on this distinct issue.” Id. at 409, n.11. Nevertheless, the court proceeded to even more strongly address that issue: “[a] company’s internal utilization of a trademark in a way that does not communicate it to the public is analogous to a individual’s private thoughts about a trademark. Such conduct simply does not violate the Lanham Act, which is concerned with the use of trademarks in connection with the sale of goods or services in a manner likely to lead to consumer confusion as to the source of such goods or services.” Id. at 409 (emphasis added). The court offered another analogy involving the use of trademarks in metatags:
[I]t is routine for vendors to seek specific ‘product placement’ in retail stores precisely to capitalize on their competitors’ name recognition. For example, a drug store typically places its own store-brand generic products next to the trademarked products they emulate in order to induce a customer who has specifically sought out the trademarked product to consider the store’s less-expensive alternative. ‘WhenU’ employs this same marketing strategy by informing [computer] users who have sought out a specific trademarked product about available coupons, discounts, or alternative products that may be of interest to them. Id. at 411.
In sum, the Second Circuit, which noted that, “we do not necessarily endorse the holdings … [in] cases such as Brookfield,” id. at 411, n.15, would most likely find that a website’s use of a competitor’s trademark in the website’s metatags does not violate the Lanham Act.
Todd Bank is a solo practitioner in Kew Gardens representing plaintiffs primarily in class actions.