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Two of the cases recently summarized in ILU are provided below. As you will see, they address the use of another's trademarks in key word advertising, a hot topic in search, and one that bears watching given the conflicting decisions being issued by the courts:Purchase Of Keyword Advertisements Not "Use In Commerce" Sufficient To Sustain Trademark Infringement Claim, Merck & Co., Inc., et al. v. Mediplan Health Consulting, Inc., d/b/a RxNorth.com, 05 Civ. 3650 (DC) (S.D.N.Y., March 30, 2006).
In six related lawsuits arising out of the sale by online Canadian-based pharmacies of both branded and generic versions of plaintiff’s popular anticholesterol medication “Zocor,” the Court granted motions to dismiss trademark infringement claims challenging defendants’ purchase of the keyword “Zocor” from search engines to trigger the display of “sponsored links” to defendants’ websites. Such purchases do not constitute the requisite ‘use in commerce’ of plaintiff’s mark necessary to sustain such claims. The Court also granted defendant CrossBorder’s motion to dismiss trademark infringement claims arising out of its use of plaintiff’s trademark “Zocor” on its website, at which CrossBorder sold both plaintiff’s own product, as well as a generic version described as “generic simvastatin.” “Simvastatin” is the active ingredient in “Zocor.” Because it sold branded Zocor at its website, this was a permitted fair use of plaintiff’s mark.
The Court declined at this early stage of the proceedings to dismiss the trademark infringement and dilution claims advanced against the remaining defendants. Defendants link the “Zocor” mark to web pages at which they sold both branded Zocor and generic products described alternatively as “generic Zocor,” “Zocor generic” or “Zocor—generic.” The Court was unwilling on this motion to determine whether such uses were likely to confuse consumers as to the source and sponsorship of these generic products, and hence unwilling to declare them permitted fair uses of plaintiff’s trademarks.
Finally, the Court granted the motion to dismiss for want of personal jurisdiction of defendant CanadaDrug’s CEO. This individual, a Canadian resident, was neither alleged to have personally undertaken any actions in the United States in furtherance of the infringing activities at issue, nor been a “primary actor” therein.Online Pharmacies Use Plaintiff's Zocor Mark On Their Websites And Purchase Keyword Advertisements Triggered By Zocor Searches
Plaintiff Merck & Co. Inc. (“Merck”), one of the world’s leading pharmaceutical companies, owns federally registered trademarks for word and design marks containing the term “Zocor.” “Zocor” is a popular anticholesterol drug for which Merck holds a U.S. patent.
Defendants are Canadian entities that control and operate online pharmacies that sell medication to U.S. residents. Defendants operate their respective websites at the domains rxnorth.com, CanadaPharmacy.com, CanadaDrugs.com, CrossBorderPharmacy.com and MedCenterCanada.com.
Defendants use plaintiff’s trademark “Zocor” on their sites in support of their sale of both branded and generic versions of “Zocor.” Universal Drugstore’s site contains a link from plaintiff’s Zocor design mark to a web page that offers both “Zocor (Simvastatin)” and “Simvastatin (Zocor generic).” On the North Pharmacy site, a link from plaintiff’s Zocor design mark takes the user to a web page that offers choices between “Generic” and “Brand” products, including references to “brand Zocor” and “generic Zocor.” CrossBorder links the word mark “Zocor” to a web page that offers “Zocor” and “Generic Simvastatin.”
Three of the defendants – Canada Pharmacy, MedCenter and Universal – also pay the search engines Google and Yahoo to display “sponsored links” to their websites when a user enters the search term “Zocor.”
Merck commenced these lawsuits, charging that defendants’ conduct infringed and diluted Merck’s trademarks in violation of both Federal and State law. Defendants were also charged with false advertising, as well as with patent infringement.
Defendants moved to dismiss various counts of the complaint and for judgment on the pleadings. No motion was made with respect to plaintiff’s patent infringement claims. As explained below, defendants’ motions were granted in part, and denied in part.No Use In Commerce
The Court dismissed the trademark infringement claims Merck advanced as a result of defendants’ purchase of keyword advertising on the search engines Google and Yahoo. To prevail on a trademark infringement claim under the Lanham Act, a plaintiff must establish “that it owns a valid mark entitled to protection under the statute that the defendant used in commerce, without plaintiff’s consent and in connection with the sale or advertising of goods and services.” The Court held that purchasing keyword advertising triggered by a user’s search for “Zocor” does not constitute the requisite “use in commerce” of plaintiff’s mark necessary to sustain such a claim. In reaching this result, the Court relied on the Second Circuit’s decision in 1-800 Contacts, Inc. v. WhenU.com, Inc., 414 F.3d 400 (2d Cir. 2005). Said the Court:
Here, in the search engine context, defendants do not “place” the ZOCOR marks on any goods or containers or displays or associated documents, nor do they use them in any way to indicate source or sponsorship. Rather, 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’ websites. 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.
The Court found further support for its decision in the fact that:
defendants actually sell Zocor (manufactured by Merck’s Canadian affiliates) on their websites. Under these circumstances, there is nothing improper with defendants’ purchase of sponsored links to their websites from searches of the keyword “Zocor.”Use Of Plaintiff's Zocor Mark At Website At Which Zocor And "Generic Simvastatin" Sold Is A Permitted Fair Use
The Court also granted defendant CrossBorder’s motion to dismiss the trademark infringement claims arising out of its use of plaintiff’s “Zocor” mark on its website. CrossBorder links this mark to a web page at which it sells both plaintiff’s own product, labeled “Zocor 80 mg tablet” as well as a generic alternative, described as “Generic Simvastatin 80 mg tablet.” The Court held that this was a fair use of plaintiff’s mark that was not likely to confuse consumers as to the source of defendant’s generic product, because its description, unlike those of the remaining defendants, did not include the word “Zocor.”
Although the mark ZOCOR appears on the site, CrossBorder sells Zocor (manufactured by Merck’s Canadian affiliates), and thus there is nothing improper about its use of the ZOCOR mark for that purpose. Nor is there anything improper (or confusing) about its offering, along side the brand product, its generic alternative, which is described as “generic simvastatin.”Infringement Claims Arising Out Of Description Of Generic Versions Of Plaintiff's Medicine As "Generic Zocor" Go Forward
At this early stage in the proceedings, the Court denied the remaining defendants’ motions to dismiss the trademark infringement and dilution claims arising out of their use of the phrase “generic Zocor,” or variations thereof, to describe the generic products they offered for sale on their websites. Defendants claimed that consumers who purchased a generic drug must know that its source is someone other than the manufacturer of the branded product and that the branded product is being replicated by the generic, and hence cannot be confused as to its source. The Court was not prepared, at this time, to accept this contention, or conclude:
that the ZOCOR mark, adjacent to or in close proximity to the word “generic” on defendants’ websites, cannot give rise to consumer confusion as to the origin or sponsorship of the product.
As such, the Court did not accept defendants’ assertion that their use of the ‘Zocor’ mark in this fashion constituted a nominative fair use – a use of plaintiff’s mark to describe an attribute of defendants’ products. Such a fair use claim requires that “the user … do nothing that would, in conjunction with the mark, suggest sponsorship or endorsement by the mark holder.” At this time, the Court was not willing to conclude that an affiliation with Merck was not suggested by the use of its mark Zocor to describe defendants’ generic products.No Personal Jurisdiction Over Thorkelson
Finally, the Court dismissed for want of personal jurisdiction claims Merck brought against Mr. Thorkelson, the CEO of defendant CanadaDrugs, and a resident of Canada. Merck had alleged that Thorkelson, as CEO, “should be presumed to be intimately involved in directing the infringing activities” at issue.
The Court held such allegations insufficient to permit it to assert personal jurisdiction over Thorkelson. Plaintiff had not alleged that Thorkelson individually transacted any business in New York.
Nor were Merck’s allegations sufficient to permit the contacts of CanadaDrug with New York to be imputed to Thorkelson, on an agency theory, for the purpose of finding him present here for jurisdiction purposes. To impute CanadaDrug’s activities to Thorkelson, the Court must find that he is the “primary actor in the transaction in New York ‘that gives rise to the litigation, and not merely ‘some corporate employee … who played no part in it.” Because plaintiff did not allege that Thorkelson was such a ‘primary actor’, the Court granted Thorkelson’s motion to dismiss. Said the Court:
Plaintiffs have not alleged that Thorkelson was a “primary actor” in the matters in question; control cannot be shown based merely upon a defendant’s title or position.Purchase Of Keyword Advertisements "Use In Commerce" Sufficient To Sustain Trademark Infringement Claim,
Edina Realty, Inc. v. TheMLSonline.com, Civil No. 04-4371 (D. Minn. 2006)
The Court holds that the purchase of keyword advertisements triggered by a search containing another’s trademark constitutes a use of that mark in commerce sufficient to give rise to trademark infringement claims. The Court accordingly denied a motion by defendant The MLS Online.com to dismiss trademark infringement claims arising out of its purchase of keyword advertisements from Google and Yahoo that displayed ‘sponsored links’ to defendant’s website when a user entered plaintiff’s Edina Realty trademark as a search term.
The Court also denied defendant’s motion to dismiss trademark infringement claims arising out of its use of plaintiff’s mark in hidden text and links found on its website, and in the text of its sponsored links, which motion was premised on the ground that this was a permitted nominative fair use of plaintiff’s marks. Adopting the ‘fair use’ test followed by the Third Circuit, the Court held such uses of plaintiff’s mark were not necessary to the description of defendant’s product or services.
Finally, the Court dismissed trademark dilution claims advanced by plaintiff Edina Realty as a result of its failure to provide evidence of actual dilution.MLS Online Uses Competitor's Marks In Hidden Text On Its Website, and To Trigger Keyword Advertisements
Plaintiff Edina Realty Inc. and defendant TheMLSonline.com (“MLS Online”) are competitors that each offer real estate brokerage services to their respective customers. Plaintiff is the largest real estate brokerage firm in the Midwest, and the owner of federal trademark registration for the mark “Edina Realty.”
Defendant MLS Online operates a website at which it provides a number of services, including listings of available real estate throughout the United States. Included within these listings are “Edina Realty listings.” Defendant uses plaintiff’s trademark in a number of ways to bring this to the attention of consumers. First, defendant purchases keyword advertisements from the search engines Google and Yahoo for plaintiff’s “Edina Realty” trademark, and variants thereof, including “Edina Reality,” a misspelling of plaintiff’s mark. Users who enter these keywords in searches are shown sponsored links that contain an advertisement for, and link to, defendant MLS Online’s website. Some of these ‘sponsored link’ advertisements have contained plaintiff’s trademark. Defendant has also used plaintiff’s trademark in hidden text and links found on its website. This text appears in a white font on a white background, and is designed to boost the responsiveness of defendant’s site to a search for plaintiff’s trademark.
After MLS Online refused to discontinue such uses of plaintiff’s mark, Edina Realty commenced this suit, charging MLS Online with trademark infringement and dilution under federal and state law, as well as with unfair competition.Use In Commerce
MLS Online moved for summary judgment, dismissing the trademark infringement claims arising out of its purchase of keyword advertisements triggered by a search for plaintiff’s “Edina Realty” trademark, and variants thereof. MLS Online argued that this did not constitute the requisite ‘use in commerce’ of plaintiff’s mark necessary to sustain such a claim. To prevail on a trademark infringement claim, the mark holder must establish that defendant, without authorization, used the markholder’s mark in commerce in connection with the sale or advertising of goods or services.
The Court rejected this argument, holding that MLS Online had, by purchasing such key word advertising, used Edina Realty’s mark in commerce. Said the Court:
While not a conventional “use in commerce,” defendant nevertheless uses the Edina Realty mark commercially. Defendant purchases search terms that include the Edina Realty mark to generate its sponsored link advertisement. Based on the plain meaning of the Lanham Act, the purchase of search terms is a use in commerce.No Fair Use
MLS Online also sought dismissal of the trademark infringement claims advanced against it on the ground that its use was a permitted nominative fair use. Adopting the test for nominative fair use set forth in the Third Circuit’s decision in Century 21 Real Estate Corp. v. Lendingtree Inc., 425 F.3d 211 (3rd Cir. 2005), a defendant’s use is a nominative fair use when:
(1) the use of plaintiff’s mark is necessary to describe both the plaintiff’s product or service and the defendant’s product or service;
(2) the defendant uses only so much of the plaintiff’s mark as is necessary to describe plaintiff’s product; and
(3) that the defendant’s conduct or language reflect the true and accurate relationship between plaintiff and defendant’s products or services.
MLS Online failed to meet that burden here. The Court held that it was not necessary for MLS Online to use plaintiff’s mark to describe its services, or the content of its website. Nor did a particular sponsored link that MLS Online authored for Yahoo, which displayed plaintiff’s trademark in its headline, and defendant’s name in a much smaller font at the bottom of the ad, reflect the true and accurate relationship between the parties. Said the Court:
The Court holds that defendant’s use of the Edina Realty mark does not constitute nominative fair use as a matter of law. Defendant uses the mark as an Internet search term, in its Sponsored Link advertisements, and in hidden text and hidden links on its website. None of these uses requires the Edina Realty mark. In its advertisements and hidden links and hidden text, defendant could easily describe the contents of its website by stating that it includes all real estate listings in the Twin Cities. Similarly, defendant could rely on other search terms, such as Twin Cities real estate, to generate its advertisement. In addition, defendant’s use of the Edina Realty mark in its advertisement does not reflect the true relationship between plaintiff and defendant. Defendant’s advertisement that has appeared on Yahoo, for example, places the Edina Realty mark in the headline, which is underlined and in bold font. The name of defendant’s company is listed in much smaller font at the bottom of the ad. Defendant could have done more to prevent an improper inference regarding the relationship.Trademark Dilution Claims Dismissed
The Court did dismiss trademark dilution claims advanced by plaintiff because of its failure to “provide [ ] evidence of actual dilution.” According to the Court, “plaintiff has presented no evidence that the ability of the Edina Realty mark to serve as a unique identifier of plaintiff’s services has been weakened.” This decision seems at odds with the Court’s holding in Moseley v. V Secret Catalogue, 537 U.S. 418 (2003) where the Court noted that “direct evidence of dilution such as consumer surveys will not be necessary if actual dilution can reliably be proven through circumstantial evidence – the obvious case is one where the junior and senior marks are identical.” As noted above, MLS Online has used plaintiff’s mark, both in advertisements and on its website. The Court nonetheless dismissed the dilution claims because of the absence of “evidence of actual dilution.”