There has been much litigation over the past five years concerning the sale or purchase of trademarks as keywords to trigger sponsored search engine results. Federal courts have struggled to determine whether such trademark usage constitutes actionable trademark infringement. The defendant used the mark in commerce in connection with any goods or services without the consent of the plaintiff. These advertisements typically relate to search terms entered by Internet users and appear as "banner" advertisements on the top of the Web page or "sponsored links" that are displayed on the right column of a Web page or before relevant search results; such Web ads, if clicked on, direct the user to the website of the advertiser. Litigation Over Keyword Advertising

Keyword-triggered advertising cases have involved trademark owners bringing suit against either keyword sellers (Internet search engines) or keyword buyers (advertisers). It is important to note that there have been very few final court rulings in keyword advertising cases, as most opinions have involved pre-trial rulings from judges on procedural motions filed by the parties. For example, courts have had to address a threshold question about whether a trademark owner would be able to overcome defense motions to dismiss the case for failure to state a claim for relief (pursuant to Federal Rules of Civil Procedure 12(b)(6)), on the grounds that the use of a trademark as a paid keyword is not a "use in commerce" within the meaning of the Lanham Act. "Use in Commerce"

Until recently, there was a split in opinion among the federal courts in different circuits concerning the use of trademarks as keyword triggers for online advertising. District courts in the Third, Fourth, Seventh, Eighth, and Ninth Circuit have found that the use of a trademark as a keyword trigger (or facilitating such use) does constitute a "use in commerce" for purposes of the Lanham Act. In the past several years, district courts in the Second Circuit have issued opinions that held that the use of a trademark keyword to trigger an online advertisement is not a "use in commerce" for purposes of satisfying the second prong of a trademark infringement claim, because they believed that such an "internal" use of a trademark (in which the competitor advertisements did not themselves exhibit the trademark) is not a "use in commerce." However, this district court decision, and similar ones issued by district courts in the Second Circuit, were effectively overruled in April 2009 by the U.S. Court of Appeals for the Second Circuit in Rescuecom Corp. v. Google, Inc . "Likelihood of Confusion"

As noted above, establishing that a defendant uses another's mark in commerce is only one element of the infringement claim; for a violation of the Lanham Act to be found, such use must be unauthorized and "likely to cause confusion, or to cause mistake, or to deceive as to the affiliation ... or as to the origin, sponsorship, or approval of ... goods [or] services." When a consumer searches for a trademarked item, she receives a search results list that includes links to both the trademarked product's website and a competitor's website. However, as discussed above, there is a lack of judicial consensus concerning the more important question of whether such trademark use causes likelihood of confusion.
The use of trademarks in connection with Internet-based advertising has sparked disputes between trademark owners, advertisers, and Internet search engine operators over whether such activity violates federal trademark law. Specifically, trademark owners have expressed concern over the sale of their trademarks by Internet search engines to third parties that want to have "banner" advertisements, "sponsored links," or "sponsored results" appear on a search results Web page when those trademarked words are entered as a search query. For example, the shoe company Reebok may purchase the trademark "Nike" from the Internet search engine Google as a "keyword." If a consumer conducts a search for the term "Nike" on Google's website, the consumer would be presented with paid advertisements for Reebok's products in the right-hand margin of the Web page immediately next to the search results for Nike's shoes and apparel.
Whether the use of trademarks as "keywords" that trigger such online advertisements constitutes actionable trademark infringement is a question that has been the subject of much litigation over the past five years. However, to date there have been very few final court rulings on the legality of keyword advertising; most cases have involved rulings from judges on procedural pre-trial motions filed by the parties. The primary issue for these courts was not whether the trademark owner would prevail in a lawsuit brought against a keyword seller (search engines) or keyword buyer (advertisers), but whether the plaintiff was entitled to proceed to trial to offer evidence in support of the trademark infringement claim. For example, most courts have had to answer a threshold question about whether a trademark owner would be able to overcome defense motions to dismiss the case for failure to state a claim for relief, on the grounds that the use of a trademark as a paid keyword is not a "use in commerce" within the meaning of the Lanham Act. Until recently, there was a split in opinion among the federal courts in different circuits concerning this question. The April 2009 decision of the U.S. Court of Appeals for the Second Circuit in Rescuecom Corp. v. Google, Inc. resolved the circuit conflict in favor of a determination that the use of a trademark as a keyword trigger (or facilitating such use) does constitute a "use in commerce" for purposes of the Lanham Act. However, establishing that a defendant uses another's mark in commerce is only one element of the infringement claim; for a violation of the Lanham Act to be found, such use must be likely to cause consumer confusion or mistake as to the origin, sponsorship, or approval of the goods or services offered by the defendant. So far, there is a lack of judicial consensus on this second element, and thus the legality of using trademarks for keyword-triggered advertising remains unsettled.
This report provides a summary and analysis of judicial opinions that have developed the current state of trademark law governing keyword-triggered advertising.