800-JR Cigar, Inc. v. GoTo.com, Inc.,et al., the US District Court of New Jersey
issued an opinion on whether the use of a trademark as a "keyword" constitutes
trademark infringement by a search engine. The plaintiff, JR Cigar,
is a prominent seller of cigars at discount prices and the owner of six federal
trademarks that utilize the formative “JR” or “JR Cigar.” The defendant, GoTo is
a pay-for-priority Internet search engine (a search engines that solicits bids
from advertisers for key words or phrases to be used as search terms, giving
priority results on searches for those terms to the highest-paying advertiser)
formed in 1997 (now Overture). Between April 1999 and June 2001, GoTo earned
revenue of about $345 from paid listings for “jr cigar” and related search terms.
The court adopted the reasoning of Government
Employees Insurance Co. v. Google Inc., 330 F. Supp. 2d 700, 73 USPQ2d 1212 (E.D.
Va. 2004) and held, among other things, that such sales by a search engine
constitute a "use" of the trademark "in commerce" within the meaning of federal
trademark statutes. According to the court GoTo made use of JR's trademark in
• GoTo traded on the value of the marks when it accepted payment by competitors
of JR desiring to pay for prominence in search results.
• GoTo injected itself into the marketplace by placing the advertisers before
the natural search results list, acting as a conduit to steer potential
customers away from JR to JR's competitors.
• GoTo's "Search Term Suggestion Tool" identified which of JR's marks were
effective search terms, and then marketed them to JR's competitors.
The court concluded, however, that there are
disputed issues of fact that preclude a summary judgment ruling on the issue of
direct trademark infringement, in particular the likelihood of confusion
resulting from the sale of trademark terms as keyword search terms.