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Bidding On Trademark Terms Okayed By Court

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Another court has decided use of trademarked terms in metatags and keyword advertising does not constitute trademark infringement, but the issue is far from settled and only gets more complicated as more courts hear arguments from both sides.

In this case, Designer Skin sued S&L Vitamins for reselling Designer Skin products online. S&L was not an approved retail channel, and was selling the self-tanning product at lower prices. Also, the company dropped the Designer Skin name into the metatags of its site to help with organic search rankings (a practice with debatable efficacy), and bid on Designer Skin keywords in order to drive traffic to the site.

Most often in keyword trademark infringement cases, the issue centers on whether competitors – in this instance, another maker of self-tanning lotion – have the right to use keywords in metatags or bid on trademarks. Courts have come down on both sides.

In this case, heard in Arizona, it is not a question of competition, but of sales channel control. At issue is a concept of "initial interest confusion," meaning when searchers see an ad or listing for Designer Skin, they could mistake S&L, a seller, as the maker of the product. The judge didn’t think any consumer with a half a brain would make that mistake:

In contrast to the deceptive conduct that forms the basis of a finding of initial interest confusion, S & L Vitamins uses Designer Skin’s marks to truthfully inform internet searchers where they can find Designer Skin’s products. Rather than deceive customers into visiting their websites, this use truthfully informs customers of the contents of those sites. Indeed, in practical effect S & L Vitamins invites Designer Skin’s customers to purchase Designer Skin’s products. The fact that these customers will have the opportunity to purchase competing products when they arrive at S & L Vitamins’ sites is irrelevant. The customers searching for Designer Skin’s products find exactly what they are looking for when they arrive at these sites. S & L Vitamins is not deceiving consumers in any way.

The outcome of this case will be used as a precedent when deciding others and will bolster the argument that use of keywords in metatags and bidding on trademarked terms for search purposes is a legitimate practice. Fairly often, plaintiffs are more concerned about control of channels and control of competition than they are about trademark infringement.

Eric Goldman, author of Technology and Marketing Law blog, goes into much deeper detail in his posting, and concurs that Designer Skin’s suit was asking too much of the legal system. "[C]ourts are realizing that they are being asked to facilitate anti-competitive practices, and wisely they are balking," he writes.
 

 

Bidding On Trademark Terms Okayed By Court
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  • http://www.foursquareinnovations.co.uk/ chris

    I guess this makes sense really and its good for the little guy – i.e. the reseller who can’t be competitive unless able to advertise the brands being sold. For instance a uK mobile phone website would be pretty stuck if they couldn’t promote  themselves for terms like ‘Vodafone’, ‘O2′, ‘Orange’ etc etc.

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