The three-judge panel reversed a lower court’s dismissal of Rescuecom v. Google, in which a computer-repair company Rescuecom claimed that Google users could be confused by the links to competitors’ ads that appear alongside Google search results for the company’s trademarked name.

In lower court, Google argued that use of Rescuecom’s trademark was internal and not a “use in commerce,” which constitutes trademark infringement. The lower court’s dismissal of the suit was celebrated by Google and other search engines, for which keyword advertising is a lucrative business.

The appeals court ruled that “Google’s recommendation and sale of Rescuecom’s mark to its advertising customers are not internal uses,” sending the case back to the trial court.

Eric Goldman, a professor of Santa Clara University School of law, said, “We are looking for definitive answers about the permissibility of keyword advertising — it’s a multi-billion-dollar- a-year industry. This says that Google may not be able to kick out trademark keyword cases with 12(b)6, motions, based on the use of commerce doctrine in the 2nd Circuit.”

The 2nd Circuit decision does not offer all the answers about the legality of keyword advertising. Rescuecom and others will still have to prove their trademarks were infringed in the end. 

Every district court outside of the 2nd Circuit found that the purchasing of a competitor’s keyword to trigger ads at least met the threshold question of starting a claim, said Ian Ballon, an Internet lawyer. “This is a significant effort at harmonizing the law.”

Source: Law.com