9th Cir.: Purchase of Competitors' Trademark for Google AdWords Listing is "Use in Commerce"; Court Clarifies Confusion Analysis in Internet Setting

Yesterday the 9th Circuit decided that a company’s purchase of a Google AdWords listing using a competitor’s trademark is a “use in commerce” potentially subjecting the purchaser to liability for trademark infringement under the Lanham Act. In NetWork Automation, Inc. v. Advanced Sys. Corp., No. 10-55840 (Mar. 8, 2011), the 9th Circuit also tried to clarify how to use its version of the well-known multi-factor likelihood of confusion test in this specific Internet setting. The court then vacated the district court’s preliminary injunction. It isn't clear to me whether the 9th Circuit wanted, or even was permitting, the district court to re-assess whether a preliminary injunction was warranted under the newly-clarified confusion analysis.

At the threshold, the 9th Circuit agreed with the 2d Circuit’s decision in Rescuecom Corp. v. Google Inc., 562 F.3d 123 (2d Cir. 2009) that Google’s sale of a trademark as a trigger for an AdWords listing qualifies as a “use in commerce.”

In probably the most significant aspect of its attempt to clarify how to apply the Sleekcraft confusion factors in this setting, the 9th Circuit indicated that when assessing the “similarity” of the parties’ marks, the courts must pay attention to the “labeling and appearance” of the purchased advertisement, including whether it identifies the alleged infringer’s business. The court also noted that the graphics and text that the Internet service provider (here, Google) uses to distinguish the purchased ads from the search results also plays into the confusion calculus, as does the degree of care exercised by typical searchers.