It s a brave new world for trademark

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1 Volume 20, No. 2 Winter 2009 Committee Cochairs Mike Garvin Hahn Loeser & Parks LLP Cleveland, OH mjgarvin@hahnlaw.com John P. Hutchins Troutman Sanders LLP Atlanta, GA john.hutchins@troutmansanders.com Newsletter Editors Editor in Chief Steve Gardner Kilpatrick Stockton LLP Winston-Salem, NC sgardner@kilpatrickstockton.com Editor at Large Brad Lyerla Marshall Gerstein & Borun LLP Chicago, IL blyerla@marshallip.com Subcommittee Article Editor Melanye K. Johnson E.I. du Pont de Nemours & Co. Wilmington, DE Melanye.K.Johnson@usa.dupont.com Young Lawyer Oriented Editor Elaine Y. Chow K&L Gates LLP San Francisco, CA elaine.chow@klgates.com Litigation Tips Editor Douglas N. Masters Loeb & Loeb Chicago, IL dmasters@loeb.com Editor at Large David L. Marcus Comcast Cable Communications Philadelphia, PA David_Marcus@Comcast.com Associate Editor Jeffrey Salyards Art Director Tamara Nowak Intellectual Property Litigation is published quarterly by the Committee on Intellectual Property Litigation, Section of Litigation, American Bar Association, 321 N. Clark Street, Chicago, IL The views expressed within do not necessarily reflect the views of the American Bar Association, the Section of Litigation, or the Committee on Intellectual Property Litigation American Bar Association Published by the Intellectual Property Litigation Committee of the ABA Section of Litigation 2009 American Bar Association, All Rights Reserved This Issue: Current Issues in Trademark Litigation The Brave New World of Policing Trademarks It s a brave new world for trademark owners. By some accounts, virtually every typographical error and misspelling of a word is monetized by someone, whether a domain name registrar, a domain investor, [or] an ISP Trademark owners spend millions of dollars in promoting their marks and taking all reasonable steps to protect that investment. On any given day, however, hundreds or even thousands of permutations of those marks are popping up in domain There is a curse that goes, May you live in interesting times, the suggestion being that upheaval is cause for trepidation. Well, these are interesting times for trademark owners who find themselves needing to assert their trademark rights against a suspected infringer. Until recently, a trademark owner could fire off a demand letter to a suspected infringer without triggering federal court declaratory-judgment jurisdiction, so long as the letter did not create a reasonable apprehension of suit. 1 Trademark practitioners well understood the reasonable apprehension standard, and all of us had cease and desist By Patrick M. Fahey and Susan S. Murphy names on the Internet, leading customers to websites populated with links to the legitimate mark holder s competitors. By the time the mark owner tracks down who has registered those domains to the extent that information can be determined the registrations have changed hands. Domain tasting, the practice of registering and monetizing a domain name and dropping that registration if it proves unprofitable, is being fueled by a five-day Continued on page 14 MedImmune and the Expanded Scope of Declaratory- Judgment Jurisdiction By Greg Wesner and Mike Keyes form letters at the ready, tailored to make the threat of litigation seem real to an accused infringer, without being so threatening as to risk invoking declaratoryjudgment jurisdiction in some unfriendly forum. This standard held sway for more than 20 years. 2 And it was a decision out of left field (a patent case, of all things) that recently upset this comfortable, historical arrangement for trademark owners. That decision was MedImmune v. Genentech, 3 which dealt with the circumstances under which a patent licensee could sue his or her licensor seeking a declaration that the licensed patent is invalid Continued on page 18 Published in Intellectual Property Litigation, Volume 20, Number 2, Winter by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof 1 Published in Intellectual Property may not Litigation, be copied Volume or disseminated 20, Number in any 2, Winter form or 2009 by any 2009 means by or the stored American in an electronic Bar Association. database Reproduced or retrieval with system permission. without All the rights express reserved. written This consent information of the American or any portion Bar Association. thereof 1

2 Message from the Chairs First of all, congratulations to all of the editors of and contributors to Intellectual Property Litigation, which received the award for Best Newsletter at the 2008 Fall Editors Symposium, sponsored by the Section of Litigation. We widely boast to everyone who will listen that our newsletter is the best, and now our editors have some documentation to prove it! If you are a regular reader of Intellectual Property Litigation, you know that our editors do a terrific job of making sure that the newsletter covers all aspects of intellectual property law, especially including the core disciplines of patents, trademarks, copyrights, and trade secrets. Still, perhaps you re a trademark practitioner who depends on the newsletter for the most current content concerning trademark practice. Or perhaps you re an IP lawyer who spends most of your time on other disciplines but would like to bone up on the latest issues impacting the trademark practice. Well, then this issue of Intellectual Property Litigation is for you, because it is absolutely packed with insightful articles about a variety of trademark hot topics. Trademarks are the lifeblood of many of the most successful companies in the world, and aggressive branding and trademark protection is one of the primary ways these companies create demand for their products and services. Since the advent of the Internet, branding campaigns have become even more critical, and trademark protection has become even more of a challenge. This issue of Intellectual Property Litigation goes right to the heart of the biggest tests facing trademark owners and their lawyers today. Two articles highlight the hottest of all hot topics in trademarks keyword advertising and the split in the Federal Circuits over just how much protection is available with regard to nontraditional uses of marks. This issue also explores another cutting-edge topic involving trademarks and the Internet the phenomenon of domain tasting. Two other articles focus on different aspects of the landmark Trademark Dilution Revision Act, enacted in late 2006 in response to the United States Supreme Court s ruling in the famous Victoria Secret case, and how courts have interpreted the act since its passage. And, as if the shifting substantive law of trademarks is not enough to keep practitioners on their toes, there is an article on the shakeout from the changes to the Trademark Rules of Practice for Trademark Trial and Appeal Board proceedings, and another one interpreting declaratory judgment jurisdiction in the wake of MedImmune v. Genentech. Undoubtedly, this issue of Intellectual Property Litigation will bolster our oftrepeated claim that our newsletter is one of the central benefits of membership in the Intellectual Property Committee. But don t forget the other benefits, such as the continually updated content on our committee website, and the opportunity to network with peers at the Section Annual Conference and ABA Annual Meeting. Make plans now to attend the Section Annual Conference in Atlanta, April 29 May 1, Our committee will sponsor three CLE programs, and we are inviting the entire committee to dinner! Be on the lookout for more details to come, and we hope to see you in Atlanta. In the meantime, we hope you enjoy this issue of Intellectual Property Litigation, our award-winning committee newsletter. l Conversation with the Honorable William G. Young, United States District Judge for the District of Massachusetts, on Litigating a Patent Case Please RSVP to Olga V. Mack at omack@wsgr.com. Once registered, you will receive a confirmation with the dial-in information and instructions for submitting questions to Judge Young. The number of participants is limited, so please register as soon as possible. We anticipate a very exciting exchange of ideas and hope you will join us. The Patent Subcommittee of the Intellectual Property Litigation Committee invites you to participate in the first in an ongoing series of telephonic conversations with federal trial judges about various aspects of trying and litigating a patent case. Our first call will take place on Friday, January 16, 2009, at 2:00 p.m., Eastern Standard Time, and will feature the Honorable William G. Young, from the District of Massachusetts. This will be a perfect opportunity to ask a renowned federal judge questions about the dos and don ts of patent litigation and trial practice. Judge Young will address various topics related to patent litigation and entertain questions submitted by you, the audience, before and during the event. Since 1985, Judge Young has served as a United States District Judge for the District of Massachusetts. He has presided over numerous patent cases and has spoken widely on issues relating to patent litigation. Robert M. Asher Joseph P. Esposito Cochairs, Patent Subcommittee 2 Published in Intellectual Property Litigation, Volume 20, Number 2, Winter by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof

3 Trademark Parody: Taking a Bite Out of Owner s Rights? By Diane Burke Trademark parody cases are not new. Tommy Hilfiger sued over cologne for pets called Timmy Holedigger. Jordache sued over plussized jeans labeled Lardashe. Hormel brought suit over a wild boar Muppet named Spa am. Because these cases were decided prior to enactment of the Trademark Dilution Revision Act of 2006 (TDRA), courts resolved these disputes based primarily on trademark infringement case law and state antidilution statutes. But the Fourth Circuit s decision in Louis Vuitton Malletier, S.A. v. Haute Diggity Dog, LLC 1 is an important new trademark parody decision because it provides an in-depth analysis of the law under both established trademark infringement principles and the TDRA. Aside from being entertaining, the decision also provides guidance for both would-be parodists and their targets. Background of the Louis Vuitton Dispute It is safe to say that most of us are familiar with the products of Louis Vuitton Malletier, S.A. (LVM), which include luggage, purses, and accessories. The Louis Vuitton brand and its stylized LV monogram evoke an image of quality and exclusivity. Around 2003, LVM hired a renowned Japanese artist, Takashi Murakami, to create a patterned design including its LV monogram interspersed among star, flower, and cross shapes. Products with this pattern retailed from $995 to $4500. LVM spent millions advertising the new pattern, and it became hugely popular. Many famous people were seen carrying the bags, and there was an extensive waiting list to purchase them. Haute Diggity Dog, LLC, on the other hand, is a company that sells pet toys and pet beds. Haute Diggity Dog makes a number of parody products including Chewnel No. 5, Jimmy Chew, Dog Perignonn, Sniffany & Co., and Dogior. The product that is the subject of the Louis Vuitton lawsuit is Haute Diggity Dog s parody pet toy called Chewy Vuiton. The product mimicked the shape, design, and color of Louis Vuitton s Murakami handbags. Instead of LV, the toy s pattern included a stylized CV. The toy s pattern also employed a flower, cross, and diamond pattern that resembled, but was not identical to, the Muakami pattern. Haute Diggity Dog generally sold the chew toy through pet stores for less than $ When most people hear about Chewy Vuiton, they laugh. But LVM was not amused. The company expressed its indignation in a lawsuit alleging trademark infringement, trademark dilution, counterfeiting, trade dress infringement, copyright infringement, and related common law violations. Fourth Circuit s Legal Analysis The first question the Fourth Circuit needed to address in Louis Vuitton was whether or not Chewy Vuiton was a trademark parody. Courts generally are in agreement about what constitutes a parody, and Louis Vuitton reiterated that a trademark parody is a simple form of entertainment conveyed by juxtaposing the irreverent representation of the trademark with the idealized image created by the trademark s owner. To be a parody, the second mark must convey two simultaneous and contradictory messages: that the second mark is the original, but also that it is not the original and is instead a parody. This latter message not only differentiates the parody mark from the original but must also communicate some articulable element of satire, ridicule, joking, or amusement. The Fourth Circuit found Haute Diggity Dog s use of Chewy Vuiton and its associated pattern to be a parody of LVM s original mark. The Chewy Vuiton toy was found to be similar in its name, monogram, design, and coloring, which clearly indicate that the toy is an imitation. The toy also was found to be different from the original handbags, for example, being a small and plush dog toy rather than an expensive, luxury handbag. The court also noted that all of the design elements were different (e.g., Chewy/ Louis, Vuiton/Vuitton, CV/LV, simplified and crude pattern/detailed and distinguished pattern). Each of the elements Haute Diggity Dog selected to create the parody effect was close but not identical. But if a trademark is found to be a parody, does that make a difference in the legal analysis? Trademark Infringement After finding that the Chewy Vuiton toy was a parody, the Fourth Circuit was quick to point out that being classified as a parody is not a defense to a claim of trademark infringement. A finding of parody is not a free pass. The test for trademark infringement remains whether or not use of the mark in commerce creates a likelihood of confusion. But a finding of parody does play into the analysis. The court then proceeded to consider each of the traditional likelihood of infringement factors and explained how those factors may be applied in a parody context. The court found that the strength of the Louis Vuitton mark was a factor that weighed in favor of Haute Diggity Dog. Normally, a strong mark favors the senior trademark owner, but in the case of a parody, the fame of the mark allows consumers to perceive the target of the parody. Similarity of the marks also favored Haute Diggity Dog. As noted above, the parody was sufficiently blatant so as to invoke the famous trademark in the mind of consumers yet still distinguish the products. The similarity, or, in this case, dissimilarity of the products also was in Haute Diggity Dog s favor, as one product is a chew toy and the other is a designer purse. Interestingly, despite the fact that LVM currently makes dog collars, leashes, and pet carriers, the court found it unlikely that LVM would make dog toys in the future. With respect to similarity of facilities and advertising channels, the court found it relevant that Haute Diggity Dog s products generally were sold at pet stores with other pet products, including other parody products, while LVM handbags generally are sold in Louis Vuitton boutiques or Continued on page 20 Published in Intellectual Property Litigation, Volume 20, Number 2, Winter by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof 3

4 Changes to the Trademark Rules of Practice: One Year Later By Bradley J. Walz About a year ago, the United States Patent and Trademark Office (USPTO) amended the Trademark Rules of Practice governing opposition, cancellation, and concurrent use proceedings before the Trademark Trial and Appeal Board (TTAB). Most of the new rules became effective on November 1, 2007, although some of the rules became effective on August 31, In general, the new rules made opposition and cancellation proceedings more similar to district court litigation, but the parties still retain more flexibility to structure the proceedings in comparison to district court litigation. The USPTO claimed that the new rules would increase the efficiency of the processes for commencing inter partes cases and increase the efficiency by which discovery and pretrial information is exchanged between parties to inter partes cases. 2 Ultimately, the changes would enhance settlement prospects and... lead to earlier settlement of cases; and for cases that do not settle, [the] disclosure [changes will] promote greater exchange of information, leading to increased procedural fairness and a greater likelihood that cases eventually determined on their merits are determined on a fairly created record. 3 Some of the new rules have improved the efficiency of inter partes proceedings, while others appear to complicate the process. Commencement of Proceedings Under the new rules, a party commences an opposition or a cancellation proceeding by serving either the attorney of record or domestic representative with a Notice of Opposition (Notice) or registrant with a Petition for Cancellation (Petition), and filing the Notice or Petition with the TTAB along with proof of service. 4 The TTAB will send each party an Institution Order that will include the discovery and trial schedule. 5 Under the new rules, the TTAB will set the following discovery and trial dates: A. Deadline to answer the Notice or Petition B. Deadline for the parties to hold the discovery conference C. Date for discovery to open D. Deadline for initial disclosures E. Deadline for expert disclosures F. Date for discovery to close G. Deadline for plaintiff s pretrial disclosures H. Date for the close of plaintiff s trial period I. Deadline for defendant s pretrial disclosures J. Date for the close of defendant s trial period K. Deadline for plaintiff s rebuttal disclosures L. Date for the close of plaintiff s rebuttal period 6 The parties may modify this schedule through agreement and approval by the TTAB. 7 However, after an answer is filed, the TTAB is reluctant to approve any modification until the parties have conducted the required discovery conference. 8 Furthermore, absent modification, neither party may serve discovery requests or move for summary judgment until it has served its initial disclosures. 9 A party, however, may move for summary judgment at any time to assert res judicata, collateral estoppel, or lack of jurisdiction. 10 The requirement that the parties rather than the TTAB serve the Notice or Petition has not increased the efficiency of inter partes proceedings. Because Notices and Petitions can be filed online, the TTAB generally sends the Institution Order to the other party on the same day the Notice or Petition is served and filed. Therefore, the other party knows about the inter partes proceeding before receiving the served copy of the Notice or Petition, which results in unnecessary duplication. Furthermore, the service requirement can be a trap for pro se parties or represented parties that are unaware of this new rule. The TTAB will not commence an inter partes proceeding until proof of service is filed with the TTAB. In fact, on February 2, 2008, the TTAB refused to institute Oakley, Inc. s opposition to Sunbow Sunglasses Import, Inc. s application to register its Ellipse Design mark (Application Serial No. 77/183,151), because Oakley did not include proof of service when it filed its Notice. Oakley appeared to have mailed its Notice to the TTAB rather than filing the Notice through the TTAB s online filing system. When filing a Notice or Petition online, the filing receipt contains a Certificate of Service statement at the end. However, it is unclear whether this statement constitutes proof of service. In at least one instance, the TTAB commenced an inter partes proceeding when a separate certificate of service was not filed with the TTAB. 11 It appears that unwary parties are rewarded for filing online and punished for filing by mail. If Oakley would have filed its Notice online, the TTAB likely would have instituted its opposition. In other words, the TTAB will do the work for parties that file online by including a computer-generated certificate of service. It is unclear how the TTAB s denial of Oakley s opposition facilitated a more efficient inter partes proceeding. Assuming the time to oppose had expired, Oakley would simply have had to wait to file a Petition once the Ellipse Design mark registered. If Oakley was willing to oppose the Ellipse Design mark application, it probably would have been willing to petition to cancel the mark as well. If Oakley s mistake was made in connection with a Petition, it probably would have refiled the Petition with the required proof of service. In such a case, the service requirement simply delays the institution of an inter partes proceeding. And the delay is unnecessary because the TTAB still notifies the other party of the proceeding. The only way this delay improves the efficiency of the inter partes procedure is if Oakley and Sunbow Sunglasses Import would have used the extra time caused by the TTAB s denial to discuss settlement. Nevertheless, whether filing by mail or online, a party 4 Published in Intellectual Property Litigation, Volume 20, Number 2, Winter by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof

5 instituting an inter partes action should include a separate certificate of service when filing the Notice or Petition. Holding the Discovery Conference The parties in an inter partes proceeding are now required to have a discovery conference after an answer to the Notice or Petition is filed. 12 In the discovery conference, the parties are expected to discuss the nature and basis of their respective claims and defenses; possibility of settlement or narrowing the scope of claims and defenses; and arrangements relating to disclosures, discovery, and the introduction of evidence. The requirement that the parties hold a discovery conference does bring the parties together earlier in the proceeding. For the most part, the discussions are brief but can be productive if the parties are prepared and committed to the process. Even though the parties only possess information about their respective marks and what they can learn about the other party on the Internet, discussions in a discovery conference have been a good starting point for ultimately resolving the issues between the parties. However, it is important that the parties attend the discovery conference with an idea of the terms that could settle the matter. When one party has not considered settlement, there is little to discuss. Nevertheless, in most cases in which I have been involved, the parties agree to either suspend the proceeding or extend the trial and discovery deadline dates to explore settlement. Additionally, it is important not to gloss over discussing the nature and basis of the claims and defenses. Assuming the parties considered settlement prior to the discovery conference, discussing the claims and defenses generally will provide insight into the parties respective motivation for the proceeding. Gaining this insight can allow the crafting of creative settlement proposals. Finally, parties should consider discussing more about discovery than just what to do with the initial disclosure requirement. Specifically, the parties could discuss reducing the number of interrogatories to 50, for example, from 75, or capping the number of requests for admissions. Even if the other party does not agree, making this proposal sends a message regarding your confidence in your ability to handle an inter partes proceeding. It may also signal to the other party your thoughts on the strength of your case. Disclosures and the Standard Protective Order The new rules require that parties in an inter partes proceeding make initial, expert, and pretrial disclosures to the other party. 13 The disclosure obligations basically mirror the obligations under the Federal Rules of Civil Procedure. 14 Additionally, the TTAB s standard protective order is applicable in all inter Discussing the nature and basis of claims and defenses can allow the crafting of creative settlement proposals. partes proceedings. 15 However, the parties can modify the standard protective order through stipulation or motion. 16 The disclosure requirements and standard protective order were adopted because the USPTO believed they would promote more efficient discovery and trial, reduce incidents of unfair surprise, and increase the likelihood of fair disposition of the parties claims and defenses. 17 The standard protective order requirement has increased the efficiency of the inter partes procedure. Instead of negotiating an entire agreement, the parties now discuss modifications to the standard protective order s provisions. However, there is often no discussion of the standard protective order. On the other hand, the disclosure requirements do not appear to have impacted the efficiency or fairness of inter partes proceedings. Most of the time, the parties agree to waive the requirement of serving initial disclosures. Absent stipulation by the parties, each party is entitled to 75 interrogatories, which is a lot of questions for an inter partes proceeding. Generally, this number of interrogatories is sufficient to obtain all the information covered by the initial and expert disclosure requirement. And waiving the requirement removes the impediment to moving for summary judgment. Whether the initial and expert disclosure requirements increase the fairness of an inter partes proceeding is questionable because the majority of parties ask for this information in their interrogatories. Pretrial disclosures are required 15 days prior to a party s testimony period. 18 In general, a party must disclose any witnesses that may provide testimony in the inter partes proceeding. The new rules did not change the requirement for serving testimony depositions during the testimony period or filing notices of reliance. Additionally, this information is generally requested in interrogatories. Therefore, the pretrial disclosures are duplicative. On the other hand, in the event a party did not supplement its answers to interrogatories, the pretrial disclosure requirement ensures that this information is disclosed prior to the opening of the testimony period. And the disclosure of this information may slightly increase the fairness of an inter partes proceeding even though the requirement to serve testimony deposition notices and file notices of reliance are still applicable. Conclusion The requirement that a party serve the Notice or Petition rather than the TTAB is probably falling short of its expected effect on the efficiency and fairness of inter partes proceedings. However, the requirement that the parties hold a discovery conference and the immediate applicability of the standard protective order probably is achieving its expected effect. Positive results flow from the Continued on page 22 Published in Intellectual Property Litigation, Volume 20, Number 2, Winter by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof 5

6 Keyword Advertising Use in Commerce : A Pro-Plaintiff Trend Emerges By Peter E. Nussbaum and Nancy A. Del Pizzo Keyword advertising, which is paying for the right to link certain words to an advertisement in the form of a web page, is an advertising tool on the Internet. 1 It also has become a source of substantial litigation. Companies choose the words they want to link to their Internet advertisements and generally pay a fee each time a viewer chooses that word in a search engine and clicks through to that link. Legal issues do not emerge where the keyword is a generic term, such as the word automobiles, linking to a choice of various automobile manufacturer websites. However, when the keyword is a competing company s trademark, an infringement claim may follow. A preliminary dispositive issue is whether such keyword use is in fact a use in commerce under the Lanham Act. The law has been largely unsettled. But a number of recent decisions, finding use in commerce, suggest an emerging trend in courts outside the Second Circuit. District courts in the Second Circuit, on the other hand, have continued not to find use in commerce. With the exception of a couple of narrowly defined decisions, district courts in the Second Circuit have held that the purchase of keywords and keyword use itself, without more, is not a use in commerce under the Lanham Act. The Second Circuit, however, currently has the opportunity to address this issue more broadly and/or comment on the law that has developed within the circuit in contrast to the law that has developed elsewhere. The Second Circuit To succeed on a claim under the Lanham Act, the moving party must demonstrate that the defendant (1) used the trademark in issue and (2) in such a way that is likely to cause confusion in the marketplace. 2 A keyword advertising claim typically must withstand the first prong before a likelihood of confusion analysis is conducted. For the use of a trademark to be actionable under the Lanham Act, that use must be in commerce and on or in connection with any goods or services, or any container for goods. 3 It has been suggested that a plain reading of the Lanham Act does not provide that keyword advertising is a use in commerce under the act. 4 District courts in the Second Circuit routinely have held that use of a competitor s mark as a keyword, standing alone, does not constitute use in commerce. Cases holding that the use of keywords fall outside the use in commerce include S&L Vitamins, Inc. v. Australian Gold, Inc. 5 (the general rule in this circuit is that use of a trademark in keywords and meta tags, where the use is strictly internal and not communicated to the public, is not a use under the Lanham Act ); Fragrancenet.com, Inc. v. Fragrancex.com, Inc. 6 (no Lanham Act use for a trademark in a keyword or meta tag 7 because the use is strictly internal, not communicated to the public, and the use does not indicate source or ownership of the mark ); Site Pro-1, Inc. v. Better Metal, LLC 8 (where the mark is not used to indicate source or origin, it is not a use in commerce); Merck & Co., Inc. v. Mediplan Health Consulting, Inc. 9 (finding that the use of a keyword to trigger display of a sponsor s link is not a use of a mark under the Lanham Act because defendants are not placing the marks on any goods or containers or displays or associated documents, nor do they use them in any way to indicate source or sponsorship ); and Rescuecom Corp. v. Google, Inc. 10 (no use in commerce in selling plaintiff s mark as a keyword that alters a computer user s search result because the mark is not displayed in any of the sponsored links ). Stating that whether there is a use is the threshold question, because while any number of activities may be in commerce or create a likelihood of confusion, no such activity is actionable under the Lanham Act absent the use of a trademark. The S&L Vitamins court drew from earlier cases, including Site-Pro-1, which it noted collect[ed] cases addressing this issue. 11 In S&L Vitamins, the plaintiff, an unauthorized distributor of Australian Gold s products, sought a declaratory judgment that its sale of those products did not constitute infringement. S&L Vitamins promoted the products by purchasing keyword ads and using Australian Gold s mark in its HTML source code and meta tags for its website. 12 The court distinguished Hamzik v. Zale Corp., 13 stating that unlike Hamzik, S&L Vitamins was actually selling the trademarked products. 14 As a result, there is nothing improper where a party uses another s marks in keyword advertising and meta tags for products it actually sells. In Hamzik, the plaintiff owned the registered mark The Dating Ring. 15 Defendant Zale purchased the keyword phrases dating ring and dating rings from Internet search engines Yahoo! and Google. 16 When a user entered those phrases into those search engines, the resulting display read Dating Ring Zales and showed links to different types of rings available from Zales. The Northern District of New York held that keyword use is a use in commerce but qualified its opinion, explaining that the defendant s purchase alone of a keyword matching the plaintiff s mark is not a use in commerce, but if after a party clicks on the keyword and the plaintiff s marks appear on displays associated with defendant s goods, then the use is a use in commerce. 17 Distinguishing the facts in Hamzik from other district court opinions in the Second Circuit, the court found a use in commerce, 18 (stating that the opposite result was found in several cases within the same circuit but noting that there were factual distinctions in those cases), citing Rescuecom Corp. v. Google, Inc. 19 and Merck & Co. v. Mediplan Health Consulting, Inc. 20 The Hamzik court stated that in cases where there was no use in commerce, there were no allegations that the defendant had placed the plaintiff s trademarks on any goods, containers, displays, or advertisements, or that its internal use [was] visible to the 6 Published in Intellectual Property Litigation, Volume 20, Number 2, Winter by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof

7 public. 21 In Hamzik, however, users of the keywords ended up with a result of Dating Ring Zales, which the court stated was a fact that could demonstrate that the plaintiff s mark does appear on displays associated with the goods or documents associated with the goods or their sale. 22 Hamzik and Site-Pro-1 were decided within a month of each other (though Site-Pro-1 is now a reported case). In Site Pro-1, the court determined whether the use of another company s mark in metadata or as part of a sponsored search constitutes use of a trademark in commerce. 23 The plaintiff asserted that the defendant used its Site Pro 1 trademark in the meta tags or metadata of defendant s website and improperly purchased a keyword sponsor search from Yahoo!, using the mark in a search algorithm. 24 When an Internet user searched under some combination of the words Site, Pro, or 1 on Yahoo!, the user would receive a list that included the defendant s website, and because of the meta tags, a search for Site Pro 1 would yield a link to the defendant s website. The court found no use in commerce because the meta tags were not visible to consumers and because the defendant did not place the plaintiff s mark on any of its goods, advertisements, or displays associated with the sale of its goods. The Second Circuit has held that where keyword use of a trademark is internal ( the customer sees only the defendant s advertisement, which makes no mention or other use of the trademarked phrase ), it is analogous to an individual s private thoughts about a trademark and is not an actionable use Contacts, Inc. v. WhenU.com, Inc. focused on whether there was a use in commerce where the defendant s software program caused a competitor s pop-up ad to appear as a separate window on the plaintiff s website when a user of the software accessed the plaintiff s website. 26 The court found no use in commerce because the defendant s program did not place the plaintiff s marks on any goods or services and did not reproduce or display the mark or cause it to be displayed. Moreover, the court noted that the only place the plaintiff s name appeared in the defendant s software program was in the directory that resided on the user s computer, which was inaccessible to the user and was in the form of the plaintiff s website address, not its mark. Although Contacts addressed use under different facts than other lower court cases in the Second Circuit, district courts in the circuit have opined that no Lanham Act use exists for the use of a trademark in a keyword or meta tag. 27 Similarly, the Northern District of New York noted that the Second Circuit has not considered whether the purchase or sale of a trademark as a keyword that triggers the appearance of an advertisement is a use in commerce, but nevertheless found for the defendant. 28 The law within the Second Circuit, suggests that such use is not limited to affixing another s mark to one s own goods but also encompasses any use of another s mark to advertise or sell one s own goods and services. 32 In April 2008, the Eleventh Circuit held that a party s use of a competitor s trademarks within the invisible meta tags of a website is, in fact, a use in commerce under the plain language of the Lanham Act. When a consumer entered the plaintiff s trademark into the Internet search engine, the search result displayed the defendant s website and a brief description that included the plaintiff s trademarks. The court found such use represented The court in Hysitron expressly discounted the various contrary opinions from the Second Circuit. however, may shift in the near future, depending upon the anticipated appellate decision in Rescuecom. In 2006, Rescuecom filed an appeal, which was followed by amicus curiae briefs from several parties, including Yahoo! Inc., AOL LLC, and ebay Inc. 29 an effort to promote and advertise... products on the Internet, which, under the plain meaning of the language of the Lanham Act, constitutes a use in commerce in connection with the advertising of any goods. 33 The defendant relied upon Contacts, a meta tags case in which the Second Circuit held that there was not a use in commerce because the defendant s use was internal. 34 But the Eleventh Circuit distinguished that case on the grounds that in Contacts, the defendant used the plaintiff s website address, not its trademark, and the defendant did not cause the plaintiff s trademark to be displayed to any consumers. In December 2007, the District of Massachusetts found use in commerce where the defendant, Super Duck Excursions, had purchased the right to link its Internet advertisements on Google to the phrase Boston duck tours. 35 However, that issue was not determinative because the defendant had made efforts to avoid consumer confusion by including a disclaimer on the linked page. Thus, there was a use but not confusion. Other Recent Law Outside of the Second Circuit, courts have acknowledged that keyword use is a use in commerce under the Lanham Act, and this emerging view is in accord with the plain language of the statute. 30 Indeed, other courts have stated recently that a plain reading of the Lanham Act demonstrates that such use is a use in commerce. 31 The court in Hysitron expressly discounted the various contrary opinions from the Second Circuit, noting that the majority of courts disagreed with the Second Circuit s reasoning, and holding that using a competitor s trademark to generate advertising, even where the use is a keyword in a search engine, is a use in commerce under the Lanham Act. This holding, the court stated, adhered to the plain meaning of the Lanham Act s definition of use in commerce, which Continued on page 22 Published in Intellectual Property Litigation, Volume 20, Number 2, Winter by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof 7

8 The Trademark Dilution Revision Act and Federal Dilution Protection By Jay A. Yurkiw Trademark dilution provides trademark owners with an additional theory of relief beyond traditional trademark infringement. While a cause of action for trademark infringement exists when an unauthorized use of a mark on competing or related goods and services causes a likelihood of confusion among consumers about the source or sponsorship of those goods and services, dilution provides a cause of action against the use of a mark that weakens or whittles away the commercial value of a famous mark even if such use does not cause a likelihood of confusion. On October 6, 2006, the Trademark Dilution Revision Act (TDRA) became law and replaced the provisions of the Federal Trademark Dilution Act of 1995 (FTDA). Congress rewrote the old statute and enacted the TDRA in response to the United States Supreme Court s holding in Moseley v. V Secret Catalogue, Inc., 1 which severely weakened the protections provided under the FTDA, and to clarify what Congress meant when it originally passed the FTDA. Congress also intended the new legislation to eliminate the conflicts that had resulted among the circuit courts of appeal on key dilution issues. While the TDRA contained many changes potentially favoring the enforcement of federal dilution claims, courts have interpreted the statute cautiously and have continued to apply principles originally developed under the FTDA and trademark infringement law. As a result, the cases decided within the first two years of the TDRA s enactment have demonstrated that federal dilution law remain limited in scope and offer little additional protection to most trademark owners. Significant Changes Made by TDRA In Moseley v. V Secret Catalogue, Inc., the owners of the Victoria s Secret mark brought a claim under the FTDA against two owners of a retail store named Victor s Little Secret. The defendants business sold adult videos, adult novelties, lingerie, and other items. The plaintiffs brought the suit after an army colonel saw an advertisement announcing the opening of the defendants store and viewed it as an attempt to use a reputable company s trademark to promote the sale of unwholesome, tawdry merchandise. 2 The Western District of Kentucky granted summary judgment in favor of the plaintiffs on their dilution claim, and the Sixth Circuit Court of Appeals affirmed. The Supreme Court reversed, holding that the FTDA required a showing of actual dilution instead of a likelihood of dilution. The Court explained that while the consequences of dilution, such as an actual loss of sales or profits, need not be proved, the mere fact that consumers mentally associate the junior user s mark with a famous mark is not sufficient to establish dilution. 3 While it did not decide the issue, the Court s decision in Mosley also left the continued viability of dilution by tarnishment in doubt. The Court s decision prompted Congress to enact the TDRA, which also was supported by trade groups representing intellectual property owners such as INTA, AIPLA, and IPO. On its face, the TDRA made at least seven significant changes to federal dilution law. First, it lowered the standard of proof from actual dilution to a likelihood of dilution. 4 Second, it narrowed the definition of a famous mark and eliminated niche market fame, that is, fame limited to a specific geographic area or a specialized type of consumer, as a basis for a federal trademark dilution claim. Third, it clarified that the distinctiveness of a mark may be inherent or acquired. Fourth, it provided a definition for dilution by blurring. Fifth, it expressly recognized dilution by tarnishment as an actionable claim. Sixth, it firmly established that trade dress could be protected by dilution. Seventh, it elaborated on the defenses to a federal dilution claim, including fair use (such as comparative advertising, parodies, criticism, or commentary), news reporting, and noncommercial use of a mark, thereby more clearly protecting traditional First Amendment uses of a mark. In addition to these changes, some commentators have argued that Congress eliminated the requirement that a defendant s use of a mark be in connection with the sale or marketing of goods or services. No court has adopted this position yet. 5 It also has been suggested that Congress unintentionally created another bar to a federal dilution claim. While federal registration of a trademark continues to serve as a complete defense to a state law dilution claim, the TDRA now appears to make federal registration a defense to a federal dilution claim as well. 6 This apparent defense has not posed a problem yet and may not, considering two circuit courts of appeals have permitted state law dilution claims where the plaintiff also asserted a claim seeking the cancellation of the defendant s federal trademark registration. 7 Marks Protected by the TDRA A federal dilution claim is not a viable cause of action for every trademark owner. A trademark owner may obtain injunctive relief based on a claim of dilution if (1) the owner s mark is famous; (2) the owner s mark is distinctive; (3) the defendant started using a mark in commerce after the owner s mark became famous; and (4) the defendant s mark is likely to cause dilution by blurring or tarnishment of the owner s mark. Fame The key requirement to a claim for dilution continues to be whether a mark is famous. As one court stated, This is because, among the various prerequisites to a claim, the one that most narrows the universe of potentially successful claims is the requirement that the senior mark be truly famous before a court will afford the owner of the mark the vast protections of the TDRA. 8 A mark is now famous under the TDRA if it is widely recognized by the general consuming public of the United States as a designation of source of the goods or services of the mark s owner. 9 8 Published in Intellectual Property Litigation, Volume 20, Number 2, Winter by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof

9 In determining whether a mark is famous under the TDRA, a court may consider all relevant factors, including (1) the duration, extent, and geographic reach of advertising and publicity of the mark; (2) the amount, volume, and geographic extent of sales of goods or services offered under the mark; (3) the extent of actual recognition of the mark; and (4) whether the mark is registered. [T]he judicial consensus is that famous is a rigorous standard. Dilution is a cause of action invented and reserved for a select class of marks those marks with such powerful consumer associations that even noncompeting uses can impinge their value. 10 At least one court has said that the TDRA is not intended to protect trademarks whose fame is at all in doubt. 11 To be famous, a mark must be truly prominent and renowned and have a strength beyond that needed to serve as a trademark. 12 Examples of famous marks include Nike, adidas, Coca-Cola, Pepsi, Starbucks, Exxon, Nissan, and Kodak. Courts have considered a wide range of evidence to determine whether a mark is famous. This evidence has included consumer surveys, press accounts, the length of time the mark has been federally registered, advertising expenses, placements of advertising (such as newspaper and magazine ads, mailings, television commercials, infomercials, and the Internet), the number and variety of locations where goods with the mark have been used and sold or services offered, sponsorship of sporting events, endorsements, and quality awards. 13 Distinctiveness The TDRA does not provide a test for analyzing the distinctiveness of a mark. It does, however, make clear that in addition to marks with inherent distinctiveness (e.g., suggestive, arbitrary, or fanciful marks), marks with acquired distinctiveness (e.g., descriptive marks that have a secondary meaning) can be protected, thus extending the potential reach of federal dilution law to a greater variety of marks. Dilution by Blurring The FTDA simply stated that the owner of a famous mark was entitled to injunctive relief if the defendant s commercial use of a mark causes dilution of the distinctive quality of the mark. It did not list any factors for determining whether a defendant s mark caused dilution or distinguish between blurring and tarnishment. The TDRA now specifically defines two ways in which dilution may occur: blurring and tarnishment. Dilution by blurring is defined under the TDRA as the association arising from the similarity between a mark or trade name and a famous mark that impairs the distinctiveness of the famous mark. 14 In determining whether a mark is likely to cause dilution by blurring, a court may consider all relevant factors, including: The similarity between the marks The inherent or acquired distinctiveness of the famous mark The extent to which the owner of the famous mark is engaging in substantially exclusive use of the mark The degree of recognition of the famous mark Whether the user of the mark intended to create an association with the famous mark Any actual association between the marks Most courts have relied on case law developed under the FTDA or infringement law to analyze these six factors and determine whether dilution by blurring is present. This approach, in combination with the tightened definition of a famous mark, has limited the expansion of federal dilution protection. Similarity Between the Marks The similarity between the defendant s mark and the famous mark has become perhaps the most critical factor for determining dilution. Like the FTDA, however, the TDRA does not provide any guidance regarding when a mark is sufficiently similar to a famous mark to be actionable. Without a statutory test, most courts have continued to borrow the analysis used to evaluate trademark infringement claims but required a more stringent degree of similarity. 15 In this regard, a defendant s mark must be identical, nearly identical, or substantially identical to the famous mark in terms of look, sound, and meaning to be actionable under the TDRA. 16 To be nearly or substantially Recent cases have demonstrated that federal dilution law remain limited in scope. identical, the two marks must be similar enough that a significant segment of the target group of customers sees the two marks as essentially the same. 17 This inquiry is context-specific and fact-intensive in nature. Some courts have created the identical mark presumption based on the Supreme Court s statement in Moseley that the use of an identical mark would be circumstantial evidence of actual dilution. 18 Under this presumption, dilution may be presumed if the defendant s mark is identical to the famous mark. 19 Degree of Distinctiveness The degree of distinctiveness of the famous mark is essentially derivative of the analysis conducted in connection with trademark infringement claims, under which highly distinctive marks receive stronger trademark protection. 20 Extent of Exclusivity The TDRA does not require that use of the famous mark be absolutely exclusive, but substantially exclusive. 21 While limited third-party use will not defeat a dilution claim, widespread use and promotion of a mark by third parties weighs heavily against a finding of dilution. Degree of Recognition The Trademark Trial and Appeal Board has stated that this factor seems Continued on page 24 Published in Intellectual Property Litigation, Volume 20, Number 2, Winter by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof 9

10 Negative Keywords and Positive Thoughts By Jack L. Hobaugh Jr. The bad news is that the plaintiff has survived your motion to dismiss its trademark infringement claims. The good news is that the plaintiff, wanting to minimize litigation costs, is willing to settle. The plaintiff has submitted a first draft of the settlement agreement. The agreement contains a lengthy list of prohibited acts covering the nonuse of the plaintiff s registered trademarks. Included in the list of prohibited acts is the use of the plaintiff s trademarks in web page meta tags and purchased search engine keywords. Some of the prohibited acts are specific and cover the claims at issue. Others are broader, intended to cover any new technology that might burst upon the Internet advertising scene. The final prohibited act paragraph is an attempt to cover any Internet advertising that could be tied to the use of the plaintiff s trademark. Negative keywords are not addressed in the agreement. Should you insist that the area of negative keywords be addressed in the second draft? The short answer is yes. But first, a bit of keyword and trademark infringement background. The ubiquitous nature and ease of use of the Internet has provided powerful advertising opportunities. Search engines have become a part of everyday life. If we want information on a word or product, we type that word or product name as a search term into a search engine such as Yahoo!, Google, or a host of others. These are also known as content providers. To the user, a search term is just a word or product name, but to the content provider or seller of goods, these are terms that the content provider will use to determine what will be displayed the search results. The content provider uses these search terms to search the World Wide Web of the Internet for website pages with content containing the search terms. The website pages are housed on computer servers available via Internet protocol (IP) addresses on the Internet. The content of the website pages can be identified in a shorthand description in what are called meta tags. If I use my last name Hobaugh as a search term in Google, 58 pages of links to web pages containing that search term appear on my computer screen. These links are the result of my search. It is fairly obvious that not all of these pages contain the term Hobaugh in their meta tags; thus the search engines likely search beyond just the meta tags to deliver content related to the search term. This is understandable, as search engine techniques have matured and both Internet and computer processing speed continue to increase. These search terms can also be keywords. Search terms become keywords when an advertiser purchases the terms from the content provider in return for either a special advertisement link or normal link to be added to the search results pages. This has the effect of moving the advertiser s link towards the beginning of the search results list or placing a special link at the top or the side of the search results. These additional sponsored links are normally designated as such on the results page. Negative keywords have the opposite effect. To the naked eye, negative keywords look just like any other keywords. It is the use of negative keywords that makes them special. Advertisers purchase keywords to have their links displayed when a particular search term is entered. Advertisers use negative keywords to keep their website links from being displayed when a particular search term is entered. One advertiser s keyword may be another advertiser s negative keyword. This technique filters out unwanted traffic to their website. The example given by Google on its website is a clothier that doesn t sell shorts might want to make shorts a negative keyword to keep those that are only interested in buying shorts from accessing the clothier s website. This would be helpful, as every access of the website uses that server s processing power and a server can become bogged down with too many attempts to access the server s web pages. Of course, the obvious example that relates to the subject of this article would be the use of negative keywords to avoid using a competitor s trademark to display a search result or sponsored link. That is the black and white world of the Internet. Next, a quick discussion of the gray world of trademark infringement law and its application to Internet advertising. The textbook elements for trademark infringement under 15 U.S.C are (1) ownership of a valid registered mark; (2) the alleged infringer used (3) in commerce (4) the mark or a similar symbol (5) in connection with the sale, distribution, or advertising of goods or services; (6) the use caused likelihood of confusion, mistake, or deception. 1 Naturally, the circuits tend to tweak these elements, so these might not exactly match the elements of choice in your circuit. Most of these elements are easy to prove, such as whether the mark is registered and whether the alleged infringer used the mark in commerce in connection with sales or advertising. The element that is not so easy to prove is use of the trademark leading to the likelihood of confusion, mistake, or deception. Accordingly, most courts focus on the likelihood of confusion element in determining whether trademark infringement has occurred in relationship to the use of keywords that are also trademarks. Unfortunately, for the practicing attorney, the courts are not in agreement on how to apply this element to keywords. Several federal courts have ruled on cases claiming trademark infringement using keywords resulting in varying holdings. Many of the courts address the concept of initial interest confusion to determine if the likelihood of confusion is sufficient to find trademark infringement. Initial interest confusion is presale confusion where a trademark is used to direct a customer to the alleged infringer s product. But before the purchase is made, the purchaser is aware that he or she is buying the infringer s product and not the trademarked product. Thus, at the time of purchase, the confusion does not exist. But the alleged infringer has benefited from using the competitor s trademark. Some courts have also viewed the internal use of a trademark in meta tags and keywords as the same as thinking about a 10 Published in Intellectual Property Litigation, Volume 20, Number 2, Winter by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof

11 trademark, which is not actionable as use that leads to confusion. In Rescuecom Corp. v. Google, Inc., 2 the court held that using a competitor s trademark as a keyword was not use under the statute. The court viewed this as an internal use that did not communicate the trademark to the public. The court resorted to the analogy that gathering a results page based on the use of a trademark in keywords would be the same as placing generic products next to trademarked products on a drugstore shelf. Because the buyer is looking at both products sideby-side, the confusion is removed prior to the sale. But other courts have found that using trademarks in keywords is trademark infringement. In J.G. Wentworth S.S.C. Limited Partnership v. Settlement Funding LLC, 3 the court held that using the plaintiff s trademarks as keywords was use under the statute. There is a long list of similar cases dealing with the use of keywords that either afforded the plaintiff protection or allowed the defendant to continue to use the plaintiff s trademark as a keyword. That is the current world of trademark keyword litigation. Before moving on to a discussion of the courts and negative keywords, a few thoughts about keyword-related litigation. As evidenced by the disagreement among the circuits on the issue of trademark infringement when the Internet is involved, one must understand the past rulings of the presiding court regarding use leading to likelihood of confusion under the statute. Also imperative is whether the current facts can be distinguished from a previous ruling by a particular court. I am not trying to insult the reader s intelligence at this point. Distinguishing the facts from the holdings of previous cases is part of any motion. Here, the attorney must not only deal with the holding but also with whatever analogy the court has cooked up to deal with the Internet technology. My suggestion is to remove the technology from the argument as soon as possible, because arguing the law is tough enough without the fog of technology in the courtroom. Computers (and thus, the Internet) are based on the binary system. A computer only recognizes two states recorded by a bit that records that state as either a one or a zero. Intelligence is added by a human who writes the programs using the ones and zeros to make the computer useful. A human also takes those programs and databases and adds keywords and negative keywords to determine the content to be displayed by an Internet search. The focus should be on the law, the use of the trademark, and not on the technology. The best place to remove the technology is at the complaint level. I would attempt to make the complaint look as much like a traditional non-internet based complaint as possible. Understand the analogy being used in your court and write your complaint with that in mind. Understand that the defendant will be filing a motion to dismiss based on that court s analogy and the law, not just the law. Because courts usually will not allow extrinsic evidence to be presented for a motion to dismiss, you must provide that evidence in the complaint itself. Add data to the complaint that will help you combat the motion to dismiss by showing that there is a possibility that you can prove the elements of trademark infringement. Now back to the courts and negative keywords. There just are not many cases that mention negative keywords. In a motion for sanctions in Google Inc. v. American Blind & Wallpaper Factory, Inc., 4 the court references in a footnote that Google argued American Blind had unclean hands because American Blind had not purchased negative keywords to keep American Blind advertisements from appearing with the use of competitors trademarks as search terms. In Fragrancenet.com, Inc. v. Fragrancex. com, Inc., 5 the plaintiff moved to amend the complaint to add a claim for NEW EDITION Updated... Expanded... An ABA best seller The Attorney-Client Privilege and the Work-Product Doctrine Fifth Edition Edna Selan Epstein The Attorney-Client Privilege and the Work-Product Doctrine has helped thousands of lawyers through this increasingly complex area. In addition to providing a comprehensive overview of the current law of the attorney-client and work-product immunities, this perennial ABA best seller includes case illustrations and contextual examples, as well as numerous tips and guidance. Practical, accurate, reliable, and clear, this book is the ideal guide for a practicing litigator: intellectually rigorous, but without the theoretical and academic baggage that can make writing on this subject cumbersome and leaden. The Fifth Edition maintains the style and emphasis of the previous editions, but now is divided into two volumes. Volume One examines the attorney-client privilege, and Volume Two covers work-product protection and factors common to both the attorney-client privilege and the work-product protection. 2007, 2 volumes (1,474 pages), 6 3 9, paper ISBN: PC: $ Regular price $ Litigation member price Published in Intellectual Property Litigation, Volume 20, Number 2, Winter by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof 11

12 trademark infringement. Again, in a footnote, the court acknowledged that the plaintiff s proposed complaint alleged that the defendant had failed to employ negative keywords, referring to them as a negative match. The court found no distinction in the use of a trademark in a keyword or a negative keyword as it relates to trademark infringement. The plaintiff s motion was denied as futile. These two cases stand for the proposition that most courts will probably lump keywords and negative keywords together in litigating trademark infringement. But Orion Bancorp, Inc. v. Orion Residential Finance, LLC 6 gives us a view of how the courts will treat negative keywords as part of an agreement between the parties. In Orion, the court addressed a motion for entry of final judgment and an agreed permanent injunction. The permanent injunction contains seven paragraphs of prohibited acts that start with a broad prohibition of the use of Orion s marks, followed by narrowly tailored prohibition paragraphs. In the fourth paragraph, the court prohibits the defendant from using the mark Orion or other confusingly similar terms as a keyword in the purchase of Internet advertising. The court also orders the defendant to activate negative keywords as part of its keyword advertising purchases. This order provides a nice template for the attorney starting from scratch on a settlement agreement. I would also add a paragraph addressing the use of trademarks in the defendant s meta tags. Now that we ve examined the various interplay between keywords, negative keywords, technology, and the law, it s time to get back to the good news that the plaintiff and your client are willing to settle. As stated in the introduction to this article, the plaintiff has provided a wish list of prohibited acts but has not addressed negative keywords. One option is to ignore the subject of negative keywords and have your client sign the agreement. After all, the purchase of negative keywords in addition to the keyword advertising may add extra cost and will be one more item to manage. But not addressing the negative keyword issue could leave your client open to the following scenario. The settlement agreement gave your client a grace period to stop using the plaintiff s trademarks. Your client complied by canceling all keyword contracts using the plaintiff s trademarks from each of its content providers. Once a day someone in the plaintiff s office types in each one of the plaintiff s trademarks covered by the settlement agreement into several major search engines. His or her job is to determine if any competitors links are showing up in the results page. Unfortunately, your client s link is still on the results page. Your phone rings. It is the plaintiff s counsel. You explain on behalf of your client that your client has removed all keywords from its advertising and you don t know why the links are still showing up on the results page. Plaintiff s counsel explains that under their interpretation of the settlement agreement, your client is obligated to purchase negative keywords from the content providers. Naturally, you disagree because that exact wording is not in the agreement, just some catchall phrase that might be interpreted to cover negative keywords. Next, you discover that your client, your unhappy client, has been served with a complaint for breach of contract in state court. Hopefully, you gave adequate attention and thought to the choice of venue and law paragraph. I am not suggesting that every alleged infringer should sign up for negative keywords. Your client may not want to sign up for negative keywords. Your client s website may contain valid research comparing the qualities of your client s product and the trademarked product that a search engine might discover and display in the results page in the same manner as my name was picked out in the example previously alluded to. As I understand the law, this would not be trademark infringement. And if a negative keyword is used, this link probably would not appear, potentially causing your client to be unfairly prejudiced. What I am suggesting is that vague settlement agreements that do not address negative keywords could lead to further litigation. Now a few words for the plaintiff who wrote the vague settlement agreement. I am assuming the plaintiff enters into the settlement agreement to bring the litigation to an end on terms that are beneficial or agreeable to the plaintiff. A broad, but vague, prohibited acts section may give the plaintiff room to adjust its trademark protection to new technologies and methods using those new technologies by a potential infringer. But as in the previous scenario, if the defendant does not agree with your interpretation of the vague phrase, you are right back in court, also with an unhappy client. As in Orion, I recommend the use of a broad nontechnical trademark nonuse paragraph at the beginning of the agreement, and then follow up with paragraphs addressing the known technologies and potential for infringing. Adding a catchall future technology paragraph is just too broad. Instead, address all the known technologies being used to infringe today. Be precise. Hiring an expert is an option. If Orion is any indication, and I believe it is, the courts are likely to uphold a settlement agreement requiring the use of negative keywords. The settlement agreement is a contract between the parties. In ruling on the enforcement of the settlement agreement, courts are free to concentrate on contract law and not trademark law. Unless there is proof of unequal bargaining power outside of the litigation itself, the courts will look within the four corners of the agreement to enforce. But a vague contract could lead to more litigation and an uncertain outcome. l Jack L. Hobaugh Jr. is a term law clerk for the Honorable Tena Campbell in the District of Utah. He may be reached at jhobaugh07@law.du.edu. Endnotes 1. Stephen M. McJohn, Intellectual Property 261 (Aspen 2003). 2. Rescuecom Corp. v. Google, Inc., 456 F. Supp. 2d 393 (N.D.N.Y. 2006). 3. J.G. Wentworth S.S.C. Limited Partnership v. Settlement Funding LLC, No , 2007 WL (E.D. Pa. Jan. 4, 2007). 4. Google Inc. v. American Blind & Wallpaper Factory, Inc., No. C JF (RS), 2007 WL (N.D. Cal. June 27, 2007). 5. Fragrancenet.com, Inc. v. Fragrancex.com, Inc., 493 F. Supp. 2d 545 (E.D.N.Y. 2007). 6. Orion Bancorp, Inc. v. Orion Residential Finance, LLC, No. 8:07-cv T-26MAP, 2008 WL (M.D. Fla. Mar. 25, 2008). 12 Published in Intellectual Property Litigation, Volume 20, Number 2, Winter by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof

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14 The Brave New World Continued from cover grace period during which unprofitable domains can be dropped free of charge, and the availability of automated systems that can identify, register, and gauge traffic on the sites in bulk. This practice has proven enormously lucrative for domain name owners, but it has placed some trademark owners on a virtual merry-goround of abuse. Mark owners recently have scored a victory in the fight against the ill effects of domain tasting, but not a complete victory. In Verizon California, Inc. v. Navigation Catalyst Systems, Inc., 2 the United States District Court for the Central District of California concluded domain name, and no one else can use that domain name as the address for a website. However, during the AGP, the new owner can drop the domain name for any reason, without charge. If the new owner does not drop the name by the end of the AGP, it must pay the registration fee for that domain name. 4 The implementation of the AGP, which was meant to protect registrars and registrants from mistakes and fraud in the registration process, has led to the unintended consequence of domain tasting. 5 According to the World Intellectual The traditional tools available to combat cybersquatters leave trademark owners ill-equipped to deal with the new world of domain tasting. that the tasting of domain names that are confusingly similar to a trademark violates the Anticybersquatting Consumer Protection Act. At the same time, however, the court declined to enjoin the use of an automated search and registration process, even where the plaintiffs claimed that such process is uncontrolled and ineffective in preventing the registration of infringing domain names. 3 The New World of Domain Tasting It began innocently enough in 2001, when the entity tasked with coordination of the Internet domain name system, the Internet Corporation for Assigned Names and Numbers (ICANN), implemented the Add Grace Period (AGP), a five-day grace period during which the new owner [of a domain name] can make full use of the chosen Property Organization (WIPO), domain name tasting is a practice in which a person or entity (who may be affiliated with a registrar) registers a domain name for a five-day grace period without payment of the registration fee, and parks it on a pay-per-click website monitored for revenue, whereupon the name is dropped or re-registered by a new registrant, thereby starting a new grace period. Only those domain names generating significant traffic are permanently registered. 6 To some, domain tasting is a legitimate business model. Others view the practice as undesirable even where the rights of trademark owners are not impacted. These critics point out that tasting limits the availability of domain names for registration and leads to a proliferation of low-quality websites that have no purpose other than to host advertisements. 7 Particularly troubling to trademark owners is abusive domain tasting, defined as a practice whereby a relatively small number of registrars and individuals register millions of domain names on a daily basis that often include brands and typographical errors of brands en masse and free of charge by exploiting the five-day AGP. 8 Whether viewed as legitimate or nefarious, the instances of domain tasting have increased exponentially over the course of the past three years. 9 Several factors are responsible for this. First, the ease with which available domain names can be identified and registered using automated processes, sometimes referred to as dropcatching, allows for the bulk registration of thousands of domain names at a time. 10 Second, domain tasting has exploded due to the ease with which the tasted domains can be monetized and analyzed for profitability quickly and in bulk. 11 Finally, the practice of domain tasting, when done on a large enough scale, has proven to be extraordinarily lucrative. 12 Unsurprisingly, the most lucrative domain names tend to be those that are the most similar to known trademarks. The amount of money at stake has led to an increase in a particular form of cybersquatting typosquatting a practice that takes advantage of those Internet users who eschew search engines for direct navigation, or typing a domain name directly into their web browser s address bar. 13 This practice, which capitalizes on trademark owners goodwill, is harmful and costly for mark owners because it diverts traffic intended for their websites and confuses consumers. 14 Worse yet, the traditional tools available to combat cybersquatters leave trademark owners ill-equipped to deal with the new world of domain tasting. The Old World Tools for Combating Cybersquatting Prove Ineffective Trademark owners seeking to put a stop to the use of domain names that are confusingly similar to their marks have two principal tools at their disposal: the arbitration-based Uniform Domain Name Dispute Resolution Policy (UDRP), and the civil remedy afforded by the Anticybersquatting Consumer Protection Act (ACPA). 14 Published in Intellectual Property Litigation, Volume 20, Number 2, Winter by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof

15 The UDRP, implemented by ICANN, is meant to provide a quick, cost effective dispute resolution procedure for domain name disputes. 15 The ACPA was enacted in response to concerns over the proliferation of cybersquatting the Internet version of a land grab. 16 Both provide a means by which trademark owners can combat bad-faith use of domain names that are confusingly similar to their marks. Both have proven inefficient, however, in combating domain tasting. In the light of the use of automated systems to register hundreds of thousands of domain names a day, the sheer scope of the infringement makes any enforcement procedure cost prohibitive, whether it be by arbitration or court action. 17 Moreover, these bulk registrations are often anonymous and, because the domains are tasted for less than five days at a time, the infringing domain names are a moving target. 18 By the time a mark holder can identify an infringing domain and ascertain the registrant s identity, the mark has often changed hands, leading the mark owner repeatedly back to square one. The goals of the ACPA seem to contemplate affording protection to the mark owner from this dilemma. At least with respect to in rem actions, the act expressly provides that the registrar or registry not transfer, suspend, or otherwise modify the domain name during the pendency of [an] action However, this provision is largely ineffective and even the institution of a lawsuit often is not enough to prevent transfer of an infringing domain. This requirement of the ACPA is often ignored by non-u.s. registrars (presumably on the basis that they are not governed by U.S. law). Moreover, at least one U.S.-based registry has taken the position that it does not have the ability to comply with this aspect of the act. Accordingly, the identity of the infringer is a moving target, not only while the mark owner struggles to identify a proper defendant, but also after suit has been brought. And the infringement continues through it all. Along with the more nebulous dilutive effect on the rights of the mark owner, these confusingly similar domain names continue to divert traffic from the mark owner s website to websites populated with links to the mark owner s competitors, causing incalculable harm to the mark owner s goodwill. The decision of the District Court in Verizon California, Inc. has made it easier for trademark owners to take on domain tasters. It appears, however, that the decision will do little to put an end to the practice of domain tasting or the harm being suffered by trademark owners as a result of that practice. Verizon California, Inc. v. Navigation Catalyst Systems, Inc. In April 2008, three affiliates of Verizon Communications, Inc. and owners of certain of the Verizon trademarks brought suit in the United States District Court for the Central District of California against an ICANN accredited registrar Basic Fusion, Inc. (Basic Fusion) and its affiliate Navigation Catalyst Systems, Inc. (Navigation Catalyst). Basic Fusion specializes in bulk registrations, providing services to those customers seeking to register large numbers of domain names. Navigation Catalyst, in addition to being an affiliate of Basic Fusion, is a Basic Fusion customer, using an automated system to identify and register with Basic Fusion hundreds of thousands of domain names. 20 Plaintiffs asserted six causes of action against Basic Fusion and Navigation Catalyst. One was a cause of action for cybersquatting in violation of the ACPA. In support of this cause of action, plaintiffs claimed that defendants have registered and used over three million domain names using an automated process, targeting nearly every single famous trademark in existence have registered almost 1,400 domain names that were confusingly similar to the Verizon marks have registered thousands more domains that were confusingly similar to other famous marks unrelated to the plaintiffs in this action monetized the confusingly similar domain names, that is, defendants operate websites at each of the Confusingly Similar Domain Names which display... links featuring goods or services that are directly competitive with those sold or provided in connection with the distinctive or famous marks, and each time an Internet user clicks on one of those links, defendants received payments from one or more advertisers, search engines, or affiliate programs after using the confusingly similar domains to generate revenues, deleted many of them during the AGP in order to receive a full refund of their registration costs 21 Plaintiffs sought, among other things, preliminary injunctive relief, enjoining defendants from using or registering domain names that were confusingly similar to the plaintiffs trademarks and from continuing to use an automated process to register domain names. 22 With regard to the use of automated processes to register domain names, the plaintiffs asserted that: Defendants large-scale cybersquatting business is unrestrained and fueled by Defendants continued use of an automated process to locate those domain names that generate traffic. Defendants automated process, however, is fundamentally flawed. Having registered over 15 thousand domain names that are confusingly similar to famous or distinctive marks, Defendants must be aware that their automated process may occasion infringement liability. Nonetheless, Defendants continue to register domain names confusingly similar to... Plaintiffs marks and other famous and distinctive marks. Unless a broad injunction issues, Defendants will continue to use their automated process to register confusingly similar domain names and harm Plaintiffs and the public. On the other hand, granting an injunction will only prevent Defendants from profiting its [sic] illegal behavior, which is not a cognizable hardship that this court should consider. 23 Defendants did not deny engaging in domain name tasting, but rather claimed that they use the AGP not only to determine which of the domains will generate revenue, but also to screen out those domains that present a potential trademark conflict. According to the defendants, because of that screening procedure, [d]omain names that matched character-strings on a black-list, or identified as trademarks by human screeners, were deleted prior to the expiration of the five day Add Grace Period. 24 Interestingly, in asserting that potentially infringing Published in Intellectual Property Litigation, Volume 20, Number 2, Winter by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof 15

16 domain names were deleted for compliance purposes, not... because they did not generate revenue, defendants aptly demonstrated the significant revenues that can be derived from the act of domain tasting itself. 25 Similarly, defendants did not deny that they reserved the domain names at issue, but claimed instead that most of those names were dropped during the AGP, during which the defendants performed their trademark scrubbing procedures. 26 Defendants stressed, moreover, the recent improvements to their screening procedures both with regard to the plaintiffs marks and generally. 27 In opposing plaintiffs motion for preliminary injunction, defendants asserted, among other things, that plaintiffs were not able to establish a likelihood of success on the merits of their ACPA claim because (1) domain tasting does not constitute registration of a domain name within the meaning of the ACPA; and (2) defendants deletion of a tasted domain based on trademark compliance purposes during the AGP does not constitute badfaith use of a domain name. Defendants further claimed that plaintiffs request to enjoin defendants from using automated registration processes should be denied because, among other reasons, it would stop Navigation s entire business. 28 The Court s Decision The court rejected defendants argument that domain tasting does not constitute registration for purposes of the ACPA, noting that reserving versus registering is a distinction without a difference either here entitles Defendants to the exclusive control and use of the names at issue, at least for some period of time. In any event, the court concluded that the defendants use of those domain names during the AGP by hosting websites using the challenged domain names, on which were posted paid advertising links to other websites, in some instances selling products in direct competition with plaintiffs, satisfied the statutory requirements of the ACPA. 29 The court went on to find bad-faith use of the domain names, emphasizing in particular: (1) defendants clear intent to profit from the poor typing abilities of consumers trying the reach the plaintiffs sites ; (2) the fact that the websites associated with the domain names contained links to competitors of the Plaintiffs potentially diverting consumers who would otherwise have purchased goods or services from Plaintiffs away from Plaintiffs ; and (3) the fact that the defendants had clearly acquired thousands of domain names that were confusingly similar to any number of famous marks. 30 Importantly, the court concluded that the plaintiffs had established irreparable harm resulting from the defendants domain tasting. Since the filing of the complaint, Defendants have continued to acquire new domain names that are confusingly similar to Plaintiffs marks. Even if they are able to identify and cancel all of those names within the Add Grace Period, there is nonetheless a period of several days for each domain name when Defendants use that name to generate revenue by linking to other websites, some of which offer products and services that compete with Plaintiffs. Determining later just how much Internet traffic was diverted from Plaintiffs sites to competing sites through Defendants briefly held, and constantly changing, similar domain names, is likely to prove impossible. 31 Most significantly, the court held that [t]he use of confusingly similar domain names during the Add Grace Period is within the scope of the harms the ACPA was enacted to prevent, and enjoined defendants from registering or using any domain name confusingly similar to plaintiffs marks. 32 The court was not persuaded, however, of a need to enjoin the defendants from continuing to use an automated process to register domain names in bulk. First, the court noted that the plaintiffs had not established how an injunction barring the defendants from registering domain names that are confusingly similar to plaintiffs marks would adequately protect their rights. The court was persuaded, however, by defendants claim that such an injunction would essentially put the defendants out of business, which the court concluded was not justified on the record currently before the court. Finally, the court noted that the plaintiffs had not demonstrated that the defendants automated registration process could not ever be conducted in a permissible fashion. 33 Accordingly, the court denied plaintiffs request for an injunction with regard to defendants ongoing use of automated registration processes. The Implications for Trademark Owners The court s order on plaintiffs motion for preliminary injunction can be viewed both as a victory and as a defeat for trademark owners in their fight against infringing domain tasting. In recognizing that the tasting of confusingly similar domains constitutes badfaith registration and use in violation of the ACPA, and recognizing the harm to trademark owners in having confusingly similar domains monetized (even for short periods), the court gave mark owners a significant victory over domain tasters. Moreover, the court made clear that it is not enough for a domain taster to divest itself of confusingly similar domains during the AGP. Rather, domain tasters who reserve confusingly similar domains (even if they are never registered) are subject to liability. However, in refusing to enjoin the defendants from using an automated process to identify and register domain names in bulk, the court has left trademark owners with an imperfect remedy. It seems evident from the facts of this case that at least with respect to the defendants system automated processes are ineffective in preventing the registration of confusingly similar domain names. Moreover, as is clear from this case, by the time a mark owner is able to bring suit against a domain taster, many, if not most, of the infringing domain registrations will have changed hands. The mark owner will therefore continue to suffer harm from the monetization of those domains and faces a seemingly everlasting struggle against infringement, even after establishing a likelihood of success on the merits of its claims. Conclusion As the number of domain names being tasted increases, so does the level of difficulty for trademark owners to police and protect their marks. Although it appears that the courts are willing to find that domain tasting falls within the scope of conduct the ACPA is meant to prevent, as a practical matter, trademark owners remain on the domain tasting merry-goround, chasing infringing domains from 16 Published in Intellectual Property Litigation, Volume 20, Number 2, Winter by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof

17 one place to the next with no clear end in sight. 34 l Patrick M. Fahey is a partner and Susan S. Murphy is an associate with Shipman & Goodwin LLP in Hartford, Connecticut. Endnotes 1. Defendants Memorandum of Points and Authorities in Opposition to Motion for Preliminary Injunction [hereinafter Defendants Opposition] 17, Verizon Cal., Inc. v. Navigation Catalyst Sys., Inc., No. CV (C.D. Cal.). 2. Verizon Cal., Inc., No. CV (C.D. Cal. June 30, 2008), available at federal/district-courts/california/cacdce/ 2:2008cv02463/413394/32/0.pdf. 3. Plaintiffs Memorandum of Points and Authorities in Support of Motion for Preliminary Injunction [hereinafter Plaintiffs Motion] 21 n.7, Verizon Cal., Inc., No. CV (C.D. Cal.). 4. Verizon Cal., Inc., No. CV , at 4 (C.D. Cal. June 30, 2008) (order granting in part and denying in part motion for preliminary injunction). 5. Press Release, Coalition Against Domain Name Abuse, CADNA Responds to ICANN Tasting Survey (Sept. 24, 2007), available at org/en/newsroom/press-releases/tastingsurvey. 6. Press Release, World Intellectual Prop. Org., Cybersquatting Remains on the Rise with Further Risk to Trademarks from New Registration Practices (March 12, 2007) [hereinafter WIPO Press Release], available at wipo.int/pressroom/en/articles/2007/ article_0014.html. The related practice of domain kiting is the tasting practice of repeatedly adding and dropping the same domain every few days in order to avoid the registration fee, while monetizing the traffic by loading the page with recycled pay-per-click (PPC) advertising links. White Paper, Coalition Against Domain Name Abuse, Drop-Catching: A Study on the Fate of Expiring Domains and How the Add Grace Period Is Leveraged to Avert Domain Name Investment Risk 3 (Jan. 2008) [hereinafter Drop-Catching], available at newsroom/updates/drop-catching-study. 7. Jeremy Kirk, ICANN Considers Plan to Stop Domain Tasting, N.Y. Ti m e s, Jan. 30, Drop-Catching, supra note 6, at WIPO Press Release, supra note 6; Kirk, ICANN Considers Plan, supra note 6; Anick Jesdanum, Entrepreneurs Profit From Free Web Names, USA To d a y, Feb. 19, 2007; Leslie Walker & Brian Krebs, The Web s Million-Dollar Typos, Washington Post, April 30, Press Release, Coalition Against Domain Name Abuse, CADNA Releases Study on Drop-Catching (Jan. 30, 2008), available at Id.; WIPO Press Release, supra note 6; Walker & Krebs, supra note 9; White Paper, Coalition Against Domain Name Abuse, Tasting Solutions: An Evaluation and Analysis of Proposed Solutions to Address the Domain Name Tasting Crisis [hereinafter Tasting Solutions] 4 5 (Nov. 1, 2007), available at updates/tasting-solutions. 12. Walker & Krebs, supra note 9; Tasting Solutions, supra note 11, at 5; see also generally Jeremy Kirk, Dell Suit Reveals Lucrative Trade in Domain Names, PC Wo r l d, Feb. 6, Drop-Catching, supra note 6, at 3; Tasting Solutions, supra note 11, at 4; Brian Krebs, New Policy Aims to Curb Web Site Name Abuse, Wa s h i n g t o n Po s t, Jan. 30, 2008; Brad Stone, Coins in the New Realm, N.Y. Ti m e s, Feb. 1, Coalition Against Domain Name Abuse, The Real Cost of Cybersquatting, available at resources/real-cost-of-cybersquatting (last visited Sept. 9, 2008). 15. WIPO Press Release, supra note 6. The UDRP prohibits the bad-faith use and registration of a domain name that is identical or confusingly similar to a trademark or service mark in which the complainant has rights by one who has no rights or legitimate interests in respect of the domain name. Uniform Dispute Resolution Policy, 4a, available at 24oct99.htm (last visited Sept. 14, 2008). 16. Lucas Nursery & Landscaping, Inc. v. Grosse, 359 F.3d 806, 808 (6th Cir. 2004) (internal quotation marks omitted). Under the ACPA, a mark owner has a means of redress against one who, with a bad-faith intent to profit from the mark, registers, traffics in, or uses a domain name that is either identical or confusingly similar to a distinctive mark, or is identical or confusingly similar to or dilutive of a famous mark. 15 U.S.C. 1125(d)(1) (A). 17. See Jesdanum, supra note 9; Kirk, ICANN Considers Plan, supra note WIPO Press Release, supra note 6; Drop-Catching, supra note 6, at U.S.C. 1125(d)(2)(D)(i)(II). 20. Verizon Cal., Inc., No. CV , at Complaint for Cybersquatting; Trademark Infringement; False Designation of Origin; Dilution; and Unfair Competition at 45 47, 53, 55 56, 59 60, Verizon Cal., Inc., No. CV (C.D. Cal.). 22. [Proposed] Order Granting Motion for Preliminary Injunction at 2, Verizon Cal., Inc., No. CV (C.D. Cal.). 23. Plaintiffs Motion, supra note 3, at Defendants Opposition, supra note 1, at 6; Affidavit of Seth Jacoby in Support of Defendant s Opposition to Motion for Preliminary Injunction [hereinafter Jacoby Affidavit] at 4 & 6, Verizon Cal., Inc., No. CV (C.D. Cal.). 25. Id. at 6 7; Jacoby Affidavit, supra note 24, at Verizon Cal., Inc., No. CV , at 4 5; see also Defendants Opposition, supra note 1, at Defendants Opposition, supra note 1, at Id. at Verizon Cal., Inc., No. CV , at Id. at Id. at Id. at Id. at ICANN has recently voted to make the registration fee (currently $0.20) nonrefundable. It is unclear what effect this measure will have in curbing domain tasting. While some have opined that the imposition of this fee will render domain tasting unprofitable, at least one trademark owners advocacy group has expressed skepticism that the fee will have any effect on the practice. See Krebs, supra note 13; Press Release, Coalition Against Domain Name Abuse, ICANN s Tasting Solution a Partial Success (June 27, 2008), available at org/en/newsroom/press-releases/ icann-tasting-solution. Published in Intellectual Property Litigation, Volume 20, Number 2, Winter by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof 17

18 Declaratory-Judgment Jurisdiction Continued from cover or otherwise unenforceable. In reaching the conclusion that the licensee need not first repudiate the patent license in order to bring suit, the U.S. Supreme Court jettisoned the reasonable apprehension declaratory-judgment standard in favor of a more lenient standard that looks to the totality of the circumstances in order to determine if there is a concrete dispute between the parties. This relaxed standard has clearly expanded the scope of federal court jurisdiction and has raised a number of questions that remain unanswered. MedImmune and Its Progeny Significantly Impacted Patent Litigation MedImmune was and is a big deal in patent litigation. 4 Threat letters and license offers are common precursors to patent litigation, and patent owners have some favorite forums in which to litigate. The Eastern District of Texas may be the current favorite, in light of the quickness of its docket and the generosity of its venire. Clever patent litigators all over the country quickly grasped that the scope of MedImmune could be read to go far beyond the licensor/licensee relationship in which that dispute arose. They soon took advantage of the decision to file declaratory-judgment actions on behalf of their accused-infringer clients, in jurisdictions known to be less patent-ownerfriendly. In 2007, shortly after the Supreme Court handed down MedImmune, the United States Court of Appeals for the Federal Circuit (CAFC), the court to which all patent appeals are taken, embraced and expounded upon the MedImmune decision in SanDisk Corporation v. STMicroelectronics, Inc. 5 SanDisk and STM were undergoing explicitly amicable discussions regarding cross-licensing of flash-memory technology rights. At a settlement meeting, STM showed a PowerPoint presentation that mapped its patent claims to SanDisk technology and openly discussed SanDisk s [alleged] infringement. Even a vanilla licensing letter from counsel could provoke a declaratory-judgment lawsuit in the target s home court or venue of its choosing. To avoid a declaratory judgment suit, STM s attorney told SanDisk that STM has absolutely no plan whatsoever to sue SanDisk. License proposals were exchanged, but SanDisk eventually did not strike a deal. About one month after the initial meetings, SanDisk sued for declaratory judgment of noninfringement and invalidity. The district court dismissed the case, finding no actual controversy under the Declaratory-Judgment Act because SanDisk did not have an objectively reasonable apprehension of suit. Following MedImmune, the Federal Circuit articulated a new standard in ruling that a patentee can create a situation amenable to declaratory-judgment jurisdiction by making statements far short of threatening legal action. In particular, declaratory-judgment jurisdiction can exist when the patentee s position vis-àvis a declaratory-judgment plaintiff either (1) indicates that the declaratory-judgment plaintiff is taking illegal actions, or (2) pushes the declaratory-judgment plaintiff toward abandoning legitimate activities. The Federal Circuit found that STM s activities were sufficient to create declaratory-judgment jurisdiction. In particular, there was no need for SanDisk to cut off license negotiations prior to filing suit, and STM s self-serving statement that it did not intend to sue did not moot the actual controversy created by its acts. The teaching of SanDisk is that patent owners seeking to generate licensing revenue must be very cautious in approaching a potential licensee, or else that owner may find itself hailed into court in a foreign jurisdiction to defend allegations of both patent noninfringement and patent invalidity. In particular, this teaching should be closely considered when writing (patent) licensing letters: [W]here a patentee asserts rights under a patent based on certain identified ongoing or planned activity of another party, and where that party contends that it has the right to engage in the accused activity without license, an Article III case or controversy will arise and the party need not risk a suit for infringement by engaging in the identified activity before seeking a declaration of its legal rights. 6 In patent cases, the Federal Circuit still requires some activity by the patentee: In the context of conduct prior to the existence of a license, declaratory-judgment jurisdiction generally will not arise merely on the basis that a party learns of the existence of a patent owned by another or even perceives such a patent to pose a risk of infringement, without some affirmative act by the patentee. 7 These teachings of SanDisk are easily transportable to the trademark arena. Indeed, MedImmune s and SanDisk s reach has now embraced trademark practice. 8 MedImmune s New Declaratory- Judgment Standard Beginning almost immediately after MedImmune was handed down, lower courts began citing the decision to support the existence of declaratory-judgment subject matter jurisdiction. Courts that have explicitly adopted the MedImmune standard into trademark cases include the Southern District of New York, 9 the Southern District of Texas, 10 the Northern District of Ohio, 11 the Eastern District of Michigan, 12 and the Middle District of Florida Published in Intellectual Property Litigation, Volume 20, Number 2, Winter by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof

19 But the warmest and most significant embrace, to date, is that of the United States Court of Appeals for the Tenth Circuit, which covers Oklahoma, Kansas, New Mexico, Colorado, Wyoming, and Utah. In SureFoot v. Sure Foot Corp., 14 the Tenth Circuit applied MedImmune to reverse a federal district court s dismissal of a trademark dispute over the mark Surefoot for ski boot orthotics. We expect that the MedImmune declaratory-judgment standard will soon reign as the new standard operating procedure in trademark disputes. So, depending on the contents of your old cease and desist letters, it may be time to retire (or retool) them. But before you do either, you might want to consider the following implications of MedImmune for your trademark practice: Even a vanilla licensing letter from counsel could provoke a declaratoryjudgment lawsuit in the target s home court or venue of its choosing. A non-legal letter, offering simply to discuss the matter, may be less likely to provoke a declaratory-judgment lawsuit, particularly if it comes from the mark owner and not an attorney. Even if a mark owner would be comfortable in the target s home court, a declaratory-judgment action can be expensive and inconvenient to defend. A declaratory-judgment action could represent a threat to trademark rights (with respect to seeking a declaration of invalidity, abandonment, etc.). The threat of a declaratory-judgment action can be nearly eliminated by a mark owner filing a preemptive action in its home court. The costs of preparing a complaint for such a suit would probably be less than the early costs of defending a declaratory-judgment action. At one time, it was possible to file a placeholder suit (to preserve jurisdiction) and withhold formal service until the businesspeople could discuss the matter on amicable terms. However, the federal courts now provide electronic filing information daily, and the target s lawyers will know about the suit almost immediately after filing. If the mark owner wants to preserve jurisdiction by filing first, but also wants to try an initial soft approach, it will require some finesse on the part of the negotiator. Although MedImmune, SanDisk, and SureFoot give us guidance on when declaratory-judgment jurisdiction is triggered in the context of a skirmish involving specific allegations of infringement, there are still a number of open questions for trademark practitioners and litigators facing different scenarios. For example, in the pre-medimmune world, the threat or actual filing of an opposition or cancellation proceeding against a registration in the Patent and Trademark Office (PTO) was not, per se, sufficient to create an actual controversy for purpose of declaratory-judgment jurisdiction. 15 Such a threat now might arguably pose a sufficiently concrete dispute between the parties. Ruminating over another example, suppose a trademark applicant files an intent-to-use application with the PTO and that application is rejected over an existing registration based on likelihood of confusion. Does the registrant now have standing to file a declaratory-judgment action claiming that the mere filing of the application creates a sufficiently concrete legal dispute? What about a trademark owner that is known for its aggressive tendencies to sue any company that it spies using any mark that could remotely cause any likelihood of confusion? Could a company that just launched a new product (and fully expects to fall within the crosshairs of this aggressor) file a declaratory-judgment suit seeking refuge under MedImmune and its progeny? Maybe so, particularly in light of MedImmune s suggestion that a potential defendant need not first bet the farm by taking the supposedly violative action before a case or controversy exists. Although these hypothetical questions could be answered with a fair degree of certitude before MedImmune, the answers at this nascent stage of our post-medimmune world are certainly a bit hazier. Stay tuned, good luck, and may these times not be too interesting for either you or your trademark clients. l Greg Wesner and Mike Keyes are partners with K&L Gates LLP in the firm s Seattle and Spokane offices, respectively. Greg can be reached at gregory.wesner@ klgates.com. Mike is the immediate past cochair of the ABA Copyright Litigation Committee. He can be reached at mike. keyes@klgates.com. Endnotes 1. See MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007). 2. See Jennifer L. Collins and Michael A. Cicero, Supreme Court s MedImmune Patent Decision Impacts Both Licensing and Litigation (2007), available at MedImmuneArticle.pdf. 3. MedImmune, 549 U.S. 118 (2007). 4. The practical effect of MedImmune lowered the bar for a plaintiff to bring a declaratory-judgment action in a patent dispute. Frederick Goldman, Inc. v. West, No. 06 Civ. 3413, 2007 WL , at *3 (S.D.N.Y. July 6, 2007). As a result, the vast majority of courts called upon to address subject-matter jurisdiction in patent declaratory-judgment cases post-medimmune have found jurisdiction to exist. See, e.g., Sabert Corp. v. Waddington N. Am., Inc., Civ. A. No , 2007 WL (D.N.J. Sept. 14, 2007); Monolithic Power Sys., Inc. v. O2 Micro Int l Ltd., No. C , 2007 WL (N.D.Cal. Aug. 13, 2007) F.3d 1372 (Fed. Cir. 2007). 6. SanDisk Corp. v. STMicroelectronics, Inc., 480 F.3d 1372, 1381 (Fed. Cir. 2007). 7. Id. at The pace of MedImmune s enthusiastic adoption into the trademark realm suggests that the courts were ready for a change. The authors speculate that the court system may have detected a whiff of anticompetitive behavior in the longstanding practice of some trademark owners hinting at suit, while not going so far as to provide their competitors with redress. 9. Russian Standard Vodka (USA), Inc. v. Allied Domecq Spirits & Wine USA, Inc., 523 F. Supp. 2d 376 (S.D.N.Y. 2007). Citing MedImmune, the court found that declaratory-judgment jurisdiction exists in dispute under Lanham Act challenging Russian nature of competitors vodka. The MedImmune standard is necessarily less rigorous than the reasonable apprehension of imminent suit test. Id. at Vantage Trailers, Inc., v. Beall Corp., 2008 WL (S.D. Tex. Jan. 31, 2008). Adopting the MedImmune Published in Intellectual Property Litigation, Volume 20, Number 2, Winter by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof 19

20 standard, the court found that declaratory judgment exists in trademark dispute over mark for commercial trailers where defendant sent a letter to plaintiff informing it that defendant had become aware of plaintiff s mark, and stating it would pursue legal action if plaintiff placed any trailer on the market using the mark. 11. The Wooster Brush Co. v. Bercom Int l, LLC, 2008 WL (N.D. Ohio Apr. 11, 2008). Adopting the MedImmune standard, the court found no declaratory- judgment jurisdiction existed where Bercom sent letters to Wooster advising Wooster that Bercom believed a certain paint container would violate Bercom s trademark and patent rights, but made no statement regarding infringement. 12. World Religious Relief v. Gospel Music Channel, F. Supp. 2d, 2008 WL (E.D. Mich. May 20, 2008). Adopting the MedImmune standard, the court found no that declaratoryjudgment jurisdiction existed where Televised Christian Ministry sent a letter to plaintiff stating that its use of the words gospel music in a certain way was likely to cause confusion and that the use violated federal and state trademark laws. 13. HSI IP, Inc. v. Champion Window Mfg. and Supply Co., 510 F. Supp. 2d 948 (M.D. Fla., 2007) F.3d 1236 (10th Cir. 2008). 15. See J. Thomas McCarthy, McCarthy on Trademark and Unfair Competition, 32:52 and cases cited therein. Trademark Parody Continued from page 3 department stores and advertised in highend fashion magazines. With respect to intent, the court found that the product s status as a parody neutralized any bad faith by Haute Diggity Dog in marketing its products. Specifically, the court found that although Haute Diggity Dog intended to profit from its use of its parodies, there was no bad-faith intent to create consumer confusion. Finally, the court found no evidence of actual confusion among the relevant consuming publics. Trademark Dilution Revision Act of 2006 Having found no trademark infringement, the court turned to the issue of dilution under the federal trademark dilution statute. In Moseley v. V Secret Catalogue, Inc., 2 the Supreme Court ruled that in order to prove dilution under the federal trademark dilution statute as originally enacted, the owner of a mark must prove actual dilution of its famous mark. Congress responded to Moseley by enacting the Trademark Dilution Revision Act of 2006 (TDRA), which changed the standard under the federal trademark dilution statute to a likelihood of dilution. Thus, the issue before the Fourth Circuit in Louis Vuitton was whether or not Haute Diggity Dog s use of Chewy Vuiton was likely to impair the distinctiveness or harm the reputation of the LVM marks under the TDRA (as opposed to actually having done so). As with its trademark infringement analysis, the Fourth Circuit s dilution analysis began with the caution that parody is not automatically a complete defense to a claim of dilution either. While the If a client brings you a proposed tradmark parody, this is one of the few times when it is acceptable to laugh at your client s proposal. TDRA includes a fair-use exception that specifically recites parodies, the exception only applies if the parody is not a designation of source for the person s own goods or services. 3 Where the defendant uses the parody as its own designation of source, the exception does not apply. The Fourth Circuit acknowledged that Haute Diggity Dog s conduct did not constitute fair use, but went on to say that a court may still consider the existence of a parody in applying the TDRA s enumerated blurring factors: (1) the degree of similarity between the mark or trade name and the famous mark; (2) the degree of inherent or acquired distinctiveness of the famous mark; (3) the extent to which the owner of the famous mark is engaging in substantially exclusive use of the mark; (4) the degree of recognition of the famous mark; (5) whether the user of the mark or trade name intended to create an association with the famous mark; and (6) any actual association between the mark or trade name and the famous mark. Because the product was a parody, the Fourth Circuit found that factors two, three, and four clearly supported Haute Diggity Dog, noting that an effective parody requires a famous trademark and that a successful parody might enhance the famous mark s distinctiveness. The court also found that the remaining factors favored Haute Diggity Dog, but cautioned that the outcome may be different where the parody uses the identical or original mark. Recall the court s earlier observation that a successful parody must bring to mind the original mark but include enough differences to distinguish itself from the original. With respect to dilution by tarnishment, LVM argued that Haute Diggity Dog s use of Chewy Vuiton on dog toys harms the reputation of its trademarks because dogs might choke on the chew toys and a confused customer might blame LVM. But the court found no evidence in the record to support such claims. Counterfeiting The denial of LVM s counterfeiting claims also was upheld on appeal because Haute Diggity Dog did not use a mark that was identical with or substantially indistinguishable from the LVM trademarks as required by the statute. Copyright Infringement In a brief paragraph, the Fourth Circuit also affirmed the denial of LVM s copyright claim, noting that, Because LVM 20 Published in Intellectual Property Litigation, Volume 20, Number 2, Winter by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof

21 attempts to use a copyright claim to pursue what is at its core a trademark and trade dress infringement claim, application of the fair-use factors under the Copyright Act to these facts is awkward. But the court did review the trial court s findings and agreed that the parody use did not support a copyright infringement claim. Adopting and Fighting Trademark Parody In the Louis Vuitton case, the Fourth Circuit s endorsements and caveats provide valuable guidance for potential parodists. And the same can be said for parody targets who are considering filing suit to stop the use of a trademark parody. Does the proposed mark pass the laugh test? If a client brings you a proposed trademark parody, this is one of the few times when it is acceptable to laugh at your client s proposal. If you don t laugh and no one else does either, be concerned. To be an effective parody, the proposed mark must communicate the necessary element of satire, ridicule, joking, or amusement. Is the proposed mark similar enough and yet different enough? Haute Diggity Dog escaped liability as a trademark parody, in part, because every element of its mark and design were similar but not identical to the Louis Vuitton marks and design. The devil is in the details for parody, especially where the proposed mark mimics several protectable elements of the parody target. Are the products associated with the proposed mark too close to the mark being parodied? In the Louis Vuitton case, the products offered under the parody and parodied marks were dissimilar, and the Fourth Circuit found it unlikely that Louis Vuitton would eliminate that difference by starting to sell goods similar to those offered under the Chewy Vuiton mark. But courts are most diligent in guarding against a likelihood of confusion when the parties use their marks on directly competing products. As noted in Tommy Hilfiger Licensing, Inc. v. Nature Labs, LLC, 4 This is true both generally and in particular as to parodies. Thus, even where the use is humorous, courts have shown little tolerance where the mark is used on a competing product. Is your client prepared to be sued? Despite the fact that it was ultimately successful, Haute Diggity Dog spent several hundred thousand dollars defending itself in the Louis Vuitton case, lost distributors, and had merchandise sent back as a result of the lawsuit. The client should think carefully about who the plaintiff is likely to be. By definition, the more well-known or famous a trademark, the more likely a parody will be effective and draw an undesired response from the famous mark s owner. Does your client want to be on the receiving end of a lawsuit from companies such as Microsoft, Rolex, McDonald s, Coca-Cola, or Nike? Companies are getting increasingly aggressive about protecting their trademark rights, both domestically and abroad. And a suit filed by a wellfunded, potentially aggressive plaintiff may include numerous causes of action in addition to trademark infringement or dilution. Have all potential claims been analyzed carefully? The Louis Vuitton case included claims of trademark, trade dress, copyright infringement, dilution, and counterfeiting, along with related state or common law causes of action. For a parody target, there are many causes of action that can be brought to bear in protecting its valuable trademark. If a parody is found to violate one or more of these causes of action, strong remedies are available to the owner of the parodied trademark. Although the Louis Vuitton case shows that an effective parody can avoid liability for all of these causes of action, care should be taken in evaluating every one of them before a parody trademark is adopted. Specifically with respect to a dilution claim, Louis Vuitton represents the Fourth Circuit s interpretation of the TDRA with respect to parody claims. Other circuits may adopt a different interpretation. Future cases also may involve a more extensive analysis of the overlap or differences in protection under copyright and trademark law for parodies. Is there protection available for a trademark parody? Non-confusing parodies may be placed on the Principal Register. The U.S. Patent and Trademark Office (USPTO) recognizes that parody is not a defense to a likelihood of confusion refusal, but that [t]here are confusing parodies and non-confusing parodies. A true parody actually decreases the likelihood of confusion because the effect of the parody is to create a distinction in the viewer s mind between the actual product and the joke. While a parody must call to mind the actual product to be successful, the same success also necessarily distinguishes the parody from the actual product. 5 But as noted above, any client that adopts a parody mark should be advised of the risk of a lawsuit. The client also should expect that the target of the parody may oppose any attempt to register the parody with the USPTO. Haute Diggity Dog filed an application for federal registration of its Chewy Vuiton mark early in Shortly after publication, Louis Vuitton filed an opposition. And within a few weeks, Louis Vuitton commenced federal litigation in the Virginia district court. Parallel proceedings in federal or state court and at the Trademark Office should be considered by those who are the target of a parody and anticipated by those who adopt a trademark parody. Conclusion The Louis Vuitton case represents a clear victory for effective trademark parodies in the Fourth Circuit. But the targets of trademark parodies still have many options they can appreciate the humor, bear it in silence, or sue. l Diane Burke is of counsel with Steptoe & Johnson, PLLC in Columbus, Ohio. She can be reached at diane.burke@ steptoe-johnson.com. Endnotes 1. Louis Vuitton Malletier, S.A. v. Haute Diggity Dog, LLC, 507 F.3d 252 (4th Cir. 2007). 2. Moseley v. V Secret Catalogue, Inc., 537 U.S. 418 (2003) U.S.C. 1125(c)(3)(A)(ii). 4. Tommy Hilfiger Licensing, Inc. v. Nature Labs, LLC, 221 F. Supp.2d 410, 418 (S.D.N.Y. 2002). 5. Manual of Trademark Examining Procedure, (b)(x). Published in Intellectual Property Litigation, Volume 20, Number 2, Winter by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof 21

22 Changes to the Trademark Rules of Practice Continued from page 5 discovery conference when the parties are prepared to discuss their issues in depth. On the other hand, little changes when one party is uncommitted to the discussion. Because the number of interrogatories in an inter partes proceeding is high, the disclosure requirements can be duplicative of information that is otherwise obtained through traditional discovery methods. Nevertheless, the requirements may slightly increase the fairness of inter partes proceedings because they act as support in the event that information is not requested through traditional discovery or answers to traditional discovery are not supplemented. Overall, any burden created by the rule changes is likely outweighed by the efficiencies created by the discovery conference requirement. l Bradley J. Walz is with Winthrop & Weinstine, P.A. in Minneapolis, Minnesota. He can be reached at bwalz@winthrop.com. Endnotes 1. Miscellaneous Changes to Trademark Trial and Appeal Board Rules, 72 Fed. Reg. 42,242 (Aug. 1, 2007) (to be codified at 37 C.F.R. part 2). 2. Id. 3. Id C.F.R (a) (2008) C.F.R , 2.120(a)(1), 2.121(a)(1) (2008). 6. See id C.F.R (a)(2) (2008) Fed. Reg. at C.F.R (a)(3), 2.127(e) (1) (2008) C.F.R (e)(1) (2008). 11. Nine West Development Corp. v. Nextten Stauer, LLC, Cancellation No (T.T.A.B. April 2, 2008) C.F.R (a)(1) (2008). 13. Id.; 37 C.F.R (a) (2008) Fed. Reg. at C.F.R (2008). 16. Id Fed. Reg. at Id. at Keyword Advertising Continued from page 7 In another recent case, the Northern District of California held that the sale of trademarked terms [as keywords] is a use in commerce for the purposes of the Lanham Act. In Google Inc. v. Am. Blind & Wallpaper Factory, Inc., the Internet search provider sought a declaratory judgment that its Adwords advertising program did ABWF counterclaimed against Google Inc. and other online search engines for various trademark causes of action. The district court noted that it was guided by Playboy Enterprises, Inc. v. Netscape Communications Corp., 37 even though the Ninth Circuit did not even address the use in commerce requirement. 38 The district court stated that the two cases were distinguishable. Playboy involved the practice of linking Internet It has become fairly well settled outside of the Second Circuit that use of a competitor s marks in keyword advertising is indeed a use in commerce. Initial interest confusion is customer confusion that creates initial interest in a competitor s product. Although dispelled before an actual sale occurs, initial interest confusion impermissibly capitalizes on the good will associated with a mark and is therefore actionable trademark infringement. According to Google, the fact that Playboy did not expressly hold that keyword use is a use in commerce and, in fact, did not even address use in commerce as an issue, indicated that the Ninth Circuit assumed there was trademark use in commerce. 40 Thus, the court in Google concluded that the sale of marks as keywords is understood to be a use in commerce. 41 Other courts finding that the use of another s trademark as an Internet keyword is a use in commerce include the District of New Jersey and the District of Minnesota. 42 not infringe American Blind & Wallpaper Factory, Inc. s (ABWF) marks, American Blind and American Blinds, which ABWF used in connection with home decorating products and related services. 36 In this case, a user who typed the words American Blind into the Google search bar would receive a page of links that included websites of companies who had purchased American Blind as a keyword. keywords to Netscape s unlabeled banner advertisements that were paid for by sponsors, as opposed to keywords that linked to Google s sponsor advertisements. The district court in Playboy focused on whether the keyword use fell within the likelihood of confusion test, and more specifically, the court concerned itself with whether the plaintiff demonstrated a specific type of initial interest confusion. 39 Utah s Controversial Statute Until the spring of 2007, the courts largely determined whether keyword use was a use in commerce under the Lanham Act. Then, in a move to create a blanket prohibition of keyword use of registered trademarks unless authorized, Utah s legislature amended its Registration and Protection of Trademarks and Servicemarks Act in 2007 (the Utah 22 Published in Intellectual Property Litigation, Volume 20, Number 2, Winter by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof

23 Act). 43 The amendments, which became effective on April 30, 2007, provided for state registration of an electronic registration mark and prohibited use of such a registered mark as a keyword or trigger to a competitor s website. 44 The amendments included the establishment of a searchable mark database where parties could register their electronic marks and search for other registered marks. 45 The database was also intended to provide a mechanism for parties to contact each other for permission to use a registered electronic mark. Recognizing a possible conflict with the U.S. Constitution, Utah s legislature expressly provided that its amendments only applied to registered electronic marks that are used as keywords or triggers for advertisements delivered in the state of Utah or sold by someone located within Utah. 46 The Utah Act improved the favorable climate for plaintiffs in Utah. 47 Shortly after the law took effect, however, businesses (including, reportedly, Google) met with Utah legislators to persuade them to repeal the statute, and an editorial in the Salt Lake Tribune apparently called for the same result. 48 The Utah Act was amended, effective May 5, 2008, removing the term electronic registration mark from the statute and thereby removing keyword advertising claims as a cause of action for infringement under the Utah Act. 49 Conclusion It has become fairly well settled outside of the Second Circuit that use of a competitor s marks in keyword advertising is indeed a use in commerce. Of course, it remains to be seen whether and how the anticipated opinion of the Second Circuit in Rescuecom will impact that circuit s divergent stance on this issue. If the Second Circuit stays true to form and finds that such use, with nothing more, is not a use in commerce, its split with other courts may ultimately have to be resolved by the United States Supreme Court.l Peter E. Nussbaum is a partner and Nancy A. Del Pizzo is an associate with Wolff & Samson, PC in West Orange, New Jersey. Peter may be reached at pnussbaum@wolffsamson.com. Nancy may be reached at ndelpizzo@ wolffsamson.com. Endnotes 1. See Keyword_advertising. 2. See 15 U.S.C U.S.C. 1114(1)(a), 1125(a). 4. Interview of Steven Lieberman in Patent, Trademark & Copyright (BNA), No. 1843, at 71 (Nov. 16, 2007) (Lieberman pointing to the act s definition of a use in commerce where a mark is placed... on the goods ). 5. S&L Vitamins, Inc. v. Australian Gold, Inc., 521 F. Supp. 2d 188, 202 (E.D.N.Y. 2007). 6. Fragrancenet.com, Inc. v. Fragrancex.com, Inc., 493 F. Supp. 2d 545, 549 (E.D.N.Y. 2007). 7. A meta tag is a word or phrase that is embedded in the computer code of a website to describe the contents of the website; consumers do not see meta tags, but when a consumer types in the word or phrase, the Internet search engine may provide the searcher with a description of the website that has the embedded meta tag. See N. Am. Med. Corp. v. Axiom Worldwide, Inc., 522 F.3d 1211, 1217 n.2 (11th Cir. 2008). 8. Site Pro-1, Inc. v. Better Metal, LLC, 506 F. Supp. 2d 123, 127 (E.D.N.Y. 2007). 9. Merck & Co., Inc. v. Mediplan Health Consulting, Inc., 425 F. Supp. 2d 402, 415 (S.D.N.Y. 2006). 10. Rescuecom Corp. v. Google, Inc., 456 F. Supp. 2d 393 (N.D.N.Y. 2006). 11. S&L Vitamins, 521 F. Supp. 2d at 199, Id. at Hamzik v. Zale Corp., No. 3:06- cv-1300, 2007 WL , (N.D.N.Y. April 19, 2007). 14. S&L Vitamins, 521 F. Supp. 2d at Hamzik, 2007 WL , at * Id. at * Id. at * Id. at * Rescuecom Corp., 456 F. Supp. 2d 393 (N.D.N.Y. 2006). 20. Merck & Co. Inc., 425 F. Supp. 2d 402, (S.D.N.Y. 2006). 21. Hamzik, 2007 WL at * Id. 23. Site Pro-1, 506 F. Supp. 2d at Id. at Contacts, Inc. v. WhenU.com, Inc., 414 F.3d 400, 409, n.11 (2d Cir.), cert. denied, 546 U.S. 1033, 126 S. Ct. 749, 163 L.Ed.2d 573 (2005). 26. Id. at Fragrancenet.com, 493 F. Supp. 2d at 550 ( It would be inconsistent with the reasoning set forth in Contacts to conclude that the use of trademarks in keywords and meta tags constitutes Lanham Act use where, as here, defendant does not place the trademark on any product, good, or service, nor is it used in any way that would indicate source or origin. ). 28. Rescuecom Corp., 456 F. Supp. 2d at 395, 398, 403 (plaintiff claimed that Google s selling of plaintiff s trademark to competitors as a keyword triggering the appearance of links to the competitor s websites is a use in commerce). 29. See Rescuecom Corp., Docket Sheet, No cv. Judges Leval, Calabresi, and Wesley heard oral argument on April 3, Boston Duck Tours, LP v. Super Duck Tours, LLC, 527 F. Supp. 2d 205, 207 (D. Mass. 2007) (emphasis added), rev d in part, appeal dismissed, on other grounds, 531 F.3d 1 (1st Cir. 2008). 31. Hysitron Inc. v. MTS Sys. Corp., No , 2008 WL , at *3 (D. Minn. Aug. 1, 2008) (noting that the majority of courts have held that using a trademark for general advertising through keyword advertising is a use in commerce under the Lanham Act). See e.g., N. Am. Med. Corp., 522 F.3d 1211, 1219 (11th Cir. 2008) (noting that under the plain meaning of the Lanham Act, using trademark as meta tags to promote products on the Internet is a use in commerce). 32. Id. at * N. Am. Med. Corp., 522 F.3d 1211, 1219 (11th Cir. 2008). 34. Id. at Boston Duck Tours, 527 F. Supp. 2d at Google, Inc. v. Am. Blind & Wallpaper Factory, Inc., No. C , 2007 WL , at *6 (N.D. Cal. April 18, 2007). 37. Playboy Enterprises, Inc. v. Netscape Communications Corp., 354 F.3d 1020 (9th Cir. 2004). 38. Google, 2007 WL at * Playboy, 354 F.3d at Google, 2007 WL , at *5 ( Nothing in the majority s discussion of the relevant facts suggests that it questioned whether the plaintiff had shown that there was a use of its trademark in Published in Intellectual Property Litigation, Volume 20, Number 2, Winter by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof 23

24 commerce... Judge Berzon does not identify use in commerce as an open front in this area of law or suggest that remains a question for a later date. ). 41. Id. at *5 6 (noting that the analysis in Playboy would have been unnecessary in the absence of actionable trademark use ). 42. See Buying for the Home, LLC v. Humble Abode, LLC, 459 F. Supp. 2d 310 (D.N.J. 2006) (finding use in commerce under the Lanham Act because it (1) involved a commercial transaction that occurred in commerce, trading on the value of the plaintiff s mark and (2) the alleged use was both in commerce and in connection with any goods or services in that plaintiff s mark was allegedly used to trigger commercial advertising which included a link to defendants furniture retailing website. Therefore, not only was the alleged use... tied to the promotion of defendants goods and retail services, but the mark was used to provide a computer user with direct access (i.e., a link) to defendants website through which the user could make furniture purchases. ); Jr. Cigar, Inc., 437 F. Supp. 2d 273 (D.N.J. 2006) (finding use in commerce where an Internet search engine (1) solicited bids from plaintiff s competitors for prominence in listings reached by keywords; (2) ranked paid advertisers in the search results list; and (3) using a Search Term Suggestion Tool that identifies effective search terms and markets them to plaintiff s competitors); Edina Realty, Inc. v. TheMLSonline. com, No. Civ JRTFLN, 2006 WL , at *3 (D. Minn. March 20, 2006) (noting that use of a mark as a search term is not a conventional use in commerce, but nevertheless finding a use in commerce based on the plain meaning of the Lanham Act ). 43. S.B. 236 Gen. Sess. (Utah 2007). 44. Id..; Utah Code Ann. 70-3a-103, -203, -302, -304 to -306, -402, -501, -502 (2007). 45. Utah Code Ann. 70-3a-501 (2007). 46. Utah Prohibits Search Keyword Advertising Triggered by Electronic Registration Mark, Patent, Trademark & Copyright (BNA), No. 1816, at (April 27, 2007). The law was purported to apply not only to a party that chooses to use a keyword that is a registered electronic mark but also to the Internet providers that sold keyword advertising. See id. 47. The Tenth Circuit Court of Appeals held that keyword advertising is a use in commerce. See Australian Gold, Inc. v. Hatfield, 436 F.3d 1228 (10th Cir. 2006). 48. See Eric Goldman, Utah Legislators Realizing They Screwed Up By Banning Keyword Advertising, Technology & Marketing Law Blog, April 27, 2007, available at archives/2007/04/utah_legislator.htm. 49. See Utah Code Ann. 70-3a-402 (2008). The Trademark Dilution Revision Act Continued from page 9 redundant in light of the fact that a trademark owner must prove that its mark is famous. Applying a sliding scale of fame, though, the Board has concluded that the more famous a mark is, the more likely there will be an association between the defendant s mark and the famous mark. 22 Intent An intent to create an association with a famous mark is not sufficient in and of itself to show a likelihood of blurring. 23 A finding of willful intent, however, could give rise to remedies in addition to injunctive relief, such as money damages and attorney fees. 24 Actual Association Between the Marks The actual association between the defendant s mark and the famous mark is another critical factor in the dilution analysis. Consumer surveys showing a strong association between the defendant s mark and the famous mark, and an actual lessening of the famous mark s distinctiveness, can provide strong evidence of dilution by blurring. While the TDRA does not require confusion as to source or sponsorship, some courts still view dilution by blurring through the lens of consumer confusion and focus on whether there is a mistaken association between a famous mark and another mark, Dilution by blurring occurs when consumers mistakenly associate a famous mark with goods and services of a junior user, thereby diluting the power of the senior mark to identify and distinguish associated goods and services. 25 In Moseley, on remand from the Supreme Court and the Sixth Circuit Court of Appeals, the Western District of Kentucky applied the newly enacted TDRA to the plaintiffs dilution claim and analyzed the six factors for dilution by blurring. Despite finding that all six of the factors weighed in favor of the plaintiffs, the district court nonetheless held that the Victoria s Secret mark was not blurred largely because the army colonel did not mistakenly associate the defendants goods with the Victoria s Secret mark: The evidence in the case established that a consumer, the army colonel, readily associated the Moseleys mark with the VICTORIA S SECRET mark, but did not link the store to the Victoria s Secret brand. There was no question in his mind that the Moseleys offerings of intimate lingerie, sex toys, and adult videos were not V Secret merchandise. The choice of name and presentation by the Moseleys being just slightly different from the VICTORIA S SECRET mark, conjured the association with the famous mark, but fell short of blurring its distinctiveness in this instance. 26 Other courts, however, more correctly analyze whether a defendant has used or modified a famous mark in such a way as to reduce the public s perception of the mark as a unique identifier of the owner s product. 27 One court has explained that this inquiry depends on whether the capacity of the famous mark to identify and distinguish goods and services sold by the plaintiff is likely to have been lessened: For dilution to occur, the relevant public must make some connection between the mark and both parties. But that connection is not the kind of mental link between the parties that triggers the classic likelihood of confusion test. Rather, the assumption is that the relevant public sees the junior user s use, and intuitively knows, because of the context of the junior user s use, that there is no connection between the owners of the respective marks. However, 24 Published in Intellectual Property Litigation, Volume 20, Number 2, Winter by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof

25 even with those who perceived distinct sources and affiliation, the ability of the senior user s mark to serve as a unique identifier of the plaintiff s goods or services is weakened because the relevant public now also associates that designation with a new and different source. Hence, the unique and distinctive link between the plaintiff s mark and its good or service is blurred. 28 Such blurring certainly occurs, for example, in the hypothetical cases of DuPont shoes, Buick aspirin, and Kodak pianos. 29 This is true even though a consumer likely would not confuse the maker of Kodak cameras with the manufacturer of Kodak pianos. Dilution by Tarnishment The one area where owners of famous marks may be faring better under the TDRA is with dilution by tarnishment claims. Dilution by tarnishment generally arises when a mark is used in connection with unwholesome, illegal, or low-quality goods or services. Importantly, the TDRA resolved the ambiguity as to whether tarnishment was actionable under federal law by expressly stating that dilution is present when there is an association arising from the similarity between a mark or trade name and a famous mark that harms the reputation of the famous mark. 30 While the district court in Moseley did not find dilution by blurring on remand, it did find a likelihood of dilution based on the new definition of dilution by tarnishment. According to the court, the use of the remarkably similar Victor s Secret or Victor s Little Secret in connection with the sale of intimate lingerie along with sex toys and adult videos reduced the reputation and standing of the Victoria s Secret mark in the eyes of consumers. Other courts also have issued favorable rulings on dilution by tarnishment claims. For example, the Northern District of Georgia enjoined the defendant s use of Pepsi s marks because the defendant used those marks on goods commonly associated with the concealment of illicit narcotics. 31 In another case, the District of Utah enjoined the defendant from using the plaintiff s Chem-Dry mark, or modifications of it such as the name Chem- Who?, because the defendant s use created a negative association with the mark, and unlike cases involving permissible parodies, the defendant s use involved products and services that were similar and in competition. 32 The Eastern District of Virginia enjoined the defendant from using the plaintiff Diane Von Furstenberg Studio s marks because the defendant s counterfeit dresses were of inferior quality. Similarly, the Southern District of New York has held that the sale of gray market goods may provide the basis for a dilution by tarnishment claim because material differences between the goods sold by authorized dealers and those sold by an unauthorized dealer could diminish the reputation of the famous mark. 33 Defenses under the TDRA With the exception of parody, the defenses listed in the TDRA have not had a significant impact on the outcomes of federal dilution claims. In one of the first cases decided under the TDRA, the Eastern District of Virginia held that dog toys sold with the name Chewy Vuiton did not dilute the Louis Vuitton mark because it was a parody. 34 On appeal, the Fourth Circuit Court of Appeals noted that parody is not automatically a complete defense to a claim of dilution by blurring where the defendant uses the parody as its own designation of sources, i.e., as a trademark. 35 Nonetheless, the Fourth Circuit held that the existence of a parody may be considered as part of the circumstances for determining whether the defendant s use of a parody mark is likely to impair the distinctiveness of the famous mark. According to the Fourth Circuit, by making the famous mark an object of the parody, a successful parody might actually enhance the famous mark s distinctiveness by making it an icon. The brunt of the joke becomes yet more famous. 36 Thus, the Fourth Circuit affirmed the district court and held that the name Chewy Vuiton was not so similar as to be likely to impair the distinctiveness of the famous Louis Vuitton marks. Conclusion In sum, the TDRA has done a good job of resolving disagreements among the courts about the key elements of a federal dilution claim and providing trademark owners with greater certainty about what marks may be actionable. The TDRA has not, however, thus far resulted in expanded The Benefits of Membership Seeing Both Sides with the ABA Section of Litigation Online Audio Programming Bring the ABA Section of Litigation along on your next jog with free ipod-ready audio programs. Download programs on inadvertent document production, management, oral argument, and more, all in MP3 format. The programs are also available in streaming audio format, so it s your choice whether you listen at your desk or on the go. Start listening today at: Published in Intellectual Property Litigation, Volume 20, Number 2, Winter by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof 25

26 federal dilution protecion for trademark owners. l Jay A. Yurkiw is with Porter, Wright, Morris & Arthur LLP in Columbus, Ohio. He may be reached at jyurkiw@porterwright.com. Endnotes 1. Moseley v. V Secret Catalogue, Inc., 537 U.S. 418 (2003). 2. Moseley, 537 U.S at Id. at The lower standard of likelihood of dilution applies to claims for injunctive relief regardless of whether the defendant s mark was first used before or after October 6, Starbucks Corp. v. Wolfe s Borough Coffee, Inc., 477 F.3d 765, 766 (2d Cir. 2007). A plaintiff must still prove actual dilution, however, if it is seeking money damages and attorney fees for use that first occurred before October 6, Louis Vuitton Malletier v. Dooney & Bourke, Inc., F. Supp. 2d, 2008 WL , at *6 (S.D.N.Y. May 30, 2008). 5. Best Western International, Inc. v. John Doe, 2006 U.S. Dist. LEXIS 77942, at *7 10 (D. Ariz. Oct. 24, 2006); Fragrancenet.com, Inc. v. Fragrancex.com, Inc., 493 F. Supp. 2d 545, 547 (E.D.N.Y. 2007); Gamecaster, Inc. v. DirectTV, Inc., 2006 U.S. Dist. LEXIS 92045, at *21 (S.D. Cal. Dec. 20, 2006). See also Nike, Inc. v. Nikepal International, Inc., 2007 WL , at *7 n. 9 (E.D. Cal. Sep. 18, 2007) (indicating that use of a mark or trade name in commerce requires use in association with the sale or marketing of goods or services). 6. See 15 U.S.C. 1125(c)(6)(B) ( The ownership by a person of a valid registration under the Act of March 3, 1881, or the Act of February 20, 1905, or on the principal register under this Act shall be a complete bar to an action against that person, with respect to that mark, that... asserts any claim of actual or likely damage or harm to the distinctiveness or reputation of a mark, label, or form of advertisement. ). 7. Jada Toys, Inc. v. Mattel, Inc., 518 F.3d 628, 635 n.4 (9th Cir. 2008); Jet, Inc. v. Sewage Aeration Systems, 165 F.3d 419, 424 (6th Cir. 1999). 8. Argus Research Group, Inc. v. Argus Media, Inc., F. Supp. 2d, 2008 WL , at *17 (D. Conn. June 3, 2008) (quoting Savin Corp. v. Savin Group, 391 F.3d 439, 449 (2d Cir. 2004)) U.S.C. 1125(c)(2)(A). 10. Cosi, Inc. v. WK Holdings, LLC, 2007 WL , at *2 (D. Minn. May 1, 2007) (quoting Everest Capital Limited v. Everest Funds Management, LLC, 393 F.3d 755, 763 (8th Cir. 2005)) (internal quotation marks omitted). See also Vista India v. Raaga, LLC, 501 F. Supp. 3d 605, 623 (D.N.J. 2007) ( This is a rigorous standard, as it extends protection only to highly distinctive marks that are wellknown throughout the country. ). 11. Board of Regents v. KST Electric, Ltd., 550 F. Supp. 2d 657, 677 (W.D. Tex. 2008) (quoting Barton Beebe, A Defense of the New Federal Trademark Antidilution Law, 16 Fordham Intell. Prop. Media & Ent. L.J. 1143, 1158 (2006)). 12. adidas-america, Inc. v. Payless Shoesource, Inc., 546 Supp. 2d 1029, 1063 (D. Ore. 2008); Provide Commerce, Inc. v. Preferred Commerce, Inc., 2008 U.S. Dist. LEXIS 27697, at *11 12 (S.D. Fla. Apr. 4, 2008); Jarritos, Inc. v. Los Jarritos, 2007 U.S. Dist. LEXIS 32245, at *53 (N.D. Cal. May 2, 2007). 13. Argus Research Group, 2008 WL , at *18; Dan-Foam, LLC, 500 F. Supp. 2d at 323; Nissan Motor Co., Ltd. v. Nissan Computer Corporation, 2007 U.S. Dist. LEXIS 90487, at *5 10, (C.D. Cal. Sep. 21, 2007); Nike, 2007 WL , at *5 6; Cosi, 2007 WL , at * U.S.C. 1125(a)(2)(B). 15. See Century 21 Real Estate LLC v. Century Insurance Group, 2007 U.S. Dist. LEXIS 9720, at *44 (D. Ariz. Feb. 9, 2007); adidas-america, 546 F. Supp. 2d at Moseley, 558 F. Supp. 2d 734, (W.D. Ky. 2008); University of Kansas v. Sinks, F. Supp. 2d, 2008 WL , at *29 (D. Kan. Mar. 19, 2008); Nike, 2007 WL , at *6; Century 21 Real Estate, 2007 WL , at * Jada Toys, 518 F.3d at 634 (quoting Playboy Enters., Inc. v. Welles, 279 F.3d 796, 806 n.41 (9th Cir. 2002)) (internal quotations omitted) U.S. at Dan-Foam, LLC, 500 F. Supp. 2d at 323 ( The identity of marks creates a presumption of actual dilution. ), quoting Savin, 391 F.3d at 453; see also Audi AG v. D Amato, 469 F.3d 534, 547 (6th Cir. 2006). 20. See Nissan Motor, 2007 U.S. Dist. LEXIS 90487, at *40 42; V Secret Catalogue, 558 F. Supp. 2d at V Secret Catalogue, 558 F. Supp. 2d at Eleven Inc. v. Wechsler, 83 USPQ2d 1715, 2007 TTAB LEXIS 58, at *51 52 (TTAB 2007). 23. Starbucks, 559 F. Supp. 2d 472, 478 (S.D.N.Y. 2008) U.S.C. 1125(c)(5). 25. V Secret Catalogue, 558 F. Supp. 2d at 744 (quoting Ringling Bros. Barnum & Bailey Combined Shows, Inc. v. Utah Division of Travel Dev., 955 F. Supp. 605, 615 (E.D. Va. 1997)); Dooney & Bourke, 464 F. Supp. 2d at 504. See also World Triathlon Corporation, Inc. v. Dawn Syndicated Productions, 2007 U.S. Dist. LEXIS 72544, at *28 29 (M.D. Fla. Sep. 28, 2007) (granting summary judgment against plaintiff s dilution claim for the reasons discussed in connection with the court s determination that there was no likelihood of confusion). 26. V Secret Catalogue, 558 F. Supp. 2d at Louis Vuitton Malletier, S.A. v. Haute Diggity Dog, LLC, 507 F.3d 252, 265 (4th Cir. 2007); Starbucks, 559 F. Supp. 2d at 476; Provide Commerce, 2008 U.S. Dist. LEXIS 27697, at *9 10; Nissan Motor, 2007 U.S. Dist. LEXIS 90487, at *37 38; Century 21 Real Estate, 2007 U.S. Dist. LEXIS 9720, at * Nissan Motor, 2007 U.S. Dist. LEXIS 90487, at *37 38 (citing J. Thomas McCarthy, McCarthy on Trademarks & Unfair Competition, 24:70 (4th ed. 2006)). 29. Moseley, 537 U.S. at 431 (quoting H.R. Rep. No , at 3 (1995)) U.S.C. 1125(c)(2)(C). 31. Pepsico, Inc. v. #1 Wholesale, LLC, 2007 U.S. Dist. LEXIS 53768, at *11 (N.D. Ga. July 20, 2007). 32. Harris Research, Inc. v. Lydon, 505 F. Supp. 2d 1161, 1166 (D. Utah 2007). 33. Dan-Foam, LLC, 500 F. Supp. 2d at Dooney & Bourke, 464 F. Supp. 2d 495, 505 (E.D. Va. 2006). 35. Haute Diggity Dog, 507 F.3d at 266 (emphasis in original). 36. Id. at Published in Intellectual Property Litigation, Volume 20, Number 2, Winter by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof

27 Successful litigators understand the importance of lifelong learning. But with research, client meetings, and the everyday work of litigation practice, it can be difficult to find time for professional development. With Litigation Series CLE TeleConferences, discussing the latest issues with nationally known faculty is as easy as picking up the phone. Litigation Series CLE TeleConferences The convenient way to stay current on trends in litigation practice Join leading lawyers and judges on the second Tuesday of the month for a lively and balanced discussion of hot issues and litigation fundamentals. As a member of the Section, you qualify for special pricing on each program. Recent teleconference topics: n n n n n n Witness preparation and Rule 615 Inadvertent document production Managing technology overload Successful oral argument Sarbanes-Oxley update Class certification Get connected today at: ABA Section of Litigation l Intellectual Property Litigation Committee 27

28 In This Issue... The Brave New World of Policing Trademarks By Patrick M. Fahey and Susan S. Murphy... 1 MedImmune and the Expanded Scope of Declaratory-Judgment Jurisdiction By Gregg Wesner and Mike Keyes... 1 Trademark Parody: Taking a Bite Out of Owner s Rights? By Diane Burke... 3 Changes to the Trademark Rules of Practice: One Year Later By Bradley J. Walz... 4 Keyword Advertising Use in Commerce : A Pro-Plaintiff Trend Emerges By Peter E. Nussbaum and Nancy A. Del Pizzo... 6 The Trademark Dilution Revision Act and Federal Dilution Protection By Jay A. Yurkiw... 8 Negative Keywords and Positive Thoughts By Jack L. Hobaugh Jr American Bar Association 321 N. Clark Street Chicago, IL Nonprofit Organization U.S. Postage PAID American Bar Association Published in Intellectual Property Litigation, Volume 20, Number 2, Winter by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof 28