Rescuecom v. Google: Selling a Trademark as a Keyword Is 'Use in Commerce'

Rescuecom Corp. v. Google Inc., 562 F.3d 123 (2d Cir. 2009), resolved a question that had bedeviled the early law of internet advertising: when a search engine sells a company’s trademark as a keyword that triggers a competitor’s ad, has the search engine “used” the mark within the meaning of the Lanham Act? Writing for the panel, Judge Pierre Leval held that it had. Google’s sale of the “Rescuecom” mark through its AdWords program, and its recommendation of that mark to advertisers via its Keyword Suggestion Tool, was a “use in commerce” — a threshold requirement for trademark liability. The decision reversed a Rule 12(b)(6) dismissal, distinguished the court’s own recent precedent in 1-800 Contacts, Inc. v. WhenU.com, Inc., and cleared the way for keyword-advertising claims to be litigated on their merits.

At a glance

• Case: Rescuecom Corp. v. Google Inc., 562 F.3d 123 (2d Cir. 2009), Docket No. 06-4881-cv
• Court: United States Court of Appeals for the Second Circuit, on appeal from the Northern District of New York
• Decided: April 3, 2009
• Opinion: Judge Leval, for a panel that also included Judges Calabresi and Wesley; the opinion carries a lengthy Appendix on the meaning of “use in commerce”
• Subject matter: Whether a search engine’s sale of a trademark as a keyword advertising trigger is a “use in commerce” under the Lanham Act
• Holding: Google’s sale and recommendation of Rescuecom’s mark as a keyword is a use in commerce; dismissal under Rule 12(b)(6) reversed and remanded

The facts and the dismissal below

Rescuecom is a national computer-service franchisor whose “Rescuecom” mark is a registered trademark. Google operates AdWords, its keyword-advertising program: advertisers bid on search terms so that when a user runs a query, the advertiser’s “Sponsored Link” appears alongside or above the organic results. Google also offered a Keyword Suggestion Tool that recommended additional terms an advertiser might buy. Rescuecom alleged that Google sold the “Rescuecom” keyword to Rescuecom’s competitors and affirmatively suggested the mark to those competitors through the tool, so that a user searching for “Rescuecom” would be served rivals’ ads.

Rescuecom sued for trademark infringement, false designation of origin, and dilution under the Lanham Act. The district court dismissed under Rule 12(b)(6), reasoning that Google’s conduct was not a “use in commerce” of the mark at all — and that without a qualifying use, the confusion analysis never began. It read the Second Circuit’s decision in 1-800 Contacts, Inc. v. WhenU.com, Inc., 414 F.3d 400 (2d Cir. 2005), to foreclose liability where a defendant merely used a mark internally to trigger advertising. Because the threshold “use” element failed, the district court never reached whether Google’s practices were likely to confuse consumers.

Why keyword sales are a “use in commerce”

The Second Circuit reversed. The court explained that 1-800 Contacts did not control, because the facts were materially different. In 1-800 Contacts, the defendant WhenU did not sell keyword-triggered advertising tied to trademarks; it keyed its pop-up ads to an unpublished, internal directory of website addresses and search terms, and it never sold, displayed, or offered the plaintiff’s mark to any advertiser. The plaintiff’s trademark, as such, appeared nowhere in WhenU’s commercial transactions. That internal, invisible use — analogous, the court had said, to a store’s decision to stock a generic product next to a branded one — was not a trademark use.

Google’s conduct, by contrast, was not internal at all. Google “displays, offers, and sells Rescuecom’s mark to Google’s advertising customers when selling its advertising services,” and through the Keyword Suggestion Tool it “recommends and sells to advertisers the mark of Rescuecom.” Those were full-fledged commercial transactions in which the mark itself was the thing being sold and recommended. The court warned that accepting Google’s position would let search engines “use trademarks in ways designed to deceive and cause consumer confusion” — a result “neither within the intention nor the letter of the Lanham Act.” Because Rescuecom had adequately alleged a use in commerce, the complaint should not have been dismissed at the pleadings stage.

The Appendix and the ambiguity of “use in commerce”

What sets Rescuecom apart from an ordinary reversal is its unusual Appendix, in which Judge Leval undertakes an extended, admittedly non-binding examination of the statutory phrase “use in commerce.” The Lanham Act defines that phrase in 15 U.S.C. § 1127, and the 1988 Trademark Law Revision Act inserted the requirement that a qualifying use be a “bona fide use of a mark in the ordinary course of trade, and not made merely to reserve a right in a mark.” The Appendix argues that this definition was crafted to govern the standard for acquiring and maintaining trademark registration — to bar token uses made only to reserve rights — and was not designed to serve as a liability threshold in infringement suits under Sections 32 and 43 of the Act.

The court treated this analysis as dicta and did not rest its holding on it, but the Appendix candidly identified a genuine drafting ambiguity: reading § 1127’s registration-oriented definition into the infringement provisions could produce anomalous results, immunizing conduct that plainly trades on another’s mark. Judge Leval suggested it “would be helpful for Congress to study and clear up this ambiguity.” The Appendix has been widely cited as a thoughtful, if unofficial, roadmap to a recurring interpretive problem in Lanham Act litigation.

Open questions

Rescuecom answered only the threshold “use” question; it left the merits entirely open. Because the case settled and was withdrawn in 2010, no court in the litigation ever decided whether Google’s keyword sales actually created a likelihood of confusion — the question that ultimately determines liability. That merits inquiry has since been fought out in other circuits and courts, which have generally focused on how the sponsored results are labeled and displayed, and whether consumers are actually misled about the source of the advertised goods. The Appendix’s deeper invitation — for Congress to clarify whether the § 1127 definition belongs in infringement analysis at all — remains unaccepted, leaving the statutory ambiguity Judge Leval flagged unresolved.

Implications

• Keyword sales clear the “use” threshold. After Rescuecom, a search engine’s sale of a trademark as an ad-triggering keyword, and its recommendation of that mark to advertisers, is a use in commerce that can support a Lanham Act claim in the Second Circuit.
• “Use” is not the same as liability. Surviving the use requirement only gets a plaintiff to the real fight: likelihood of confusion. The presentation and labeling of the sponsored results usually decide that question.
• Internal versus external use matters. 1-800 Contacts still shelters purely internal, invisible uses that never display or sell the mark; Rescuecom reaches conduct where the mark is the item transacted.
• Watch the statutory definition. Litigants should be alert to the Appendix’s argument that § 1127’s “use in commerce” definition was written for registration, not infringement — a point that can reshape threshold arguments.

Frequently asked questions

What did Rescuecom v. Google actually decide? It decided a threshold question only: that Google’s sale and recommendation of a trademark as a keyword trigger for its AdWords program is a “use in commerce” under the Lanham Act. The Second Circuit reversed the dismissal and sent the case back to determine whether that use was likely to cause confusion — it did not hold that Google infringed.

How is Rescuecom different from 1-800 Contacts v. WhenU.com? In 1-800 Contacts, the software keyed pop-up ads to an unpublished, internal directory and never sold, displayed, or offered the plaintiff’s mark to anyone. In Rescuecom, Google sold the mark itself as a keyword and recommended it to advertisers through its Keyword Suggestion Tool, which the court held was an external, commercial use rather than a purely internal one.

Did Rescuecom win its infringement claim? No court ever ruled on the merits. After the Second Circuit revived the case, it settled and was withdrawn in 2010, so there was never a judicial finding on whether Google’s keyword sales caused a likelihood of confusion.

Authorities and sources

• Rescuecom Corp. v. Google Inc., 562 F.3d 123 (2d Cir. 2009), Docket No. 06-4881-cv (decided April 3, 2009). CourtListener; FindLaw full-text opinion.
• 1-800 Contacts, Inc. v. WhenU.com, Inc., 414 F.3d 400 (2d Cir. 2005), the internal-use precedent the court distinguished.
• Leval authorship, April 3, 2009 decision date, the Keyword Suggestion Tool facts, the Appendix on “use in commerce,” and the 2010 settlement corroborated by Wikipedia: Rescuecom Corp. v. Google Inc. and Proskauer New Media and Technology Law Blog.