The 2nd Circuit overturned a ruling to dismiss Rescuecom v. Google April 3, sending the trademark infringement case back to a federal trial court in New York. Rescuecom, a computer-repair company, alleges Google, through its Adwords program, confuses customers by using "Rescuecom" as a keyword to trigger ads from the company's competitors.
A federal court in New York previously threw out the case after Google argued that the use of the keyword was internal and did not constitute "use in commerce." The 2nd Circuit's three-judge panel ruled that it was not internal when Google recommended Rescuecom's competitors use the trademark when selling ads.
The district court could rule against Google if it deems the use of the trademark "likely to cause confusion" about a search result's affiliation with Rescuecom, in violation of the Landham Act. The court could also find infringement if Google does not clearly mark results with a trademarked keyword as advertisements or if the competitor's sponsorship affects search rankings.
"The Adwords can place somebody higher in the rankings," says Joseph Lewis, a partner at Barnes and Thornburg specializing in trademark law. "If people think it's based on relevance instead of on [sponsorship], that's misleading."
Still, an unfavorable ruling for Google may have little effect on its business or the larger online advertising industry.
"If Google were to lose, it still would not kill their Adwords program," Lewis says. "The bottom line for Google is it may have to take more care in disclosing what's sponsored and what is not, and also disclose the extent that sponsorship affects the rankings."
