Author Archives: Christina Frangiosa

Recent E.D. Pa. Case: No “Likelihood of Confusion” from Competitor’s Marks in AdWords

by Christina Frangiosa

In CollegeSource, Inc. v. AcademyOne, Inc., Civ. A. No. 2:10-cv-03542 (MAM), slip op. (E.D. Pa. Oct. 25, 2012), the U.S. District Court for the Eastern District of Pennsylvania analyzed a claim of trademark infringement based on the purchase and use of a competitor’s trademarks in AdWords to increase search engine results. (The case dealt with other issues such as contract formation under Pennsylvania law, trademark cancellation due to fraud on the PTO, false advertising, violation of the Computer Fraud and Abuse Act, and others. This blog post will focus solely on the AdWords issue.)
 
The court ultimately concluded that in an environment of increasingly sophisticated Internet advertising, a claim of trademark infringement based on the use of a competitor’s marks in sponsored links fails, when those marks do not appear in the actual advertisement and when the advertisements are set off in a separate section of the search results (under the heading “Sponsored Links,” set off with a different color than the rest of the search engine results). In these cases, modern Internet users are unlikely to be confused by this type of use.

In order to prove trademark infringement and unfair competition under the Lanham Act, plaintiffs must demonstrate that they own the mark in question, that the mark is valid and legally protectable, and that the defendant’s use of its own mark is likely to create confusion. Id. at 39 (citing Checkpoint Systems, Inc. v. Check Point Software Tech., Inc., 269 F.3d 270, 279 (3d Cir. 2001)). In the CollegeSource case, the defendant did not dispute the ownership of the mark or its validity, but instead challenged whether its mark was likely to create confusion.

The Lapp Factors

In the Third Circuit, the likelihood of confusion analysis is governed by Interpace Corp. v. Lapp, Inc., 721 F.2d 460, 463 (3d Cir. 1983) – the so-called “Lapp Factors.” These factors are: 

(1) the degree of similarity between the owner’s mark and the alleged infringing mark;
(2) the strength of the owner’s mark;
(3) the price of the goods and other factors indicative of the care and attention expected of consumers when making a purchase;
(4) the length of time the defendant has used the mark without evidence of actual confusion arising;
(5) the intent of the defendant in adopting the mark;
(6) the evidence of actual confusion;
(7) whether the goods, though not competing, are marketed through the same channels of trade and advertised through the same media;
(8) the extent to which the targets of the parties’ sales efforts are the same;
(9) the relationship of the goods in the minds of consumers because of the similarity of function; and
(10) other facts suggesting that the consuming public might expect the prior owner to manufacture a product in the defendant’s market, or that he is likely to expand into that market.
 

Id. at 463. Originally adapted from Polaroid Corp. v. Polarad Electronics Corp., 287 F.2d 492, 495 (2d Cir. 1961), these factors were applied in the Lapp case for the very limited purpose of considering likelihood of confusion where the products did not directly compete. Id. at 462-63; see also A&H Sportswear, Inc. v. Victoria’s Secret Stores, Inc., 237 F.3d 198, 206 (3d Cir. 2000) (“In Interpace Corp. v. Lapp, Inc., 721 F.2d 460, 463 (3d Cir. 1983), this Court established a ten-factor test (the ‘Lapp’ test) to determine the likelihood of confusion for direct confusion claims between goods that do not directly compete in the same market, but we have never decided what factors should be considered in the case of directly competing goods.”). 

In a later opinion, the Third Circuit applied these factors more broadly, including in cases where the goods competed in the same channels of trade. A&H Sportswear, 237 F.3d at 207 (“Though a court need not look beyond the marks when goods are directly competing and the marks virtually identical, we conclude that the factors we have developed in the noncompeting goods context are helpful tools and should be used to aid in the determination of the likelihood of confusion in other cases.”). The Third Circuit made clear, however, that the “ten-factor Lapp test [was developed] only as a guide” and the Lanham Act does not require that each of the ten factors must be evaluated in every case. Id.

Application of the Lapp Factors to Use of Competitor’s Trademarks as AdWords
   
In the CollegeSource case, the court relied on a Ninth Circuit opinion that identified the “key” factors to consider in cases where the goods directly compete and where a competitor’s trademarks were purchased as AdWords to generate search engine hits. Id. at 40 (discussing Network Automation, Inc. v. Advanced Sys. Concepts, Inc., 638 F.3d 1137, 1154 (9th Cir. 2011). Specifically, the Network Automation case held that in the context of AdWords cases, four of these factors were most relevant: “[1] strength of the mark, [2] evidence of actual confusion, [3] types of goods and degrees of care likely to be exercised by the typical purchaser, and [4] the labeling and appearance of the advertisements.” Network Automation, 638 F.3d at 1154.

The CollegeSource court agreed with this conclusion, and focused primarily on these four factors in determining whether the defendant’s use of the mark was likely to confuse. CollegeSource, No. 2:10-cv-03542, slip op. at 41. With respect to the first two factors, the CollegeSource court concluded: 1) the plaintiff’s mark (COLLEGESOURCE) was suggestive and commercially strong; and 2) plaintiff failed to provide significant evidence of actual confusion. Id. at 40-43. The court addressed the last two factors in reverse order, but these two provided the crux of the court’s analysis.

With respect to factor 4 (labeling and appearance of the advertisements), the court focused on the placement of ads in search engine results, noting that these ads are generally partitioned under a section of “sponsored links” and appeared separately from regular search results, sometimes in shaded boxes. Id. at 43-44. The plaintiff’s mark did not appear in the language of the advertisement. In this context, the court concluded that the offset of sponsored ads decreased the likelihood of confusion. Id.
With respect to factor 3 (types of goods and degrees of care exercised by typical purchasers), the court considered “whether an ordinary consumer seeking college transfer information via the Internet is expected to exercise diligence in his research.” Id. at 44-45. The court concluded that Internet users are exercising increasing care as the “novelty of the Internet evaporates and online commerce becomes commonplace.” Id. at 45. “Modern Internet users ‘are accustomed to such exploration by trial and error.'” Id. This increasing level of experience with search sites (i.e., the increasing sophistication of the targeted consumer) decreases the likelihood of confusion with respect to Internet advertisements like these. Id.

The Court continued to evaluate the remaining Lapp factors, finding that there was no evidence of an intent to confuse, that the Internet is not an obscure marketing channel, and that AdWords are an increasingly prolific form of advertising. Id. at 46-49. The Court ultimately concluded that plaintiff failed to introduce sufficient evidence to demonstrate a likelihood of confusion; the Court then granted defendant’s motion for summary judgment on the trademark infringement claim.

Google and Publishers Reach Settlement Over Google Books Lawsuit

by Christina Frangiosa

On October 4, 2012, Google and the Association of American Publishers (AAP) announced that the publisher plaintiffs and Google have reached a settlement of their dispute over Google’s mass copying and uploading of books (whether in the public domain or still protected by copyright) to which it had obtained access through agreements with several large libraries. These digitized books were then made available for searching and sometimes downloading (in whole or in part) through Google’s Library project. (The docket for the publisher’s lawsuit was The McGraw-Hill Companies, Inc. v. Google Inc., 05 Civ. 8881 (JES) (SDNY).)
 
(Details about the 2005 lawsuit and a proposed settlement that was rejected by the Court can be found in earlier posts.)

According to AAP, Google and the publishers agreed that “U.S. publishers can choose to make available or choose to remove their books and journals digitized by Google for its Library Project. Those deciding not to remove their works will have the option to receive a digital copy for their use.” Andi Sporkin, Association of American Publishers, Press Release (Oct. 4, 2012). Notwithstanding this agreement, U.S. publishers can continue to “make individual agreements with Google for use of their other digitally-scanned works.” Id.

The AFP reports that “publishers will have the option to allow Google to display portions or the entire book content, or to sell the work through Google Play.” Rob Lever, “Google, publishers end long-running copyright case,” AFP (Oct. 4, 2012). Users of the service, then, have the ability to browse up to 20% of books, and then purchase a digital copy through Google Play. Id.; Sorkin, Press Release. 

The remaining terms of the settlement remain confidential, but it appears that the ongoing litigation between Google and the Authors’s Guild (Authors Guild et al. v. Google Inc., No. 05-08136 (SDNY) (trial court); No. 12-2402 (2d Cir.) (on appeal)) is unaffected by this settlement. “‘The publishers’ private settlement, whatever its terms, does not resolve the authors’ copyright infringement claims against Google,’ the Authors Guild said in a statement Thursday. ‘Google continues to profit from its use of millions of copyright-protected books without regard to authors’ rights, and our class-action lawsuit on behalf of U.S. authors continues.'” Michael Liedtke (AP Technology Writer), “Google, publishers shelve book-scanning suit,” AP (Oct. 4, 2012). That lawsuit remains suspended, pending appeal by Google of the Court’s grant of class certification for the authors whose claims were raised in the complaint. Grant McCool, “Authors Guild v. Google Lawsuit In U.S. Suspended Pending Appeal,” Reuters (Sept. 17, 2012).

U.S. PTO Seeks Comments on Draft Examination Guide on Webpage Specimens

by Christina Frangiosa

The U.S. Patent & Trademark Office has released a draft version of its examination guide on webpage specimens, and seeks user comments before releasing it in final form. The U.S. PTO reports that comments will be accepted through October 31, 2012, using its online collaboration tool, IdeaScale®.
 
You can also leave comments on the following other sections: The Format of the TMEP; Chapter 500 Change of Ownership; Chapter 900 Use in Commerce; Chapter 1900 Madrid Protocol and the subject of this particular notice: Webpage Specimens as Displays Associated With the Goods (including subsections: Webpage Specimens as Displays Associated With the Goods; Webpage as a Display Associated with the Goods; Picture or Description of the Goods; Show the Mark in Association With the Goods; Ordering Information; Grounds for Refusal; and Appendix: Examples of Webpage Display Specimens).

The U.S. PTO maintains a list of its recent requests for user comments, which can be found here: http://www.uspto.gov/trademarks/notices/user_input.jsp.

Copyright Office Seeks Additional Comments on Pursuing Small Copyright Claims

by Christina Frangiosa

In a Federal Register notice issued on August 23, 2012, the U.S. Copyright Office requested additional comments about pursuing small copyright claims. Specifically, the Copyright Office is conducting a study to “assess whether and, if so, how the current legal system hinders or prevents copyright owners from pursuing claims that have a relatively small economic value and will discuss, with appropriate recommendations, potential changes in administrative, regulatory, and statutory authority.” Remedies for Small Copyright Claims: Additional Comments, 77 Fed. Reg. 51068 (Aug. 23, 2012) (the “Notice“). The Copyright Office also plans to hold two public meetings, one in New York on November 15 and the next in Los Angeles on November 16, after the comment period ends. Id.

The Copyright Office conducted a prior study (in 2011 – see comments received) and jointly participated with the USPTO in a roundtable discussion at George Washington University (in May 2012 – blog description). This time, however, the Copyright Office “seeks further input concerning how a copyright small claims system might be structured and function.” Id. at 51069. The study seeks information about the following topics:

  1. Nature of tribunal/process
  2. Voluntary versus mandatory participation
  3. Arbitration
  4. Mediation
  5. Settlement
  6. Location of tribunal(s)
  7. Qualifications and selection of adjudicators
  8. Eligible works
  9. Permissible claims
  10. Permissible claim amount
  11. Permissible defenses and counterclaims
  12. Registration (necessity of, prior to filing suit)
  13. Filing fee
  14. Initiation of proceeding
  15. Representation
  16. Conduct of proceedings
  17. Discovery, motion practice and evidence
  18. Damages
  19. Equitable relief
  20. Attorneys’ fees and costs
  21. Record of proceedings
  22. Effect of adjudication
  23. Enforceability of judgment
  24. Review/appeals
  25. Group claims
  26. Frivolous claims
  27. Constitutional issues (e.g., separation of powers, 7th Amendment right to trial by jury, personal jurisdiction, and due process)
  28. State court alternative
  29. Empirical data
  30. Funding considerations
  31. Evaluation of small claims systems
  32. Other issues
For more information and details about the categories into which the Copyright Office is investigating, please visit the official notice. The Copyright Office’s web site for the official comment form is here: http://www.copyright.gov/docs/smallclaims.

Congressional Joint Economic Committee Published Report on Impacts of IP Theft

by Christina Frangiosa

On August 6, 2012, the Joint Economic Committee issued its report on “The Impact of Intellectual Property Theft on the Economy.” (Press release; report). In summary, the report explains:

“IP infringement harms companies through lost revenue, the costs of IP protection, damage to brand, and decreased incentives to innovate because of potential theft.[FN3] Consumers are harmed when they purchase counterfeit goods of lower quality, some of which, such as counterfeit medicines, may pose health or safety risks. Governments lose tax revenue and bear enforcement costs. Decreased incentives to innovate resulting from IP infringement reduce economic growth, weaken the nation’s competitiveness, and decrease job creation.” (Report at 1)

Each of these items of harm are detailed in the report, which cites statistics about seizures by various government agencies, both U.S. and abroad. In addition, it singles out China as a major source of “pirated goods seized at the U.S. border.” (Id.)

The report also posits that small businesses are less likely to be able to combat such infringement, or actively enforce their IP rights, because they lack the resources to pursue enforcement actions.  The report explains that this conclusion derives directly from statistics about filing habits in judicial fora:  “Data on investigations initiated and completed by the U.S. ITC [International Trade Commission] show that while small businesses represent 79.0 percent of all businesses in the U.S., they comprise only 10.5% of firms filing complaints regarding intellectual property infringement.” (Id. at 3) (footnote omitted). Indeed, 78.9% of the firms that seek to enforce their rights through this mechanism are apparently large or public firms. (Id.)

Finally, the report concludes that the Intellectual Property Enforcement Coordinator (IPEC) is preparing a new Joint Strategic Plan on Intellectual Property Enforcement, which presents an opportunity to improve protections for U.S. IP rights holders. (The IPEC’s June 2012 Report on the Joint Strategic Plan (2 Year Anniversary Report) is the most current version available online.)