Use of mark in keyword ad held to cause initial interest confusion

In Storus Corp v Aroa Marketing Inc (Case 3:06-cv-02454, February 15 2008), a federal district court has granted summary judgment to a trademark owner which claimed that the defendant's use of its trademark in a keyword and in a sponsored search advertisement caused initial interest confusion in violation of the Lanham Act.

Storus Corp sells money clips under the trademark SMART MONEY CLIP, which is registered with the US Patent and Trademark Office (USPTO). Aroa Marketing Inc sells money clip products under a different mark, STEINHAUSEN. Aroa purchased an ad on Google's Adwords system that was keyed to the search term 'smart money clip'. Aroa's advertisement, which was delivered in response to searches on this term, included the title 'Smart Money Clip' and, under that heading, referred to Aroa's Steinhausen products.

Storus alleged that Aroa, by purchasing an advertisement that was keyed to Storus's mark and used the mark in its text, caused initial interest confusion, because searchers were diverted to Aroa's website after having conducted a search based on Storus's mark.

Aroa's first response was that the SMART MONEY CLIP mark is descriptive, as 'smart' is a generally laudatory descriptive term that is not entitled to protection in the absence of a showing of secondary meaning. The court rejected Aroa's argument, noting that it had failed to offer any evidence that the expression 'Smart Money Clip' is understood as a generally laudatory term. The court also held that Aroa had failed to explain why the term 'smart' is descriptive of the function performed by Storus's money clips. Finally, the court held that, even if the mark is descriptive in nature, the USPTO, which registered the term, should be presumed to have found that the mark had acquired secondary meaning. Thus, Aroa had the burden of proving the absence of secondary meaning. The court found that Aroa had failed to do so.

Having found Storus's mark to be protectable, the court turned to the issue of whether there was a likelihood of confusion, which is required in order to find infringement. The court focused on whether Aroa's use of the mark created initial interest confusion. Under established case law, initial interest confusion occurs when the defendant uses the plaintiff's mark in a manner calculated to capture initial consumer attention, even though no actual sale is finally completed as a result of the confusion. Even where there is no source confusion, there may still be initial interest confusion if, by using the plaintiff's mark to divert consumers looking for the plaintiff's product to the defendant's website, the defendant improperly benefits from the goodwill that the plaintiff developed in its mark.

The court explained that in determining whether a mark creates initial interest confusion, the fact finder must consider all the likelihood of confusion factors typically applied in the Ninth Circuit (see Interstellar Starship (304 F 3d)). However, the court observed that in the context of the Internet, the Ninth Circuit focuses on a "controlling troika" of three of the factors:

  • similarity of the marks;

  • relatedness of the goods or services; and

  • the parties' simultaneous use of the Internet as a marketing channel.

Where these three factors weigh against the defendant, a finding of likely confusion is proper unless the defendant shows that the remaining factors weigh strongly against a likelihood of confusion.

The court found that Aroa used a mark identical to Storus's mark with respect to the same type of product (money clips), and that both parties marketed their products over the Internet. Aroa argued that consumers viewing its advertisement would recognize that it offered Steinhausen, not Storus, products. The court found that Aroa failed to offer evidence to support such a finding; even if such evidence had been offered, it would not have avoided the likelihood of initial interest confusion. The court thus found there was no triable issue of fact with respect to the three "factors of the internet trilogy", each of which weighed in favour of Storus.

The burden thus shifted to Aroa to prove that remaining factors weighed strongly against a likelihood of confusion. The court concluded that Aroa had failed to meet this burden.

David S Fleming, Brinks Hofer Gilson & Lione, Chicago

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