Use of marks to trigger sponsored links is use in commerce

In line with the growing trend among federal district courts, the US District Court for the District of Massachusetts has denied a partial motion to dismiss in Hearts on Fire Co LLC v Blue Nile Inc (Case 08cv11053-NG (D Mass), March 27 2009) on the grounds that the purchase of a trademarked keyword to trigger sponsored links constitutes a use in commerce under the Lanham Act. The district court also discussed initial interest confusion and took the opportunity to identify several non-traditional factors relevant to the likelihood of confusion analysis in a trademark infringement case, specifically in the context of keyword advertising and sponsored links.

The case stems from the purchase by online diamond and jewellery retailer Blue Nile Inc of the search engine keyword 'hearts on fire', which is a domain name and registered trademark owned by diamond wholesaler Hearts on Fire Co LLC. Blue Nile purchased the keyword to trigger sponsored advertisements linking to Blue Nile’s own website. Some of Blue Nile’s sponsored advertisements contained the phrase 'hearts on fire' in the text, while others did not. Blue Nile was not an authorized retailer of the plaintiff’s Hearts on Fire diamonds.

In response to Hearts on Fire’s trademark infringement claim, Blue Nile sought partial dismissal of the case on the grounds that its purchase of the trademarked keyword to trigger ads not containing the text 'hearts on fire' did not constitute use sufficient to support a finding of infringement. The district court rejected this argument, ruling that Blue Nile’s purchase of the 'Hearts on Fire' keyword to trigger sponsored advertisements linking to its own site did constitute use in commerce under the Lanham Act. The court acknowledged a split among courts and noted that the First Circuit had not yet ruled on this issue. The court discussed the Second Circuit’s decision in 1-800 Contacts Inc v WhenU.com Inc, which held that the purchase of a competitor’s trademark to trigger pop-up advertisements did not constitute use in commerce because the ads did not actually display the mark to the public (for further details please see "Second Circuit finds no trademark 'use' in WhenU pop-up ads"). However, the judge ultimately declined to extend 1-800 Contacts to the search engine context, and instead sided with other district courts that have relied on the broader definition of 'use' contained in the civil remedies provision of the Lanham Act. That provision penalizes use in commerce of a registered mark “in connection with the sale, offering for sale, distribution, or advertising of any goods or services”. Blue Nile’s purchase of Hearts on Fire’s trademark as a keyword to trigger sponsored links qualified as a use in commerce under this broader definition.

Just days after the Hearts on Fire ruling, the Second Circuit held in Rescuecom v Google Inc (Case 06-4881-cvm, April 3 2009) that the promotion and sale of others’ trademarks as keywords to trigger sponsored links does constitute use in commerce under the Lanham Act (for further details please see "Google dealt blow in keyword case"). Distinguishing the facts in Rescuecom from those in 1-800 Contacts, the Second Circuit relied on the fact that Google had displayed and recommended the purchase of Rescuecom’s mark to advertisers. Such decision conforms to the growing consensus among federal courts, as seen in the Hearts on Fire ruling, that keyword-triggered sponsored links meet the threshold 'use in commerce' requirement for trademark infringement.

Having ruled on the 'use in commerce' prong of the infringement analysis, the Hearts on Fire court then proceeded to discuss likelihood of confusion in the context of keyword-triggered sponsored links. Hearts on Fire argued that Blue Nile’s use of the trademarked keyword - even where the sponsored link did not display the mark in the advertisement text or where consumers were not actually confused at the point of purchase - was actionable under the 'initial interest confusion' doctrine because it diverted consumers’ attention from Hearts on Fire’s trademarked diamonds to Blue Nile’s competing products. The district court clarified that initial interest confusion can support a Lanham Act claim only where consumers are likely to be confused, not simply diverted to a competitor’s product. Based on the facts alleged in the complaint, the court found that Hearts on Fire had sufficiently alleged consumer confusion, and not simply diversion. Specifically, the plaintiff had alleged that a user who searched for 'hearts on fire' and clicked on Blue Nile’s keyword-triggered sponsored link believing that Blue Nile was an authorized retailer of Hearts on Fire diamonds would find nothing on Blue Nile’s linked site immediately alerting him or her to the mistake. Therefore, the judge held that Hearts on Fire could proceed on an initial interest confusion theory and that its trademark infringement claim was actionable.

Finally, the court supplemented the traditional First Circuit Polaroid factors used to determine likelihood of confusion by adding the following non-exhaustive factors: 

Thus, the Hearts on Fire ruling not only solidifies the consensus among federal courts as to what constitutes 'use in commerce' under the Lanham Act, but also has the potential to influence how other courts analyze the 'likelihood of confusion' prong of trademark infringement in the context of keyword-triggered sponsored links.

Loni J Sherwin, Arent Fox LLP, Washington DC