Search engines bite back but online ads action continues

In Novak v Overture Services Inc, the US District Court for the Eastern District of New York has issued a ruling on various motions to dismiss the plaintiff's multi-count complaint against the defendants, who include three internet search engine companies. Following the ruling, all of the defendants remain parties to the case but certain counts are no longer before the court.

The complaint, brought by an individual named Robert Novak who owns the mark PETS WAREHOUSE and trades under the name PetsWarehouse.com, relates to an internet practice called keying. This is where a search engine company allows an advertiser to target internet users by tying the placement of advertisements on web pages to specific pre-identified search terms or keywords.

Novak sued the search engine companies Google, Overture Services Inc and Innovative Marketing Solutions Inc, which operates the Kanoodle search site, following their sale of the keywords 'pets' and 'warehouse' to John Holdefehr and Biochemics Inc, both of whom were also named as defendants. The complaint stated that as a result of this sale, an internet user inputting the keywords in a search query would see Holdefehr's and Biochemics' websites at the top of the search results page instead of Novak's website. Novak alleged that all of the defendants had thereby infringed his rights in the PETS WAREHOUSE mark. The complaint also included contract claims against Google. In response, a number of the defendants filed motions to dismiss.

Google successfully moved to dismiss the first count of the complaint, which consisted of breach of contract and tortious interference with contractual relations and prospective business relations. Novak alleged that Google refused to remove material from online discussion groups that Novak found objectionable. According to Novak, the contract he signed with Google required Google to "take down" such material. The contract included a forum selection clause that required that all disputes arising from the contract be brought in the US District Court for the Northern District of California. Thus, the US District Court for the Eastern District of New York ruled in Google's favour and dismissed the first count of the complaint for lack of venue.

Biochemics and Holdefehr moved to dismiss the complaint for lack of personal jurisdiction. The court examined their contacts with the forum state (New York) and exercised jurisdiction over both of them. It noted that Biochemics' website provided the required contacts with the state of New York. The site included a product catalogue and users could place orders on the site. Revenue from internet sales was more than $6,000 per year and revenue from New York alone reached over $6,000 for a two-year period. Similarly, the court found Holdefehr's contacts with the forum state to be sufficient to meet the requirements of personal jurisdiction since he had purchased the keywords from Kanoodle - a New York corporation.

Last, Biochemics moved to dismiss the trademark claims on the grounds that PETS WAREHOUSE is generic. In support of its motion, Biochemics submitted a domain name administrative panel decision from the World Intellectual Property Organization (WIPO) involving the domain name 'petwarehouse.com'. The parties in that arbitration were different from the parties in this litigation. In that decision, the panel found the term 'pet warehouse' to be generic. The court was not persuaded by this evidence for a number of reasons, most notably because the plaintiff here had obtained a trademark registration unlike the complainant in the WIPO proceeding. The court therefore denied the motion to dismiss the trademark counts.

The case will now proceed against all the defendants, with Google facing two actions against its keying policy.

Leigh Ann Lindquist, Sughrue Mion PLLC, Washington DC

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