US Developments in Internet Trademark Usage

Today, Ipper goldenrail had the opportunity (thanks to a friend at IP Society) to attend an interesting panel discussion on trademark law and the internet: Marked for Confusion: Has the Internet Changed Trademark Law?

Various Bay Area attorneys and other IP enthusiasts gathered in the early morning hours at Bingham's Silicon Valley office* for a special treat.  (And not just the fresh fruit and delicious tea.)  What they received was a well-done discussion with expert panelists Eric Goldman, of Santa Clara University Law School, and Mary Huser of eBay.  Moderator  Tom Kuhle, of Bingham McCutchen, added more experience and plenty of witty fun to the presentation.  The entire event was like a superbly done law school text book, using cases to illustrate basic elements of trademark law and the new developments within those elements.  A list of the cases used and some special points on each are listed below.

Several parts of the event deserve special praise: 1) the panel started at exactly 8:30, as promoted; 2) the panel ended at exactly 10:00, as promoted; 3) despite the local nature of the presentation, there was plenty of international focus with an emphasis to the audience of how important international law and cases are when dealing with anything on the internet.  This Ipper was impressed and thinks some fellow bloggers might have preferred this session to a certain "International" session dealing with the internet and trademarks.

Cases Used in Discussion

• 1-800 Contacts v. When U (2005): a staple of any Trademark text book, 1-800 Contacts was one of the first cases involving internet advertising and trademarks in the behind-the-scenes part of the web.  In this case, the 2nd Circuit held that using trademarks in the internal workings to bring up information about competitors was not "use in commerce," something required by the Lanham Act for trademark infringement.
  
  Be careful, the panel warned that Rescuecom may have limited 1-800 Contacts to its facts, and its facts involve outdated technology no longer in use.
  
• Rescuecom v. Google, 562 F. 3d 123 (April 3, 2009): this time the Second Circuit found that trademark words in the internal workings of a search engine did equal "use in commerce."  The reason: google sells the keywords.
  
  The court did not decide whether or not the use was infringing as this is an appellate decision overturning the lower court's dismissal of the case.
  
• Hearts on Fire v. Blue Nile 2009 WL 794482 (D. Mass. Mar. 27, 2009) (summary and analysis): another keyword "use in commerce" case.  This case is a battle between two competitors rather than the usual company x verses a search engine.  Again, the court said there was use in commerce; this time because the defendant purchased trademark words as keyword terms.  The court denied the motion for dismissal.
  
  As Eric pointed out, Blue Nile faces a massive tidal wave of litigation costs if it chooses to defend its use.  It will be interesting to see whether this case moves forward or settles.
  
• Beltronics v. Midwest Inventory Distribution (April 9, 2009): a confusion case with a first sale defense.  Midwest was selling Beltronics radar detectors below retail cost on eBay with a non-manufacturer's warranty.  The Tenth Circuit held that the possibility of creating confusion by selling legitimate products with a different warranty was enough for Beltronics to "demonstrate a substantial likelihood of success on the merits," the standard needed to grant the preliminary injunction at issue.  The court did not decide the actual matter of confusion.
  
  The panel members had strong feelings about this case, mostly negative.  Eric sees no real confusion and Mary sees one of many recent cases using trademark law in an attempt to keep prices uncompetitively high.
  
• Babyage.com v. Leachco, M.D. Pa. Jan. 12, 2009: deals with the newer "initial confusion".  This is the type of confusion that might lead a customer to the wrong website but not to buying the wrong product.  Here a search for Leachco led customers to Babyage where Leachco products were compared with Babyage products.  The court held there was a question of fact as to whether or not this created initial confusion and denied summary judgment for Babyage.  Another case that will be interesting to watch if it continues to trial.
  
• Mary Kay, Inc. v. Webber, 2009 WL 426470 (N.D. Tex. Feb. 20, 2009) (summary and analysis): another failing of the first sale defense.  The court decided that discontinued and expired beauty products were different than actual Mary Kay products and therefore the first sale doctrine did not apply to the case.  Summary judgment was denied.
  
  As an Independent Beauty Consultant myself, I am a bit confused as to why this is a trademark infringement case and not a breach of contract case.  Beauty Consultants are not allowed to sell products below the suggested retail price, as this Beauty Consultant was doing on eBay.  Makes one wonder if Mary was on to something when she again mentioned brand owners attempting to use trademark law to protect anti-competition measures.
  
• Tiffany v. eBay (pdf), 576 F. Supp.2d 463 (S.D. N.Y. 2008): a rather well-known case in the TM field.  The court in Tiffany held that eBay was not liable for the few non-legit 'Tiffany' pieces that slipped through eBay's extensive infringement-stopping process.  The case is now going up for appeal, where the key issue will be whether the correct standard of knowledge for liability is specific or general.
  
  Mary stressed that one of the most important things in this case was eBay's putting before the judge all the information about what eBay does to help prevent against infringing sales on its platform.  The court was then able to compare all the work eBay had done with Tiffany's simple statement than any seller selling more than five Tiffany items must be selling counterfeit items.  Tom recommended the courts opinion as excellent reading because it goes through eBay's process in detail.
  
  Eric pointed out that many courts have written decisions in which they praise third-party platforms for their involvement in helping to protect brand-owners and sellers.  He contrasted this with the common position from the 1990s where third-party platforms wanted as little involvement as possible with any of the other parties in order to lessen their liability.

* The event was sponsored both by Bingham McCutchen and by the High Tech Law Institute at Santa Clara Law School.