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Courts throughout the United States have been at odds regarding the issue of whether or not a party’s purchasing of a trademarked keyword to trigger sponsored links constitutes a trademark use within the meaning of the Lanham Act. In particular, the 2nd Circuit had consistently held that the purchase of a competitor’s trademark to trigger Internet advertising did not constitute a use for the purposes of the Lanham Act. The 2nd Circuit apparently stood alone in that no cause of action for trademark infringement would be possible in such situations. However, it appears that the 2nd Circuit is now joining the findings of other circuit courts within the United States. In particular, the growing sentiment is that the purchase of trademarked keywords that trigger sponsored links on search result pages, whether it be Google, Yahoo or MSN, or any others, is in fact a use under the Lanham Act.

While courts had apparently agreed that displaying a trademark term within the text or header of a sponsored link advertisement was indeed trademark use, numerous decisions indicated that the mere purchase of a trademarked keyword was not enough to establish trademark infringement or other trademark related liability. While not every circuit court has addressed the issue, the influential 2nd Circuit appears to be joining the other circuit courts to make it more likely than not that when a trademarked keyword is purchased in order to advertise the sale of goods or services, such action qualifies as a use in commerce and falls within the purview of the Lanham Act.

Having satisfied this threshold issue, the issue will now become whether a likelihood of confusion, the test to be applied under a trademark infringement analysis, is satisfied. Practically speaking, a motion to dismiss for failure to state a claim will likely fail and timely and costly litigation in order to address all facts pertinent to the likelihood of confusion analysis will be necessary.

Purchasers of keywords should take notice of the current state of the law and be prepared to act accordingly. In addition, trademark owners should be diligent in monitoring their trademarks, identifying unauthorized uses which now appear to include the purchasing of keywords for that trademark, and acting swiftly in order to protect and retain trademark rights.