Searching for New Trademark Law

Search engines have been big targets for trademark lawsuits the last few years. Why? How can a lot of other businesses be affected, and how is that kind of risk best insured?

Google, AltaVista, FindWhat, Excite and Kanoodle are a few of the search companies that have been sued in the last several years. A common theme in such cases is a trademark violation, and the disputes stem from the way search engines sell advertising.

Some search engines show only paid advertisements in their results. Other search companies provide both unpaid and paid search results, and the better business practice today is to clearly point out for the user which results are paid advertisements.

It’s called keyword search advertising, and it has become very popular. The determination of what advertisement comes up depends on the word or words used in the search criteria. If you’re a florist, you might want your company’s name and website link to come up in the paid results when someone conducts a search containing the word "flowers" and especially if it contains "buy" and "flowers."

The problem comes in when the search contains a trademarked word or words. Suppose the search is for "Body Solutions," a trademark owned by Mark Nutritionals. Suppose a different company that competes with Mark Nutritionals bought advertising rights for that combination of words from that search engine. Some unhappiness may result.

A more difficult legal question arises when the entire trademarked term isn’t used, but only parts of it. Late in 2003 Google, facing another lawsuit, turned the tables on one company. Google sued first in California, its home jurisdiction, asking a court to decide how Google can treat keywords involving American Blind & Wallpaper Factory. Apparently not caring to litigate there, American Blind then filed its own case against Google in New York.

Until enough law is developed to sort out legal rights and responsibilities, these cases are likely to continue. In addition to search companies, the lawsuits also could affect advertisers who purchase advertising rights to keywords that are trademarked or that are material parts of a trademarked term.

Many corporations also offer search capabilities on their own websites. Searches may be limited to their own web domain, or they may offer to search outside their site. Those companies could also face litigation, particularly if they sell keyword advertising.

Some companies still include the names and trademarks of competitors on their website or in the site’s metatag, which is somewhat hidden information about a website. Such companies may include a competitor’s name in their own metatag in an effort to cause search engines to show their site when a user is searching for the competitor.

While there is some chance of finding partial coverage under another cause of action in the lawsuit, coverage for trademark infringement is best suited for this kind of exposure. What about a general liability policy’s personal and advertising injury coverage? It does cover infringement of copyright or slogan, but several problems arise. The GL covers copyright or slogan "in your advertisement." That might help the advertiser but not the company providing the search capability. It may not help in the metatag scenario. And coverage for copyright or slogan falls far short of stating that trademark infringement claims are covered.

The GL policy also covers use of another’s advertising idea, again "in your advertisement," raising the same issue. Is a trademark the equivalent of "another’s advertising idea?"

Although some companies have argued for trademark coverage under a GL policy, and some have even won, a client does not want to be left trying to squeeze that coverage out of a GL carrier that does not intend to cover trademark claims. And newer-designed GL forms attempt to remove any possible argument by expressly excluding trademark claims, as well as saying they exclude certain "tactics to mislead another’s potential customers."

Newer GL forms also may exclude claims for other reasons, such as personal and advertising injury committed by an insured that is in the business of advertising or internet search, service or content providers.

Clearly an E&O policy — one that includes trademark coverage and marketing or advertising activities, since many do not — is a superior solution. Although some coverage issues can arise with an E&O policy under certain trademark circumstances, the issues generally are more limited than with a GL policy.