Google's AdWords Program Continues to Challenge Trademark Owners and The Courts

The debate over the open sale of trademarks to trigger online advertising at Google has been heating up. Google AdWords allows anyone to bid on keywords that, when searched by others, wins the owner high placement in the search results page based on a combination of factors. This means that your company can bid on the word "shoes," for example, in order to have your footwear company placed prominently among the search results.

But what if you want to use the NIKE trademark to trigger an ad for your footwear website? And what if you don't even sell NIKE shoes? In most instances Google allows any company to bid on keywords and place advertising using another company's trademark.

Courts across the United States have reached different conclusions on whether Google's use of trademarks as AdWords constitutes "trademark use in commerce," a necessary element of a successful trademark infringement lawsuit. The 9th Circuit, which includes Arizona and California, has held that the sale of trademark-protected words in the AdWords program is a "use in commerce" for purposes of federal trademark law. Courts in the 2nd Circuit, which includes New York, have held otherwise, holding that Google's actions are not a "use in commerce" under federal trademark law. The courts have largely accepted Google's contention that there is no trademark use in commerce because any use of the mark is internal only, and Google had never "used the mark" publicly by placing the trademark on any goods, containers, advertisements, or anything else visible to the public.

This split between east and west, or 2nd and 9th circuit, may be changing. Recently, the 2nd Circuit Court of Appeals for New York reversed a lower court's determination on the "use in commerce" issue. In Rescuecom v. Google, the Second Circuit found that selling trademarks as search engine advertising keywords can be a "use in commerce." "What Google is recommending and selling to its advertisers is Rescuecom's trademark," said the Court's ruling. "Google displays, offers, and sells Rescuecom's mark to Google's advertising customers when selling its advertising services."

We haven't seen the end of this issue. Other cases are pending against Google, and Google is said to be liberalizing its policy to permit use of third-party trademarks in some ads themselves. It remains to be seen whether the 2nd Circuit will distinguish a competitor's purchase of trademarks for use in keyword searches from Google's sale of trademarks.

Each case a business may face is unique and may require legal advice. Please consult an attorney about specific concerns in this area. For more information, contact Bradley P. Hartman at bhartman@jsslaw.com or 602.262.5842.

Trademark Fights Take Shape During Tough Economy

As companies fight for new business and look to keep what they already have, protection of a company's core identity is more important than ever.

Words, slogans and designs that you use to identify and distinguish your goods and services from others are eligible for federal registration with the U.S. Patent and Trademark Office (the "PTO"). A federal trademark registration gives a company presumptive ownership and the exclusive right to use the trademark in connection with the goods and services identified in the federal registration. For this reason, it is important to not only protect your brands through federal registration, but to also monitor the trademark registration activities of others.

Three recent cases show the importance of protecting your brand, and monitoring the actions of others:

1. Recently, The Laptop Company, owner of the online shopping service "BongoBing," made a preliminary filing with the PTO in opposition to Microsoft's application for federal registration of the "Bing" trademark for its new search engine. The BongoBing website provides information on products primarily in the home and garden area. The website is designed to look like a search engine, where you can search or "Bongo" for products.

Although The Laptop Company claims trademark rights to BongoBing, it has never filed an application for federal trademark registration. The company has received an extension through December 16, 2009, to formally oppose the registration of "Bing."

2. Oprah Winfrey and her production company, Harpo Productions, Inc., are trying to stake Oprah's exclusive claim to the term "Aha! Moment." Last year, the insurance company Mutual of Omaha filed an application for registration of the slogan "Official Sponsor of the Aha Moment," which became part of a national advertising campaign in February. After the Mutual of Omaha mark was approved by the PTO, it was published for opposition by third parties. When no opposition papers were filed, the PTO issued a Notice of Allowance.

On the same day the Notice of Allowance was issued, Oprah's lawyers sent a "cease and desist" letter to Mutual of Omaha, claiming that the slogan violates Oprah's rights in the "Aha Moment" and demanding that the company cease use of the mark. Not to be outdone, Mutual of Omaha filed a lawsuit in federal court days later, asking a judge to allow the company to use its slogan without interference from Oprah. The litigation is ongoing.

In the meantime, Harpo has filed its own applications for federal registration of "Aha! Moment," one of which (for magazine columns) was published for opposition on September 1, 2009.

3. When consumer electronics retailer giant Best Buy learned that a division of United Technologies known as the "Geek Patrol" was providing the same computer repair services as the Best Buy "Geek Squad," the company went straight to federal court with allegations of trademark infringement, unfair competition, and deceptive trade practices. Best Buy identified an online directory listing for the Geek Squad that stated "GEEK PATROL we can send a Squad of geeks to you" and "WE ARE THE BEST BUY." The lawsuit, filed last month, has resulted in some changes to the Geek Patrol website. Time will tell who ultimately prevails in this real life "geek drama."

Each case a business may face is unique and may require legal advice. Please consult an attorney about specific concerns in this area. For more information, contact Bradley P. Hartman at bhartman@jsslaw.com or 602.262.5842.

Client Alert: Recent Changes to Arizona Foreclosure Law Repealed

On September 4, 2009, Governor Brewer signed House Bill 2008, which repeals Senate Bill 1271 and its changes to the Arizona anti-deficiency statute. The real estate community’s efforts were successful; and the recent changes to the law sought out by the lending industry, signed by Governor Brewer on July 1, 2009, and scheduled to go into effect on September 30, 2009, have been repealed.

As a result of this repeal, property owners (including owners of second homes and investment properties) in the state of Arizona owning qualified real estate (residential property on two and one-half acres or less and utilized for either a single one-family or single two-family dwelling) will continue to receive the protections afforded by Arizona’s anti-deficiency statute.

To view the original client alert, or to recap on the details of SB 1271, view our blog post from August 4th.

If you have any questions or concerns about this change in Arizona’s foreclosure law, contact Brian N. Spector at bspector@jsslaw.com or 602.262.5977.

Tax Client Alert: Deadlines Approaching For Special NOL Carrybacks

Time is running out for many businesses wishing to take advantage of the expanded business loss carryback option included in the 2009 recovery law. Eligible calendar-year corporations have until September 15, 2009 to file the appropriate forms. Eligible individuals have until October 15, 2009 to choose this expanded carryback option.

This carryback provision offers small businesses that lost money in 2008 an excellent way to quickly obtain some much needed cash if the business was profitable in previous years. This option is only available for a limited time, so small businesses should consider it carefully and act before it is too late.

Under the American Recovery and Reinvestment Act (ARRA), enacted in February, many small businesses that had expenses exceeding their income for 2008 can choose to carry the resulting loss back for three, four or five years, instead of the usual two. This means that a business that had a net operating loss (NOL) in 2008 could carry that loss on their books as far back as tax-year 2003. Not only could this mean a special tax refund, but the refund could be larger, because the loss can be spread over as many as five tax years, rather than just two.

This option may be particularly helpful to eligible small businesses with a large loss in 2008. A small business that chooses this option can benefit by:

• Offsetting the loss against income earned in up to five prior tax years,
  
• Getting a refund of taxes paid for up to five prior years,
  
• Using all or part of the loss now, rather than waiting to claim it on future tax returns.

The option is available for an eligible small business (ESB) that has no more than an average of $15 million in gross receipts over a three-year period ending with the 2008 tax year. Unless the appropriate election is made prior to the referenced deadlines, the taxpayers will not be eligible to take advantage of the expanded carryback period.

Many taxpayers are also revisiting whether losses that arose from 2008 taxable transactions generated ordinary losses, or capital losses. Ordinary losses may be eligible for the expanded carryback treatment. Capital losses only can be carried forward to future tax year, and then only can be utilized to offset future capital gains, or, to a very limited extent, the ordinary income of the taxpayer.

Each case a business or individual may face is unique and may require legal advice. If these changes apply to you, or you have other tax related questions, please contact either Jack N. Rudel at jrudel@jsslaw.com or contact Richard C. Smith at rsmith@jsslaw.com.

Inaccurate Listing of Goods in Trademark Registration No Longer Basis For Automatic Cancellation: Federal Circuit Reverses Trademark Offices Stance

The recent Federal Circuit decision in In Re Bose Corporation (No. 2008-1448, Slip Op. August 31, 2009) has changed the prevailing standard for finding fraud on the Trademark Office where an applicant inaccurately identifies goods or services sold under the mark. The BOSE trademark registration had been canceled by the Trademark Trial and Appeal Board (TTAB) for fraud on the Trademark Office because a declaration filed in connection with renewing the registration had listed goods (audio tape recorders and players) that were no longer being made. Bose’s explanation that it thought that shipment of tape players for warranty work met the commerce requirement was rejected as unreasonable, and the TTAB applied its standard that an applicant commits fraud by making a representation that it knows or should know is false.

In reversing, the Federal Circuit held that fraud on the Trademark Office must be shown by clear and convincing evidence of a false statement of material fact made with deceptive intent: “There is no fraud if a false misrepresentation is occasioned by an honest misunderstanding or inadvertence without a willful intent to deceive.” Because direct evidence of intent to deceive is rarely available, fraud may be inferred from indirect and circumstantial evidence, but the inference must be clear and convincing, and must indicate sufficient culpability to require a finding of intent to deceive.

This ruling eliminates what had been a “quick and easy” basis for attacking a trademark registration. Under the prior line of TTAB authorities (now reversed), one slip in the identification of goods could be grounds for cancellation of the entire registration. If a listed item was not in commerce at the time of the declaration, cancellation for fraud was virtually automatic if requested by an adversary. Now the standard is much higher and there will be far fewer cancellations.

Even though the threat of Draconian consequences for an incorrect listing of goods or services in a registration has been minimized, trademark owners are still advised to review their existing registrations carefully for any inaccuracies and to correct them by amendment. In addition, scrupulous accuracy in future statements of use, whenever filed, should be the norm.

Each case a business may face is unique and may require legal advice. Please consult an attorney about specific concerns in this area. For more information, contact Joseph W. Mott at jmott@jsslaw.com or 602.262.5866.