American Broadcasting Companies, Inc.’s (ABC) purchase of a Japanese broadcaster’s trademarks as Google keywords in order to attract consumers to advertising for ABC’s “Wipeout” television series may violate the Lanham Act, according to a recent ruling by the US District Court for the Central District of California.  ABC’s conduct, the court held, could cause initial interest confusion among consumers as to the source of ABC’s show.  The ruling continues a recent trend among US courts suggesting that the purchase of competitors’ trademarks as Internet-search keywords, under certain circumstances, may be actionable under the Lanham Act. 

In Tokyo Broadcasting System v. American Broadcasting Companies, Inc., CV-08-06550-MAN (C.D. Cal.), Tokyo Broadcasting System (TBS) filed a complaint against ABC for copyright infringement, false designation of origin under the Lanham Act and unfair competition under California law and the common law.  TBS owns or co-owns the copyrights in the television shows “Takeshi’s Castle,” “Sasuke,” and “Kunuoichi,” all of which involve contestants competing in physical challenges including obstacle courses, similar to ABC’s show “Wipeout.”  TBS also alleged that it owned trademark rights in the names of the shows.  All of TBS’s shows originated in Japan and were licensed for broadcast in the United States. 

Google’s AdWords program allows business customers to buy so-called “keywords” that, when entered by a Google user, automatically cause the advertiser’s ad to appear as a “Sponsored Link” among the search results.  As part of its advertising campaign for “Wipeout,” ABC purchased the names of all three TBS shows as Google “keywords.”  Thus, when a Google user entered the name of one of TBS’s shows into Google’s search engine, a “Sponsored Link,” would appear, displaying the text “Wipeout on ABC” and www.abc.com. If the searcher clicked on that link, he would be directed to the ABC Web site and away from the Web sites for TBS’s shows. 

TBS alleged, for its Lanham Act claims, that by purchasing TBS’s trademarks as keywords, ABC unlawfully intercepted and diverted consumers looking for TBS’s shows and that by doing so ABC created a likelihood of consumer confusion as to the connection between ABC and TBS.  For its unfair competition claims, TBS alleged that ABC had misleadingly coupled its television advertising for “Wipeout” with advertising for the show “I Survived a Japanese Game Show,” which ran immediately after “Wipeout.”  By grouping its “Wipeout” advertisement with an ad for a Japanese game show, TBS alleged, ABC’s advertising was likely to confuse consumers into believing that “Wipeout” was somehow associated with TBS’s shows.  ABC moved to dismiss all of TBS’s claims, with the exception of its copyright infringement claim. 

With respect to TBS’s Lanham Act claim, the district court acknowledged that to prevail, TBS must show that ABC has engaged in a “use in commerce” of TBS’s marks, and that TBS’s use of those marks is likely to cause consumer confusion as to the source, sponsorship, or affiliation of ABC’s “Wipeout” show.  With little discussion, the court noted that the “decisional weight now seems to favor finding the requisite ‘use’ to exist” where a defendant buys a competitor’s trademark as a keyword, citing the Second Circuit’s Rescuecom Corp. decision from earlier this year.  (The “use in commerce” question has been hotly debated in federal courts in recent years, so the district court’s acknowledgement of the “decisional weight” on this issue in the present case is notable.) 

However, in order to prevail, TBS would still need to show a likelihood of consumer confusion.  TBS alleged that ABC’s conduct caused initial interest confusion, which, the court explained, is “customer confusion that creates initial interest in a competitor’s product.”  Although such confusion is dispelled before an actual sale occurs, initial interest confusion “impermissibly capitalizes on the goodwill associated with a mark and is therefore actionable trademark infringement.”  ABC, relying on the seminal Ninth Circuit case Brookfield Communications, Inc. v. West Coast Entertainment Co., 174 F.3d 1036 (9th Cir. 1999), asserted that there could be no initial interest confusion here as a matter of law because the Sponsored Link advertisement clearly identified ABC as the source, by displaying the text “Wipeout on ABC” and the Web site www.abc.com.  Thus, consumers would not be confused, even initially, as to source of affiliation of “Wipeout.” 

The court rejected ABC’s argument, explaining that Brookfield did not hold that initial interest confusion would be eliminated simply because a defendant clearly identifies itself as the source of the Web site at issue.  Brookfield involved a similar e-commerce issue — the unauthorized use of a competitor’s trademarks as metatags in the defendant’s Web site.  Like advertising “keywords,” metatags are not visible to an Internet user, but may cause the defendant’s Web site to be generated among the results provided by a search engine.  The Brookfield court held that the defendant’s use of the plaintiff’s mark in the metatags of the defendant’s site was likely to cause initial interest confusion because, even though a consumer would quickly realize he had not reached the plaintiff’s site, the defendant had unlawfully diverted consumers looking for the plaintiff’s site.  The portion of Brookfield relied on by ABC was the court’s assertion that initial interest confusion might be prevented where the defendant clearly identified itself. 

The Tokyo Broadcasting court, however, rejected ABC’s argument as overreaching, noting that this portion of Brookfield was merely dicta, and that even if ABC’s position were accepted, Brookfield said only that clear identification of the defendant “might” prevent initial interest confusion, not that such confusion would be avoided in all circumstances.  In this case, the court held, TBS had sufficiently pleaded that ABC’s purchase of TBS’s marks as keywords was likely to cause initial interest confusion as to the connection between “Wipeout” and TBS, and that ABC had unlawfully diverted consumers looking for TBS’s shows.  Thus, the court denied ABC’s motion to dismiss this claim.

The court also refused to dismiss TBS’s California and common law unfair competition claims “albeit barely.”  Analyzing both causes of action as false advertising claims, the court noted that the concept of false advertising embraces not only explicitly false statements, but also “false representations made by implication or innuendo.”  In this case, however, TBS’s theory of an “implicitly false statement” relied on a series of inferential leaps, namely, that a viewer who sees the juxtaposed ads for “Wipeout” and “I Survived a Japanese Game Show” and thereby notes that the shows are broadcast one after the other, will infer that:  because the latter show is a Japanese show, “Wipeout” must also be a Japanese show, and because “Wipeout” is a Japanese show, it must be affiliated with TBS and its shows.  In the court’s view, the first inference was “a weak one,” since television networks frequently promote shows that are broadcast on the same night by showing juxtaposed snippets of each show, coupled with a thematic label, e.g., “Thursday is Comedy Night.”  In the court’s view, the fact that those snippets are run together in an ad that implies a broad and general theme for the evening’s viewing does not necessarily give rise to an inference that the shows advertised together are associated in any specific fashion, such as by sharing the same writers or production company.

Nonetheless, the court held that at the pleadings stage TBS had pled sufficient allegations to avoid dismissal of its California and common law unfair competition claims.  The court reasoned that since the touchstone of any false advertising claim is the effect of the ad on consumers, TBS should be given the opportunity to present extrinsic evidence of how consumers perceived the ad.  The court therefore denied ABC’s motion to dismiss these claims as well. 

This decision follows another notable keyword-advertising decision from earliest this year—the Second Circuit’s ruling in Rescuecom Corp. v. Google, Inc., No. 06-4881-cv (2d Cir. April 3, 2009)—which held that Google’s promotion and sale of others’ trademarks as keywords constitutes use of the marks in commerce under the Lanham Act.  The Rescuecom decision helped settle what appeared to be an impending circuit split on the “use in commerce” issue, and, as noted by the Tokyo Broadcasting court, the current “decisional weight” among federal courts is that the unauthorized purchase or sale of a party’s trademarks as keywords is a “use in commerce” under the Lanham Act.  Of course, plaintiffs will still need to convince courts that such conduct is likely to cause consumer confusion.  In that regard, the Tokyo Broadcasting decision is a welcome sign for trademark owners that their Lanham Act claims could prevail—at least in the Ninth Circuit—on a theory of initial interest confusion. 

Arent Fox counsels numerous clients on the complexities associated with e-commerce and trademark and copyright use on the Internet.  If you have any questions concerning this case, or others, please contact:

Anthony V. Lupo
lupo.anthony@arentfox.com
202.857.6353

Ross Q. Panko
panko.ross@arentfox.com
202.857.6090