• New Internet Scheme Presents Threats to Trademark Owners
  • November 17, 2009 | Author: Gretchen A.M. Eck
  • Law Firm: Hinshaw & Culbertson LLP - Chicago Office
  • Advertising dollars have long been migrating from more traditional media to the internet. While no doubt a manifestation of sound business decisions, this phenomenon has unfortunately been accompanied by new means of trademark infringement. As a result, trademark owners have found that they must be especially vigilant due to consistent and nuanced efforts to profit by using their viable brand names on the internet. Two common threats to trademark owners, cybersquatting (the registration of an internet domain name using the trademark (or a common misspelling of it) of another), and phishing (the illegal use of a similar domain name or an incorporation of a registered trademark to draw internet traffic), were discussed in the January 13, 2009, issue of the Intellectual Property Update.

    A new and increasingly common threat, the “click farm” has arisen out of an advertising technique utilizing click-on advertisements. The basic structure of this practice, often facilitated through pay per click service providers such as Google, Yahoo! and Microsoft, allows a website operator to obtain a fee from the advertiser when customers to the website click on posted advertisements. This generally legal and accepted form of advertisement becomes a matter for concern when click farmers use another’s registered trademark or a common misspelling of it in the click-on ad so as to garner more clicks and thereby increase revenue. The question is whether this use of a mark constitutes trademark infringement and, if so, whether the trademark holder’s interest is protected by traditional trademark infringement laws.

    There is strong reason to believe that the law in place today will protect against click farmers who use a mark without its holder’s permission. Trademark law protects both the consumer and the trademark holder by reducing confusion as to the source of the good. Traditionally, protection is afforded through an action for infringement. To prove infringement, a valid trademark holder must show that the infringer used the mark in commerce in connection with the sale of goods, and that that use caused a likelihood of confusion. Click farming websites, which are sites with multiple click-on ads, will likely meet the “in commerce” element for a trademark infringement action because the whole point of the click farm is to generate revenue from the advertising industry when the ads are clicked upon. Click farming sites will also meet the “likelihood of confusion” element of an infringement action. Typically confusion occurs at the point of sale. However, with the internet, and especially in the case of cybersquatting, the idea of “initial interest confusion” has come into being. Initial interest confusion is confusion that creates initial interest in the product, though that confusion is dispelled before purchase. In this instance, it can be argued that the use of the trademark in the ad caused the consumer to initially click on the ad. Initial interest confusion has succeeded in sustaining an infringement action, even when the infringer is not competing with the trademark holder in a similar product market. This is because it impermissibly capitalizes on the goodwill associated with a mark.

    Trademark holders should continue to protect the goodwill that they have created around their marks by keeping abreast of new legal issues affecting the mark, especially those created by rapidly evolving internet pratices.