Rescuecom Corp. v. Google Inc.: A Conscious Analytical Shift

• Author: Jessica A. E. McKinney
• Position: J. D. Candidate, The University of Iowa College of Law, 2010
• Pages: 01

J. D. Candidate, The University of Iowa College of Law, 2010; B.A., The University of Iowa, 2007. My sincerest thanks to my parents, Wayne and Debra McKinney, my brother Matthew, and my sister Caroline for their love, support, and inspiration; Jeff Elkins for his insightful suggestions, dedication, and good humor; and the editors and members of Volume 95 of the Iowa Law Review for their diligent work on this Note and commitment to excellence.

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I Introduction

Technology has altered the commercial world and the way companies conduct business. For instance, PepsiCo can ensure that every time a consumer launches a Google search for its competitor Coca-Cola, the consumer simultaneously sees advertisements for Pepsi's products prominently placed on the search-results page.¹ Google's search-result-advertising business model, which facilitates this conduct, generates billions of dollars in revenue for the company,² as well as voluminous debate in courtrooms and scholarly circles about whether this conduct is benign contextual advertising or injurious trademark infringement actionable under the Lanham Act.³

The Lanham Act provides trademark owners with protection against the unauthorized use of their marks.⁴ Courts have, however, interpreted and applied the Act's infringement provisions differently, culminating in conflicting outcomes in factually similar cases.⁵ This inconsistency emanates from disagreement regarding whether the Lanham Act injects the trademark-use doctrine ("trademark use" or "use doctrine") into the infringement analysis as a threshold determination, and if it does, what conduct qualifies as a trademark use.⁶

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Prior to the spring of 2009, the U.S. Court of Appeals for the Second Circuit appeared to stand alone in applying the use doctrine strictly—requiring a threshold-use analysis entirely unconcerned with whether a defendant's conduct created a likelihood of confusion, and holding that various online conduct did not amount to the trademark use required to state a claim for infringement.⁷ Meanwhile, courts outside the Second Circuit held that similar conduct did satisfy the use required to state a trademark-infringement claim.⁸ In Rescuecom Corp. v. Google Inc., however, the Second Circuit modified its analytical approach and took a step toward harmonizing its outcomes with those in other circuits.⁹ The Rescuecom opinion is important to analyze and understand because, as scholars have explained, "the choices courts make at [these] crossroads"—whether they will recognize and apply the trademark-use doctrine, and if they do, the rigidity with which they will apply the doctrine—"will have a tremendous impact on both Internet-based commerce and on the overall evolution of trademark law."¹⁰

This Note analyzes the Second Circuit's decision in Rescuecom and argues that the court does more than factually distinguish Rescuecom from its prior decision in 1-800 Contacts, Inc. v. WhenU.Com, Inc.¹¹ In Rescuecom, the Second Circuit makes a conscious analytical shift away from the circuit's previously applied strict trademark-use doctrine and, despite imperfections, this decision represents a move in the proper direction. Ideally, RescuecomPage 285 will solidify the importance of the likelihood-of-confusion element in infringement analyses and will dissuade courts from applying the trademark-use doctrine strictly.

In the following discussion, Part II explores trademark law generally by addressing the law's purposes and goals. It then introduces the trademark-use doctrine and illuminates the doctrine's contentious nature by exploring some of the debates surrounding trademark use. Part II also establishes the foundational predicates essential to analyzing Rescuecom by introducing the case on which Rescuecom is built: 1-800 Contacts; surveying the array of analytical approaches plaguing this area of law; and then explaining the conduct challenged in Rescuecom: search-result advertising. Part III details the Second Circuit's opinion in Rescuecom, explaining the court's reasoning and ultimate decision. Part IV then analyzes Rescuecom and argues that the decision represents a conscious analytical shift away from the Second Circuit's previously applied strict trademark-use doctrine. It illuminates this shift by detailing a series of analytical and drafting choices employed by the court. Part IV also notes some of the risks and limitations possibly created by Rescuecom's analytical approach. Part V, drawing on academic discourse surrounding the doctrine, discusses why the Second Circuit's opinion is a move in the proper analytical direction. Part VI surveys some of the decision's implications, and Part VII concludes.

II THE FOUNDATION

A A Brief Background on Trademarks

Trademarks serve several functions and accrue enormous value.¹² Trademarks communicate to the public that all goods bearing the mark emanate from the same source and "are of an equal level of quality."¹³ In doing so, they minimize consumer search costs, bolster consumer confidence, and ultimately improve marketplace efficiency.¹⁴ TrademarksPage 286 also embody a company's goodwill—the '"good feeling' consumers have when they see, hear, or think of the firm and/or its trademark; in economic terms, it is the probability that, based on this good feeling, customers will come back in the future."¹⁵ Goodwill is extraordinarily valuable. For example, the value of Coca-Cola's trademark, independent of any tangible assets, is estimated to exceed $24 billion.¹⁶

Two primary interests structure trademark law: (1) consumer protection and (2) producer incentives.¹⁷ At the heart of both interests stands the underlying goal of avoiding consumer confusion—it is the common concern driving trademark law.¹⁸ Trademark law vindicates its first interest, consumer protection, by reducing consumers' search costs—the "costs of shopping and making purchasing decisions."¹⁹ Trademarks reduce search costs by providing consumers an information shortcut, ensuring they can quickly and accurately decide to purchase a product based on a past favorable experience or avoid a product based on a past unfavorable experience.²⁰ Preventing others from using marks that are confusingly similar reduces consumers' search costs by allowing consumers to rely on the mark as an indication of the quality of the goods. Guarding against confusingly similar marks, therefore, furthers the consumer-protection goal by ensuring that consumers are able to rely on trademarks as information shortcuts and that consumers looking to purchase a particular company's product in fact purchase that company's product and are not confused or deceived by the same or similar mark into buying a different company's goods.

The second rationale, producer incentives, protects the mark's owner who has invested '"energy, time and money,... from [the mark's] appropriation by pirates and cheats.'"²¹ It assures producers that they, notPage 287 their competitors, will "reap the financial, [and] reputation-related rewards associated with a desirable product."²² Guarding against confusion ensures that companies reap the financial reward of repeat customers who appreciate the quality of the goods and who, consequently, desire to seek out and purchase those goods again. If others were permitted to use confusingly similar marks, consumers may inadvertently purchase another company's goods. The company whose goods the consumer had actually sought to re-purchase would lose the financial reward of a repeat purchase that would have accrued absent the consumer's confusion. Thus, both interests—consumer protection and producer incentives—are achieved by avoiding consumer confusion.

The Lanham Act seeks to vindicate these goals by providing trademark owners with protection against others' unauthorized use of their marks—it grants owners the right to exclude.²³ If one owns a valid trademark for a distinctive logo, for example, the Lanham Act's infringement provisions grant the owner the right to exclude others from using that logo or one confusingly similar. The elements of infringement prescribed in the Lanham Act have provoked debate in recent cases involving trademark-infringement allegations in various online settings.²⁴ This debate centers on the trademark-use doctrine.

B The Trademark-Use...