Sunday, June 13, 2010

A Step Closer To Outlawing Google’s Assault on Brand Owners’ Rights? Court Concludes That Google Can Be Liable Under Anticybersquatting Protection Act As A Domainer’s Authorized Licensee

A recent decision in the case of Vulcan Golf, LLC et al v. Google Inc., 1:07-cv-03371 (N.D. Ill. June 9, 2010), out of the U.S. District Court for the Northern District of Illinois, Eastern Division, caught my attention yesterday. The plaintiffs in that case have sued Google (as well as other defendants, all of which have agreed to settlement terms) alleging that it engages in a scheme whereby it receives billion of dollars in ill-gotten advertising revenues by knowingly and intentionally registering, licensing and monetizing deceptive domain names at the expense of trademark owners.

The plaintiffs target Google’s AdSense for domains (“AFD”) program. Google’s AFD program allows domain name owners that have yet to develop their sites to display search engine search results and tailored advertisements, known as “sponsored links.” The AFD program is designed to replace error messages or “under construction” statements that historically would appear prior to a website’s launch. Once domain name owners become AFD partners with Google, Google populates their websites with search engine search result content and sponsored advertisements. If users click on advertisements (e.g., Sponsored Links), the advertisers are billed a few cents of which Google and its AFD partners share.

Plaintiffs contend that certain individuals and companies – most of which are Domainers – intentionally register or license domain names that are confusingly similar to trademarks owned by third parties. Plaintiffs further contend that when users land on those websites in error they are presented with search results and advertisements of competing products and services. More importantly, should users click on displayed advertisements on those web sites, they are redirected to competitors’ web sites, which may result in lost would-be customers and lost revenues to trademark owners.

In the instant case, Plaintiff Vulcan Golf contends that defendant registered the domain name wwwvulcangolf.com (without a period after “www”) for the purpose of misdirecting Vulcan’s would-be customers from a “deceptive” web page to competitors’ sites via sponsored advertisement links, while sharing advertising revenues with Google for doing so. Accordingly, the plaintiffs’ allege that Google and AFD partners profit from the misuse of the plaintiffs’ trademarks.

The pertinent law at issue in this case is the Anticybersquatting Protection Act, Lanham Act section 43(d). The relevant portion that that Act states as follows:

1(A) A person shall be liable in a civil action by the owner of a mark, including a personal name which is protected under this section, if, without regard to the goods for services of the parties, that person:

(ii) registers, traffics in, or uses a domain name that:

(I) in the case of a mark that is distinctive at the time of registration of that domain name, is identical or confusingly similar to that mark;

(II) in the case of a famous mark that is famous at the time of registration of the domain name, is identical or confusingly similar to or dilutive of that mark; or

(III) is a trademark, word, or name protected by reason of section 706 of Title 18 or section 220506 of Title 36.

(1)(D) A person shall be liable for using a domain name under subparagraph (A) only if that person is the domain name registration or that registrant’s authorized licensee.

(1)(E) As used in this paragraph, the term “traffics in” refers to transactions that include, but are not limited to, sales, purchases, loans, pledges, licenses, exchanges of currency, and any other transfer consideration or receipt in exchange for consideration.

The plaintiffs allege that the contracts between Google and its AFD partners render Google an authorized licensee for purposes of carrying out the AFD program - due to certain provisions of the AFD agreement that grant Google a license to “use the domains contained in the AFD” agreement. Although the Court found Plaintiffs’ evidence of record lacking to support that allegation, it still concluded that one of the agreements made of record may support Plaintiffs’ contention that Google would be deemed an authorized licensee as contemplated by the ACPA.

The Court also concluded that if the relevant AFD agreements included the licensee provision(s), Google may also be guilty of “trafficking” in the relevant domain names – as contemplated by the ACPA.

In sum, the Court concluded that Google could be liable under the ACPA as an authorized licensee of a domain name that infringes third party trademark rights and be liable for trafficking in domain names as contemplated by the ACPA if an AFD agreement expressly grants Google a license to use a subject domain name.

Why must the agreement expressly grant Google a license? Does that change the services carried out by Google under the AFD program? Of course not. Then why must the AFD agreement expressly state that a license is being offered!? What about an implied license? If there weren’t at least an implied license, wouldn’t Google be trespassing?

In any event, I like this Court’s decision, overall. In my opinion, Google abuses trademark owners’ rights, which must come to an end. Its sale of trademarks as keyword search terms, for example, provides competitors the ability to “free ride” on competitors’ trademarks/brands. I know that someday the courts – or it may even take an act of Congress – will finally get it right and outlaw Google’s business practices that - in my opinion – violate brand owners’ rights. When that happens – which I know it will – be sure to sell any Google stock before it hits $5 per share.

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