GEICO v. Google

Citation: Government Employees Insurance Co. (GEICO) v. Google, Inc., 330 F.Supp.2d 700 (E.D. Va. 2004)(full-text) (Google's motion to dismiss); 77 U.S.P.Q.2d (BNA) 1841 (E.D. Va. Aug. 8, 2005) (Google's motion for judgment).

Factual Background
GEICO, a well-known insurance company, sued Google and Overture, leading Internet search engines, for trademark infringement (including contributory and vicarious infringement), unfair competition, false representations, and dilution, as well as state claims for tortious interference and statutory civil business conspiracy.

This suit arose out of defendants’ sale of advertising linked to GEICO’s trademarks. When users entered one of the GEICO marks in defendants’ search engines, the results page displayed not only web results returned by the regular search algorithms, but also links to paid advertisers listed as “Sponsored links.”

Trial Court Proceedings
Defendants moved to dismiss all claims for failure to state a claim, and the court granted the motion in part and denied it in part. Regarding the Lanham Act claims, defendants argued that GEICO’s complaint did not allege that defendants used GEICO’s marks “in commerce” and ”in connection with the sale, offering for sale, distribution, or advertising of goods or services,” because the complaint did not allege that defendants used GEICO’s marks “in a way that identifies the user as the source of a product or indicates the endorsement of the mark owner.” Defendants also argued that because they used GEICO’s marks only in their internal computer algorithms to determine which ads to show, users never saw GEICO’s marks and thus could not be confused about the origin of the goods or services advertised in the sponsored links.

Defendants relied on two cases where district courts found that companies using third-party trademarks to trigger pop-up ads did not “use” the marks for purposes of the Lanham Act. Those cases included U-Haul v. WhenU.com, in which this same court held that the WhenU.com’s pop-up software did not “use” the plaintiff’s marks for purposes of the Lanham Act. Specifically, WhenU.com did not use the plaintiff’s marks in commerce to identify its goods or services but rather only used them for “a pure machine-linking function.” Defendants also relied on Interactive Products v. A2Z Mobile Office Solutions, in which the Sixth Circuit held that use of a trademark in the post-domain path of a URL was not a trademark use under the Lanham Act but rather a “purely technical use.”

GEICO relied on 1-800 Contacts v. WhenU.com, where the Southern District of New York reached the contrary result that WhenU.com “used” the plaintiff’s trademarks for purposes of the Lanham Act in two ways &mdash; by using the plaintiff’s mark in the advertising of competitor’s websites and by including the plaintiff’s mark in its directory of terms that triggered the pop-up ads. GEICO also relied on Playboy v. Netscape, in which the Ninth Circuit held that the sale of Playboy’s marks as keywords to trigger banner ads constituted a use in commerce and “potentially created” a likelihood of confusion.

The court here found GEICO’s authorities more persuasive and held that GEICO pleaded sufficient facts to allege “trademark use” for its Lanham Act claims. Relying on the Fourth Circuit’s decision in PETA v. Doughney, the court stated that ”when defendants sell the rights to link advertising to plaintiff’s trademarks, defendants are using the trademarks in commerce in a way that may imply permission from the trademark holder to do so.” According to the court, this case differed from the U-Haul case in that the defendant there did not market the trademarks themselves as keywords to prospective advertisers.

The court also held that GEICO’s allegations that defendant controlled the appearance of the advertisements and the use of GEICO’s trademarks were sufficient to state claims for both contributory and vicarious trademark infringement. Accordingly, finding that defendants used GEICO’s marks in commerce, the court denied the motion to dismiss the Lanham Act claims. The court cautioned, however, that its ruling did not mean that defendants’ actions violated the Lanham Act or the common law of unfair competition. Rather, the issues of fair use and likelihood of confusion were fact-specific issues that could not be decided until discovery had been completed.

The court did grant defendants’ motion to dismiss the state-law claims of tortious interference and business conspiracy. The tortious-interference claim was defective because GEICO failed to plead a specific prospective economic advantage or business expectancy. And the business-conspiracy claim failed because GEICO did not plead that defendants entered into agreements with advertisers with the intent to injure GEICO maliciously.

Subsequent Trial Court Proceedings
On December 15, 2004, following a bench trial, the court held that Google’s sale of GEICO’s trademarks to trigger ads did not constitute trademark infringement when the resulting ads did not include GEICO’s trademarks. GEICO settled with Overture prior to trial, leaving Google as the only defendant. However, the court indicated that any resulting ads that contained GEICO’s marks either in the title or in the text were likely to cause confusion. The court adjourned the trial to enable it to prepare a written opinion on its findings and to give the parties time to explore a settlement.

When the trial resumed, the court indicated that it would decide the question of whether Google is liable for contributory infringement, unfair competition, and dilution for ads that contained GEICO’s marks.

On August 8, 2005, the court issued its long-awaited opinion on Google’s judgment as a matter of law. GEICO argued that Google’s use of its trademark caused initial-interest confusion. The court noted that the “risk of losing customers who are initially confused is lessened on the Internet” as compared to a billboard using initial-interest confusion to divert drivers down the wrong road “because a customer can retrace his steps almost instantaneously online.” However, GEICO argued that its situation was unique because most consumers seek an average of fewer than two quotes before buying car insurance. As a result, GEICO argued that it lost significant business because Google’s sponsored links diverted potential customers who originally sought out GEICO to websites where they obtained quotes from other companies.

GEICO submitted consumer-survey evidence in support of its position. The survey showed a test group a results page from April 2004 showing five sponsored links next to the regular web results and asked a series of questions, the first of which was “If you wanted to purchase automobile insurance from GEICO, where on this page would you ‘click’ first?” The first four sponsored links mentioned the GEICO mark in the heading or text whereas the fifth did not. The survey also tested a control group who viewed a similar results page except that the sponsored links had been changed from ads for car-insurance quotes to ads for NIKE apparel, i.e., the sponsored links in the control group mentioned neither GEICO nor car insurance.

The court, however, found that the survey evidence was flawed in several respects. First, the control was flawed. Because the search results page used for the control group removed all references to car insurance from the sponsored links, the control did not reveal which part of the insurance-related sponsored links in the test group caused the confusion &mdash; the use of GEICO in the ads or the mere reference to insurance in the ads.

Second, because respondents were repeatedly asked questions specifically mentioning GEICO, they were “more likely to assume that ‘GEICO’ was the right answer or what the interviewer wanted to hear.” The order of the sponsored links in the test group also undercut the results. By the time respondents considered the fifth sponsored link &mdash; the only one not mentioning GEICO &mdash; they had already seen four others containing the GEICO mark, thus bringing into question the results obtained for sponsored links not containing the GEICO mark.

Third, the web pages shown to respondents differed from the actual pages users would likely see when searching for “GEICO” (e.g., the survey page contained more sponsored links than an average Google results page; the sponsored links were closer to the web listings on the survey page than an actual search results pages).

According to the court, “these differences give the Court serious doubts about the accuracy of the survey results’ reflection of actual users’ experiences with and reactions to the Sponsored links,” especially given the other weaknesses outlined above. The court held that the flawed survey was insufficient to establish likelihood of confusion based solely on Google’s use of GEICO’s trademark as a keyword, or based on sponsored links that did not include GEICO’s marks in their headings or text.

Despite the survey’s many flaws, however, the court held that the survey’s high levels of confusion was sufficient to show likelihood of confusion when sponsored links contained GEICO’s marks, especially since defendant had no evidence to introduce on this issue. The court was careful to emphasize, however, “that its ruling applies only to the specific facts of this case, which include the unique business model employed by [GEICO] and the specific design of [Google’s] advertising program and search results pages.”

The court did not address the remaining legal issues, including whether Google was liable for advertisers using GEICO’s marks in the headings and text of their sponsored links; the time frame of when such violations occurred; and the amount of damages or other relief that GEICO would be entitled to if Google was found liable. The court stayed this action to allow the parties to consider the opinion and to explore whether they could resolve the remaining issues of liability and damages.

This page uses content from Finnegan’s [[Internet] Trademark Case Summaries]. This entry is available under the Creative Commons Attribution-Share Alike License 3.0 (Unported) (CC-BY-SA).