800-JR-Cigar v. Goto.Com

Citation: 800-JR-Cigar, Inc. v. Goto.Com, Inc., 437 F.Supp.2d 273, 81 U.S.P.Q.2d (BNA) 1939 (D.N.J. 2006).

Factual Background
Plaintiff is a prominent seller of discount-price cigars. Defendant is a “pay for priority” search engine that solicits bids from third parties for keywords or phrases that would be used as search terms. In any given search, defendant prioritizes the search results of the highest-paying third party websites.

For example, several of the terms that defendant sold to third parties were “jr cigar” and slight variations (“j-r cigar,” “j&r cigar,” etc.). When an Internet user entered these terms as search terms, the third parties who had paid for the terms would have their websites appear at the top of a list of search results. The paying websites would be listed in the order of who had paid the most, and “natural” search results appeared only at the bottom of a list of paying websites.

Trial Court Decision
Both parties filed motions for summary judgment. The court first discussed whether defendant’s use of plaintiff’s marks &mdsh; accepting “priority listing” bids for terms that included these marks and similar terms &mdash; was a commercial use under the Lanham Act.

The court held that it was, even though defendant was not a distributor or direct competitor of plaintiff, and even though defendant was the third-party purchaser of a search term and selected and used the term in conjunction with content contained on the third-party’s website.