CNG Financial Corporation v. Google Inc

Filing 27

MOTION for Leave to File Additional Authority in Support of its Response to Google's Motion for Judgment on the Pleadings by Plaintiff CNG Financial Corporation, Counter Defendant CNG Financial Corporation. (Attachments: # 1 Exhibit 800-JR Cigar, Inc. v. GoTo.com, Inc.)(Hunter, Barry)

CNG Financial Corporation v. Google Inc

Doc. 27 Att. 1

Case 1:06-cv-00040-SSB-TSB

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FOCUS - 1 of
800-JR CIGAR, INC., Plaintiff, v. GOTO. COM, INC. et aI., Defendants.

CIVIL ACTION NO. 00-3179

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY
2006 U.S.
July 13,
Disl. LEXlS

48279

July 17 , 2006,

2006, Decided Filed

ter law. JR Cigar
COUNSEL: (*1) For 800-JR CIGAR, INC. , Plaintiff: JAN ALAN BRODY, CARELLA, BYRNE, BAIN GILFILLAN , CECCHI, STEW ART
ROSELAND, NJ.

judgment on these claims.

BACKGROUND
JR Cigar is a prominent seller of cigars at discount prices. JR Cigar has marketed its products for more than

For GOTO.COM, INC. , Defendant: PETER JOSEPH PIZZI , CONNELL FOLEY, LLP, ROSELAND, NJ.
JUDGES: John C. Lifland, U. DJ.

thirty years under the service mark "JR Cigars

" more

recently under other marks featuring the formatives "JR"

OPINIONBY: John C. Lifland

or "JR Cigar " and, even more recently, under the trade name "jrcigars. com " which is the address for JR' s Internet website that was launched in April 1999. JR Cigar is

the ultimate owner of six federal trademarks that utilize

OPINION:

the formative " JR" or "JR

Cigar. "

n2

OPINION & ORDER
LIFLAND , District Judge

n2 At briefing, JR Cigar also had five pending applications on other
above-mentioned formatives. The Court is

Before the Court is the Motion of Plaintiff 800Cigar , Inc. (" JR" or "JR Cigar ) pursuant to Federal
Rule of Civil Procedure

aware of the outcome of those applications.
(*3)

56 for summary judgment as to liability on Counts I (trademark infringement, 15 USe. JJ 14), II (unfair competition, 15 1125(a)), USe. III (dilution , 15 1125(c)), USe. V (common law trademark infringement), VI (New Jersey trademark infringement and dilution NJ.SA. 56:3-13. 16 and NJ.SA. 56:3- 13.20), and VIII (New Jersey statutory unfair competition NJ.SA. 56:4- et seq. against Defendant GoTo. com, Inc. (" GoTo ), now known as Overture Services , Inc. , and the cross-motion of Defendant GoTo for

GoTo is a pay-for-priority Internet search engine formed in 1997. Its service reaches of all Internet users. A search engine allows users to find
information by entering a search term and receiving a list

summary judgment in its favor serted against it. n1 For the Plaintiffs motion will be denied and Defendant' s
motion will be granted in part and denied in part.

search engines solicit bids from advertisers for key words or phrases to be used as search terms, giving priority results on searches for those terms to the highest-paying advertiser. Thus, each adverof results. Pay-for-priority

cross-

tiser s rank in the search amount of its bid on the search term entered by the user. The list of paid results on GoTo s web site discloses the amount of each advertiser s bid. Advertisers pay GoTo

only when a user clicks on their listings in the
nl GoTo

property claims

intellectual deceptive

results. After all paying advertisers ' sites are listed as

search results , GoTo lists unpaid or " natural" search list-

telemarketing and consumer fraud--fail as a mat-

ings ,

i.

, those whose sites are most logically relevant to

Dockets.Justia.com

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2006 U. S. Dist. LEXIS 48279

the search criteria. GoTo
user clicks on unpaid listings.

cigar "

(*6) or related search terms.

its advertisers represent to it that their

Search terms are displayed on GoTo result
only if a user enters those particular search terms. And if the search terms are displayed in web site descriptions in the search result listings , it is (*4) owner of the listed web site included the term in its description for the listing.

search listings will not violate third party. Moreover , GoTo claims that it exercises no

control over the content of the web
among paid and unpaid listings.
At one time GOTO S "Editorial Manuals " and " Relevancy Guidelines " prohibited bidding on trademarks and on the names of advertisers ' competitors , stating that:

It is arguable that GoTo does not use "jr any other JR Cigar trademark to

cigar" or

its own services. However , in addition to accepting bids
for search terms and earning revenue therefrom , GoTo

. For line listings ,

GoTo does not permit

assists prospective and current
search terms by providing an automated " Search

the mention of
bidding for search terms that are

Term

Suggestion Tool." This tool enables an advertiser to assess the usefulness of a search term. When an advertiser enters a search term for which it is considering a bid , the Search Term Suggestion Tool applies various algorithms and automatically generates a list showing how many times that term and related terms were the prior month. GoTo applies its standard view process to search terms identified through the use of the Search Term Suggestion Tool.
Between April 1999 and June 2001 , GoTo earned

marked names;

. We do not accept search terms based on competitors , unless our advertisers ' websites present actual , significant information about their competitors ' products by comparing
the products of our advertisers '

them to their own.

revenue of about $ 345 from paid listings for ' ~r cigar

and

stemmed from the term " " and clicks to web sites entirely unrelated to cigars, such as J&R Music. Another

These prohibitions were removed in 1999 and 2000 , reportedly because it was impractical for editors to determine who owned trademarks and tiser s use was infringing.
On June 28, 2000, JR Cigar filed suit against GoTo
and the non-search engine

portion of this revenue resulted (*5) from
web site maintained by JR Cigar s attorneys.
JR Cigar itself did not pay GoTo for a priority list-

ing, but some of its
defendants) did. According to GoTo , some of the bids for jr cigar" search terms were accepted because the advertisers ' web sites contained content that was relevant to JR Cigar or its products under GoTo s relevancy guidelines.
In other cases ,

sponded to the receipt of the Complaint and demand letter by reviewing the paid (*7) listings for "jr cigar" and related search terms , and removed a number of listings
that were not relevant. The two remaining paid listings

include advertising by a JR Cigar attorney and by a site providing financial and other information about JR Cigar.
n3 The reached settlements with JR.
In response to JR Cigar s complaint that its web site
was not appearing among unpaid listings , GoTo appar-

GoTo accepted bids because its editors
cigar

believed that the term "jr junior" or small cigar.

" was a

In June 2000, JR became aware that GoTo was selling to the non-search engine defendants the right to use the term "JR Cigar" and slight variations of that term including "J R Cigar J&R Cigar, R Cigar JRCigars. com " and " 800 JR Cigar" (collectively the JR search terms ), as Internet keywords or other devices to generate advertising revenues for GoTo. According to JR Cigar, that enabled JR Cigar s competitors to "pass themselves off as JR" and " divert internet shoppers and
purchasers from JR's

ently investigated and learned that the company that supplied unpaid results to GoTo and other had applied an adult content rating to JR Cigar s site that blocked the site from GoTo s unpaid listings unless users

set the adult filter to view all

, the

website to their own

websites. "

rating was changed. As a result , JR Cigar s site appears at or near the top of GoTo s unpaid listings.

At no time did GoTo enter into any agreement with
any advertiser encouraging the advertiser to bid on "

DISCUSSION

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2006 U. S.

I. Summary Judgment Standard

1114(1) and

1125(a),

involving the unauthorized use of

Summary judgment is
genuine issue as to any

JR marks in
likely to create confusion. JR Cigar further GoTo has diluted JR Cigar s " famous mark
JR Cigar to permanent
" entitling

party is entitled to a judgment as a matter (*8)
Fed. R. Civ. P. n.2 (3d Cir. 56; Serbin v. Bora Corp. 96 F.3d , 69 1996). In evaluating a summary judgment motion , a court must "draw all reasonable inferences in Armour v.

dilution statute. n4 JR Cigar also

exists for common law and New Jersey statutory unfair
competition , infringement, and dilution claims because virtually the same proof is required as for liability under
federal law.

favor of the

County of

Beaver, PA 271 F.3d 417 (3d Cir. 2001) (quoting Reeves v. Sanderson Plumbing Products, Inc. , 530 u.s. 133 150, 120 S. Ct. 2097 147 L. Ed. 2d 105 (2000)). motion for summary judgment requires the non-moving party to set forth specific facts genuine issue for trial. Anderson v. Liberty Lobby, Inc. 477 Us. 242 250, 106 S. Ct. 2505 91 L. Ed. 2d 202 (1986). The initial burden of showing that no issue of material fact exists rests initially on the moving party. Celotex Corp. v. Catrett 477 Us. 317, 323 106 2548, 91 L. Ed. 2d 265 (1986); Ct. Huang v. BP Amoco Corp. 271 F.3d 560, 564 (3rd Cir. 2001). Once the mov-

N4 JR Cigar acknowledges

damages must await determination by the trier of
fact.

GoTo responds that JR Cigar
power " well beyond the bounds afforded by

broad veto

protection. The argument goes that the (*11)
trademark on GoTo s web site is consistent with applicable law allowing for comparative gripe sites " and other cases of fair use. GoTo further

ing party has
summary judgment, the burden shifts to the non-moving

party to " set forth specific facts showing that there is a genuine issue for trial." Fed. R. Civ. P. 56(e); Anderson 477 Us. at 242.
The mere existence of some alleged factual dispute
between (*9) the
properly supported motion for summary judgment. sushita Elec. Indus. Co. v. Ct.

that its paid
wherein courts have allowed use of another s trademark
in domain names , as key words for banner

Mat475

ments, and in metatags (hidden codes whether a web site appears in search engine results). In summary, GoTo maintains that it has not made trade-

Zenith Radio Corp.
L. Ed. 2d

Us.

mark use of any JR Cigar search
vices and that there is no contributory infringement be-

574,

586
v.

106

S.

1348, 89

538 (1986);

Hasbro, Inc. 934 F.2d 497 500 (3d Cir. Quiroga 1991) (noting that a motion for summary judgment is not
defeated by mere allegations,
general denials , or other

cause it did not intentionally induce infringement or continue to offer its service to an advertiser that it knew to
be infringing.
III.

vague statements ). Rather, only facts that might affect the outcome of the lawsuit under the governing law will preclude the entry of judgment. Anderson 477 Us. at 247-48. If the evidence
such that a reasonable fact- finder could return dict for the nonmoving party, " summary
is "

Secondary Liability for Trademark Infringement
Before turning to the analysis of the parties ' arguit is

ments ,

a ver-

indirect liability which appear relevant to GoTo s
duct in this case.

con-

should not be
Westminster Bank of New Jersey,

Id. at

248; 98

Lawrence F.3d , 65

v.

Nat'

(3d Cir.

Certain theories of secondary liability are recognized
under the Lanham Act. graph Co. v. Winback American Telephone

1996).

TeleInc.

Conserve Program,

II. Parties' Arguments
JR Cigar seeks monetary and injunctive relief, arguing that GoTo (1) profited from the unauthorized sale of the JR marks as search terms to its the JR marks to attract search customers to its site; and (3) created and implemented a scheme to divert Internet
users seeking to find "jr cigar " (*10) to JR Cigar

F.3d

1421, 1432-433

(3d

1994)

AT&T"). (*12) The Supreme Court theory of secondary liability for trademark infringement that comes very close to aiding and abetting. Id. at 1432 (citing William R. Warner Co. v. Eli Lilly Co. 265 Us. 526, 44 S. Ct. 615, 68 L. Ed. 1161, 1925 Dec.
Comm r
Pat. 420

(1924)). The theory of

competitors and rivals. JR Cigar argues that such conduct constitutes trademark infringement , unfair competition , and false designation of origin in violation of Sec-

infringement, as it came to be known , requires proof of either an intent to induce another to infringe a trademark
or continued supply of goods or

tions 32(1) and 43(a) of the

, 15

us.e.

the supplier (contributory infringer) knows or has reason to know is engaging in trademark Inwood

,"

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Labs. , Inc. v. Ct. 2182, 72
1432.

Ives Labs. ,
L. Ed. 2d 606

Inc.

456 (1982);

Us.

844, 854
AT&T, 42

102

fringement,

that argument

F.3d at Thus, the actions undertaken by the supplier of

puted fact that cannot be resolved by a
motion to dismiss. The claim that Overture monitors and controls the third- party

services (contributory infringer) enable an infringer to confuse or deceive the ultimate consumer. See 4 J. Tho-

mas
AND UNFAIR COMPETITION, 9 25:18 , at 25-43. Although the doctrine was applied to drug manufacturers in the Inwood Labs case courts have expanded it beyond that particular origin. AT&T, 42 F.3d at 1432-433 (noting application of the theory to ' situations involving fran-

advertisements is sufficient to plead actual or constructive knowledge required to allege contributory infringement.

Id. at 705.

The GEICO court additionally commented on

theories of liability based on a
ship and concluded that " (b)ecause GEICO has alleged

chisors and franchisees and (*13) to

ants in the context of flea markets).

that both Overture and the advertisers control the appearance of the advertisements on Overture s search results page and the use of GEICO' s trademarks therein, plain-

The Third
agency law, including the doctrine of apparent authority, to conclude that

tiff has stated a
against Overture. " Id.

in certain instances, secondary, indirect li-

ability is a legitimate basis for
under the federal unfair competition statute. There is a good Lanham Act is derived generally and purposefully from the unfair competition, and its language paral-

lels the
common law and statutory torts. Thus , the conduct prohibited by section 43(a) of the

n5 The term " vicarious infringement" used in the GEICO case was meant to refer to secondary liability in the trademark context , not with vicarious liability in the copyright and patent contexts. In copyright law (a) defendant is vicariously liable for copyright infringement if it has the right and ability to supervise the infringing activity and

Lanham Act is even more
at issue in

common law torts than the antitrust laws Hydrolevel. The Act federalizes

also has a direct financial interest in such activities. AT&T, 42 3d at 1441; see also MetroGoldwyn-Mayer Studios, Inc. v. Grokster, Ltd. 125 S. Ct. 2764, 2776, 162 L. Ed. 2d 781 (2005). However , the Supreme Court has

ondary liability in the
narrowly than in the copyright or patent contexts

a common law tort. In construing the Act then , courts routinely have recognized the propriety of examining basic tort liability concepts to determine the scope of liability. . . . Applying the analysis to the facts of this case, it is clear that liability on agency principles is often appropriate.

and the Third Circuit has
carious liability in the
AT&T, 42 F.3d at

1441.

(* 15)

the Court will proceed to analyze JR' s
Id. at

JR has not raised issues of secondary liability. Thus claims of direct

1433-434 (internal citations omitted).
In the present context of

infringement against GoTo until such time that these
issues are properly before it.

fringement,

the court in v.

Government Employees InsurGoogle, Inc. , 330 F. Supp. 2d

ance Co. ("GE1CO'
700 (E. D. Va.

(*14)

IV. Trademark Infringement and Unfair Competition Claims

infringement and stated:

To establish violations of either
43(a) of the Lanham Act, Plaintiff must show (1) ownership of a valid and legally protectable mark; (2) that defendant used the mark " in commerce" (3) " in connection with the sale, offering for sale, distribution, or advertising " of goods and services (4) in a manner likely to confuse customers. 15 us.e. 9 9 1114 1125(a); Fisons Horticulture, Inc. v. Vigoro Industries, Inc. , 30 F.3d 466
472 (3d Cir.

Overture encourages advertisers to bid on
trademarked words, and

controls the allegedly infringing thirdparty advertisements. Although Overture

argues that its monitoring is
prevent,
not encourage, trademark

1994). Section 32(1) of the

states:

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filiation ,

connection, or

(1) Any person who shall,
. consent of the registrant--

such person with another person ,
without the
the origin ,

or as to

sponsorship, or approval of his

(a) use in
counterfeit, copy, or colorable imitation of a registered mark in connection with the sale , offering for sale, distribution, or ad- .

or her goods, services, or commercial activities by another person , or

(B) in commercial advertising or promotion , misrepresents the nature , characteristics , qualities, or geographic origin of his or her or another person s goods, services or commercial activities, shall be liable in

vertising of any goods or services on or in connection with which such use is likely to cause confusion, or to (*16) cause mistake , or to deceive; or

a civil action by any person who believes that he or she is or is likely to be damaged by such act.

(b) reproduce, counterfeit, copy, or colorably imitate a registered mark and apply
such reproduction ,
counterfeit, copy, or
15 us.e.

1125(a).
use of JR

colorable imitation to labels, signs, prints packages , wrappers, receptacles or advertisements intended to be used in

These motions turn largely on GoTo s marks and confusion in the marketplace.

merce upon or in connection with the sale distribution, or advertising of goods or services on or in connection with which such use is likely to cause confusion , or to cause mistake , or to deceive
offering for sale ,

A. Trademark Use
First to be addressed is whether GoTo s " use " of JR cigar " and like key search terms for purposes of priority listing -- falls within the commercial use contemplated by statutory and
marks -- accepting bids that include "jr
common law trademark infringement prohibitions.
JR contends that GoTo s use of the "

shall be liable in a civil action by the reg-

istrant for the
vided. Under registrant shall not be entitled to recover profits or been committed with knowledge that such imitation is intended to be used to cause confusion , or to cause mistake , or to deceive.

JR Ci-

gar, " and " 800 (*18) JR Cigar" marks and variations of
those marks are the sort of use contemplated by the

Lanham Act, even though GoTo is not a distributor or direct competitor of JR Cigar. GoTo sale of JR marks is not "trademark use " attributable to GoTo , because it is the advertiser who selects the search

term and uses it in
tained on the advertiser

s website. GoTo

involvement as merely limited to
15 us.e. IlI4(1).

Section 43(a) of the Lanham Act

tiser s bid on the search term after determining that the term is relevant n6 to the advertiser s Web site.

states:

n6 To determine relevancy after an advertiser
(a) Civil action

selects its own
bids for each search term , a " search

(1) Any person who, on or in connection with any goods or services, or any container for goods, uses in word, term , name, symbol, or device , or any combination thereof, or any false designation of origin, false (*17) or misleading description of fact, or false or misleading representation of fact, which-, or to cause mistake , or to deceive as to the af-

listing re-

quest" is assigned to an editor. Editors typically

compare each search term to the advertiser s Web site and accept or reject the search term under the relevancy guidelines noted above.
The Court finds JR' s position to be more persuasive. Instructive on this point is the GEICO case supra where GEICO (*19) brought suit against Google Services, Inc. (formerly GoTo , the defendant in the pre-

(A) is

sent action) based on their use of GEICO' s trademarks

in selling advertising on Google s and Overture s Internet

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search engines.

GEICO,

330 F. Supp. 2d at 700.

GEICO

Internet activity to discover
matched any information in the When the software identified a match , tisement was selected from WhenU' s clients and
computer screen.
In finding that WhenU did not use plaintiffs ' tradea pop-up adver-

alleged that Google
search engines that were used by Internet users to search the Internet for sites offering certain products or services. Id. at 701. The search engines functioned by the Internet user entering search terms. Id. Those search terms were then compared with databases of websites maintained by
the search engine,

which

websites matching the given search term. Id.
Google and Overture also sold advertising linked to

marks in commerce, the U-Haul and Wells Fargo courts

both reasoned that WhenU did not
(*22) trademarks to its customers or target specific websites , either in its software or in the selling of its services

When an Internet user entered a search term, the results page displayed not only a list of
search terms. Id. at 702.

to advertisers. Rather, WhenU used the trademarks for a
pure machine- linking function " to internally associate

websites generated by the search engine using

criteria,
the

but also links to websites of paid advertisers

identified as "

Sponsored Links. " Id. GEICO alleged that defendants ' practice of selling advertising, by allow-

terms with categories, marks in commerce.

and thus did not place the trade-

ing GEl CO' s competitors to pay to have their (*20) ads

appear next to the listings that resulted when GEICO' marks were entered as search terms, violated the Lanham Act , contributed to violations of the Act by third parties
and also constituted various state law torts.

Similarly, in 800 Contacts, Inc. v. WhenU.com Inc. 414 F.3d 400 (2d Cir. the Second Circuit found that WhenU did not make " use " of the plaintiffs

trademark. Although web site address, www. 1800Contacts. com .

in its proprietary directory, the court found compelling the fact that
WhenU " does not disclose the proprietary contents of the SaveNow directory to its advertising clients nor does it

Google and Overture moved to dismiss for failure to
state a claim, arguing that the complaint failed to allege

that defendants made cifically, defendants argued that their use marks was not " in commerce" and " in connection with the sale , offering for sale, distribution, or advertising of
goods and services. " Id. Defendants claimed only used GEICO' s trademarks in their internal computer
algorithms to determine which advertisements to show.

permit its
specified keywords to add to the directory. Id. at 409 (distinguishing GEICO, supra).

n7 GoTo does, arguably, permit its clients to purchase " specified keywords.

The GEICO trademarks did not appear on the paid advertisements and therefore, Google and Overture argued, the

Internet user could not be confused as to the origin of the
advertised insurance products.
In its analysis , the GEICO court cases holding that use of trademarks

The GEICO court (*23)
which held that the use of trademarks as keywords by the

potentially created a likelihood of

there was no
marks in commerce. See, e.
v.

panies to generate pop-up Internet not constitute " trademark use " of the marks under the Lanham Act. " Those cases are based on a finding that the

Playboy Enterprises, Inc.
354

Netscape Commc n Corp.

F.3d 1020, 1024 (9th

marks (*21) were not used by the pop-up software to identify the source of its goods and services. Id. at 703. See, e. Haul Int' , Inc.
WhenUcom,
2003); 293 see also F. Supp. 2d

Similarly, courts have found that the use of trademarks in use in commerce for purposes of the Lanham Act. See Bihari v. Gross 119 F. Supp. 2d 309 (S.D.N. Y. 2000) (using plaintiffs
Cir. 2004).

Inc.

279

F. Supp. 2d Co. v.

723,

727

(E. D.

Va.

trademarks as
involved infringing use because those websites also conPlayboy Enter. , Inc. v. Asiafocus Int'l , Inc., 1998 u.s. Dist. LEXIS 10459, No. 97- 734- 1998 WL 724000 (E.D.

Wells Fargo

WhenUcom, Inc.

734,

762

(E. D. Mich. 2003).

tained hyperlinks to plaintiffs

In the U-Haul and Wells Fargo cases, WhenU operated an Internet pop-up advertisement business. Its software program , called " SaveNow " was

10,

1998) (commercial use found where defendant em-

downloaded by Internet users into their
determine which pop-up ads to display, WhenU collected

bedded plaintiffs trademarks

s web-

common search phrases,

web addresses , and various

site s computer source code (Le. , metatags) in order to attract consumers searching for plaintiff).

keyword SaveNow program

The GEICO court ultimately ture made trademark use of GEICO' s marks. The court

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found that the allegations of the (*24) ported trademark use the complaint
trademarks in their internal
330 F. Supp. 2d at 703.

the (*26) more money
(was)
quently advertisers include JR' s

trademarks among their

addressed to more than the defendants ' use of the

GEICO

selected search terms , the more advertising income GoTo is likely to gain.

That is, the complaint addressed defendants ' selling of and profiting from GEl CO' s marks.

The GEICO court distinguished the actions taken by defendant WhenU in the U-Haul case, stating:

n8 GoTo contends that its Search Term Suggestion Tool is an entirely automated utility that
takes a term entered by the user and applies vari-

ous algorithms to generate a list
many times that term was

(W)hen defendants sell the rights to link
advertising to plaintiffs trademarks , de-

preceding month. Perhaps , but it is nonetheless

clear to the Court that the Search
tion Tool permits GoTo to channel advertisers directly to JR' s

fendants are using the

commerce in a way that may
defendants have trademark holder to do so. This is a critical distinction from the Haul case, because in that case the only ' trademark use ' alleged was the use of the trade-

trademarks by demonstrating quan-

titatively the potential for successful advertising, thereby implicitly recommending those terms to advertisers.
For these reasons, the Court concludes that there are no disputed material issues of fact which would prevent the Court from concluding, as a matter of law , that GoTo is making trademark use of JR Cigar s trademarks. It
must next be determined whether summary judgment is

mark in the
nal computer coding.

WhenV allowed ad-

vertisers to bid on broad
terms that included the trademarks, but

did not market the protected marks themselves as keywords to which advertisers
could directly purchase rights.

appropriate on the issue of whether GoTo s use (*27) of
JR' s trademarks creates a likelihood of

B. Likelihood of Confusion
Id. at 704

(emphasis added).

To establish a likelihood of confusion , a plaintiff

The distinction made by the GEICO court, italicized above , is applicable here. GoTo gives prominence (*25) in search results to the highest bidder by linking advertisers with certain trademarked terms. There is evidence

must prove that " consumers viewing the mark would probably assume that the product or service it represents

is associated with the source of a
service identified by a similar mark."

tems,
v. Cir.

Inc.

v.

Checkpoint SysCheck Point Software Tech. , Inc. , 104 F.
456

in the record that , prior to the filing of JR' s

Complaint

Supp. 2d.

GoTo accepted bids for the JR marks from no less than eleven of JR' s competitors and ranked their priority on search results listings from highest to lowest
who paid the most money. (Rothman Decl. Ex. B. ) Such

427,

(D. N.J.

2000)

(citing

Ford Motor Co.

Summit Motor Products,
1991) affd

Inc., 930 F.2d Inc. v.

277,

292

(3d

Checkpoint Systems,

Check Point

Software Tech. ,

conduct is qualitatively different from the pop-up advertising context, where the use of trademarks in computer coding is neither nor for sale to the highest bidder.
Here , GoTo makes trademark use

Inc. 269 F.3d 270, 280 (3d Cir. 2001). The likelihood of confusion is a highly factual issue , and

accordingly summary judgment for
on this issue.

unlikely, absent a particularly one-sided

The Third
analysis known as the Lapp

part
factors for determining

in three ways. First , by accepting bids from those competitors of JR desiring to pay for results, GoTo trades on the value of the marks. Second by ranking its paid advertisers before any " natural" listings in a search results list , GoTo has injected itself into
the marketplace , acting as a conduit to steer

whether a likelihood of confusion exists:

(1) similarity of the marks; (2) the strength of the owner s mark;

customers away from JR to JR' s competitors. Finally, through the Search Term Suggestion Tool , GoTo identifies those of JR' s marks which are effective search terms and markets them to JR' s competitors. n8

(3) the price of the goods and other factors indicative of the care and expected of consumers when (*28) making a purchase;

,"

,*

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(4) the length of time the defendant has

used the mark without evidence of actual
confusion; (5) the intent of the defendant in adopting
the mark;

(6) the evidence of actual confusion; (7) whether the goods are marketed or advertised through the same channels; (8) the extent to which the targets of the parties ' sales efforts are the same;
(9) the relationship of the

similarity is not necessarily determinative of likely confusion , but rather one of a number of factors that must be examined. ld. at 282. Here, GoTo contends that its Internet search engine services do not compete with JR Cigar s retail cigar services , and that JR' S marks bear no similarity to GoTo s mark. Therefore , GoTo argues that
this Lapp factor should favor it.

minds of consumers; and (10) other factors suggesting that the con-

suming public

owner to manufacture both products , or

manufacture a product in the defendant'

market , or expect that the prior owner is likely to expand into the defendant' s market.

JR responds that the test for mark similarity involves the identity between the goods and services being offered under the parties' trademarks , not merely a comparison of the two litigant' s marks. JR explains that GoTo has used the JR search terms that are virtually identical to the JR Cigar marks to sell search result marketers and sellers of cigars, and in doing so , GoTo has benefitted financially. According to JR , the fact that GoTo is a search engine rather than a cigar seller is not relevant to the issue of the similarity of the parties ' (*31) use of the JR marks, because GoTo has injected itself into the cigar market through the way it sells its search services.
While JR sells cigars and GoTo sells priority listings to cigar marketers and sellers , among others, GoTo
has used JR' s

Scott Paper Co.

v. (3d Cir. (citing

1225,

1229

Scott' s Liquid Gold, Inc. 589 F.2d 1978); see also Checkpoint 269
Interpace Corp. v. Lapp, 721

F.3d at 280

F.2d

marks in its efforts to
and

460

463

(3d Cir.

1983)). The same ten factors apply

regardless of whether or not the goods at issue directly compete. A&H Sportswear, Inc. v. Victoria Secret Stores, Inc. 237 F.3d 198, 213 (3d Cir. 2000). No one factor is determinative , and not all factors are relevant in each case. (* 29) Checkpoint 269 F.3d at 280. In a

engine services. There is no similarity between " JR"
GoTo. " But there is similarity, if not JR Cigar s marks and the

GoTo sells to direct competitors of JR Cigar who are the
highest bidders. Under these circumstances , the Lapp

situation where plaintiff and
competing goods or services the court must look beyond the trademark to the nature of the products or services themselves , and to the context in which they are
marketed and sold. Fisons Horticulture, Inc. v. Vigoro Indus. , 30 F.3d 466, 473 (3d Cir. 1994). The closer the

factor of similarity of the marks favors JR Ciga r.
Lapp Factor (2): Strength of the Owner

Mark

The
marks. "' Strength,' as applied to trademarks , refers to the

commercial strength or marketplace recognition of the
mark ,
Jesus

as well as distinctiveness of the mark.
v. Brodsky, 993 F. Supp. 159 F.3d

relationship between the products and their sales contexts , the Checkpoint court instructed that the Lapp factors remain

Jews for

282 302 (D. N.J.
1351 (3d Cir.

affd without opinion ,

1998), 1998).

relevant to any should be
confusion is likely.

Marks that are fanciful, arbitrary, or suggestive are con-

, and

whether, in the totality of the circumstances , marketplace Checkpoint 269 F.3d at 297.
Lapp Factor (1):

sidered strong, whereas those that are merely descriptive or generic are deemed to be weak. Checkpoint 269 F.3d at 282-83. (*32) "Marks that are (without a secondary meaning) are generally weak and

Similarity of the Marks

not entitled to strong protection. A mark is with a secondary meaning when the mark is
by the consuming public to be not only an identification of the product or services , but also a representation of the origin of those products or services. Id. at 283. A secondary meaning can be " established through extensive advertising which creates in the minds of consumers an

Marks are confusingly similar if " ordinary consumers would likely conclude that. . . vices) share a common source , affiliation, connection or sponsorship. Trade Media Holdings Ltd. v. Huang Assoc. 123 F. Supp. 2d 233 240 (D. N.J. 2000) (citing Fisons, 30 F.3d at 477). The similarity between the (* 30) owner s mark and the alleged infringing mark may be the most important factor when products directly Checkpoint 269 F.3d at 281 (citing Fisons, 30 F.3d at

association between the mark and the
services advertised under the mark. " Id.

476). Where

, mark

JR Cigar argues that its marks are ing become incontestable and creating a presumption of secondary meaning. JR maintains that because " JR" n9 is

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not a description of the products sold by JR and because arbitrarily arranged letters are not easily memorable , the

cigar
(Rothman Rply. Dec. Ex. 1- 12; Denis Dec. Ex. 5GoTo has not successfully contradicted this evidence.
Lapp Factor (3): Price of the Goods and Other Factors Indicative of the Care and

JR marks qualify for the
under the Lanham Act. JR adds that the

sales--more than a billion dollars over a five-year span (Colleton Decl. Conf. Ex. 16)--and the extent of the unsolicited third-party recognition by the JR marks (Id., Exs. 14 ,
that has been received
15) speak to the (*33)

Consumers when Making a Purchase

strength of its marks. JR also points out that the term "

Cigar " routinely search terms Search Term

Consideration of this Lapp factor is highly relevant to the analysis of this action and also merges with initial interest confusion analysis. The Court' s discussion of this factor is addressed in Part IV. C.
Lapp Factors (4) & (6):

, (McCarthy Decl. Ex.
Length of Time Defendant

10), which GoTo urges advertisers to use " to drive traffic " to their websites. (Rothman Decl. Ex. G.

Has Used the Mark Without Evidence of Actual Confusion

n9 The

These Lapp factors are also highly
JR" were

owner of 800-JR-Cigar

in honor of his father

Jack Rothman. Rothman Dec. P5.
GoTo responds that JR' s marks do not qualify for the

argues that JR has presented no evidence of actual confusion , Le. , that a consumer clicked on an advertiser s listing believing it to be a JR Cigar listing, and once reaching the advertiser s web site, believed that it was affili-

ated in some way with JR Cigar , and purchased cigars
from the advertiser s web site. Indeed, JR Cigar offers no

nothing particularly distinctive about plaintiffs m ark. The initials AO are letters in the use by everyone. It is merely

highest degree of protection because marks consisting of initials are considered to be weak marks that are merely descriptive and without secondary meaning. GoTo contends that the initials " JR" are not distinctive in that the initials alone do not instantaneously conjure up JR Cigar in the minds of consumers. See Anheuser-Busch, Inc. B Distrib., Inc. , 910 F. Supp. 587, 593 (MD. Fla. 1995) ("A B" mark " is merely descriptive , and must be characterized as a weak mark. American Optical Corp. v. American Olean Tile Co. , Inc., 1974 WL 20261 185 Us.P. Q. 405, 409 (S.D. NY 1974) (*34) ("There is

gle Snacks, Inc.

EaNabisco Brands, Inc. 625 F. Supp. 571, 583 (D. N.J. 1985) (*36) (noting that failure to offer confusion survey may give rise to inference that survey
survey evidence of actual consumer confusion. See v.

results would be
more fully below.

, JR has pre-

sented evidence of diversion that is probative of initial interest confusion. Initial interest confusion is discussed
The lack of evidence of actual confusion in the form
of mistaken purchasing

ever, there is evidence regarding temporary diversion of potential customers away from JR' s website. Whether

characterized as a weak mark. ). It is also argued that the term "jr cigar" may be perceived as a descriptive term by consumers-- , a "junior" or " small" cigar. GoTo argues

this diversion supports a finding of initial interest confusion must be decided by the trier of fact.

Lapp Factor(5): Intent of
Mark

that the mark is further non-tobacco entities such as " J&R Music.

This factor favors JR Cigar. GoTo has not discredited the evidence put forth by JR Cigar as to the strength of its marks. GoTo does not dispute that JR has used its marks for as long as thirty years , spent millions of dollars promoting the sale of the JR products , achieved sales of over one billion dollars in a span of five years , and received extensive unsolicited third party recognition. That JR' S marks consist of someone s initials, under these circumstances , does not reduce their has pointed to evidence establishing secondary meaning

JR Cigar contends that GoTo vancy Guideline prohibitions against the sale of trademarks to competitors when it permitted JR' s competitors

to purchase JR marks. nlO JR Cigar
GoTo s
failure to

receiving notice of this action signals willful and bad
faith conduct. After receiving JR' s Complaint ,

GoTo

continued to permit at least five JR chase JR marks (none of whom had relevant information on their sites). (See DeNys Decl. Exs. 5- ) JR Cigar
relies on 518 NFL v.

New Jersey Giants

637

F. Supp. 507

of its marks. The Court is demonstrably strong. As JR Cigar points out , the fact that more than twenty competitors bid on the " JR Cigar name on Go To s system (*35) further

1986), (*37) which held that " (d)efendant' continuation of its activities after
(D. N.J.

cease and desist
deemed to be an actual and original intention to confuse
consumers. "

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Under this prong, courts examine whether buyers
n10

GoTo s development of the Search Term Sugges-

and users of each parties ' goods are likely to encounter the goods of the other , creating an assumptio ? ~f com-

tion Tool and its promotion of the Tool to advertisers wishing to identify effective search terms
upon which to bid

concerning GoTo s intent in adopting JR' s marks.

Those questions are suitable for resolution only
by the trier of facts.

mon source affiliation or sponsorship. The test the goods are similar enough that a customer would assume they were offered by the same source. Id. at 286 (internal citation omitted). JR argues that the net result of GoTo s conduct is to direct Internet users JR' s website to the web sites of JR' s competitors, who, by
definition , offer similar products. Paid search website suggest GoTo s promulgation of an association between GoTo advertisers and JR, and an implied right (*40) to advertise using JR' s name.
delivered in response to searches for JR' s

GoTo disputes the significance of this evidence and maintains that only advertisers who were making fair use were allowed to bid on search terms that are JR marks.
GoTo argues that even though the Relevancy Guidelines were replaced by the end of 1999 (McCarthy Exs. 4- 7),

the Guidelines are consistent with principles of fair use routinely followed by the company, and that , where appropriate , it has removed listings of advertisers not appear to be making (*38) fair use. GoTo took steps to ensure that JR' s website would appear at or near the top of unpaid listings. Also , GoTo has pointed to evidence that its editors initially accepted some "jr cigar search terms in the good faith belief that they were abbreviations for "junior cigar
about JR' s

Go To argues , as it has throughout, that JR' s retail cigar services and GoTo s search engine services are not related. "Internet users looking for JR Cigar

(GoTo) because they do not know how to locate JR Cigar, its products or information regarding it , not because they believe it is somehow connected to JR Cigar. " Def. Br. at 28. While this may be true , GoTo s sales efforts to

JR Cigar

s competitors

tween JR' s retail cigar services and GoTo s search engine

" and that,

after learning

services. GoTo s argument

Complaint, removed listings that did not com~ edito
stood for a small cIgar wJ!1

ply with relevancy

really believed that "jr cigar"

be up to the trier offact.
Evaluation of the foregoing evidence bearing on

underpinnings at hand and overlooks the fact that Int~rnet users looking for JR Cigar on GoTo s search engine don t necessarily find JR either , but may likely be diverted to a competitor instead.
The Court finds that the goods to which Internet users are ultimately directed in GoTo s search results are
similar to JR's

GoTo s intent is for the trier of fact.
Lapp Factors (7) & (8):

products and are likely to be so identified

Whether the Goods are

in the minds of
favors JR.

Marketed or Advertised Through the Same Channels and
the Extent to Which the Targets of the Parties

Sales Ef

forts are the Same
The Internet is used as the marketing channel for all concerned , so this factor does not further the analysis. See Playboy Enter. 354 F.3d at 1028.
(W)hen parties target their sales efforts to the ~ame consumers , there is a stronger likelihood of confusIOn.
Checkpoint, 269 F.3d at

e. Initial Interest Confusion
A trademark violation based on initial interest confusion arises when a senior user s customers are diverted to a junior user s website offering (*41) similar products.
The idea is that, upon arriving at the competitor s website , customers may be fully aware that the website is not JR' , but may buy from the ?venience or in the belief that JR' s products are aVaIlable

289. Here, the targets of the

present parties ' sales efforts are differen~ in the sense ~hat

from the
West Coast Entm t Corp.

Broolifield Commc n.
174

Inc.

39) GoTo

F.3d 1036,

1064 (9th Cir.

information on myriad topics of interest , Cioar sells cigars and cigar-related
tracting consumers seeking to
favors JR.
Lapp Factor (9):

whereas JR

1999).

fro an Internet searcher s perspective, these overlap to the extent these efforts are all directed to at-

sion supports a violation of the Lanham Act. 269

~d re-

The Third Circuit has held that initial interest confuCheckpoint F.3d at 292. Initial interest confusion " occurs when

lated products. The eighth Lapp factor thus marginally

a consumer is lured to a product by its similarity to a
even though the consumer realizes the true identity and origin of the product before consummating a purchase. Id. at 294 (citing Eli Lilly Co. v. Natural Answers, Inc. 233 F.3d 456 at 464 (7th Cir. 2000)). Without protection against initial interest confusion , an
known mark,

Relationship of the Goods in the

Minds of Consumers

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infringer receives a " free

ride on the

compete. GoTo again argues that it does not
with JR, and that when the goods or services of the parties are dissimilar, there can be no initial interest confu-

established mark.

Id. at

295 (internal citations omitted).

Indeed (c)onfining actionable confusion Lanham Act to confusion present at the time of purchase would undervalue the importance of a company s goodwill (*42) with its customers. "

sion. The correct inquiry here is not whether the present

parties are themselves competitors (*44)
business, but rather a comparison of the similarity of the

Id.

Thus , courts have found that damage to a trademark holder results even
actual sale occurs. See

goods and services being offered under the
being used by both.

comes aware of the source s actual identity or where no Australian Gold, Inc. v. Hatfield 436 F.3d 1228, 1239 (lOth Cir. 2006); BigStar Entm
v,

GoTo and JR both used JR' s marks -- GoTo
JR' s

1nc,

Next Big Star, Inc. ,

marks to promote its search engine services to cigar suppliers other than JR , and JR uses its marks to promote

105 F. Supp. 2d

185

(S.D. N. Y

its own cigars. As
the " Similarity of the Marks " and " Relationship of the Goods Lapp factors, GoTo s use of the marks suggests an affiliation or connection between JR and GoTo based on GoTo s alleged infringing use of the marks.

2000).

This damage can manifest itself in three
ways: (1) the

Level of Care Exercised by
Purchasing Decisions and sumer

prospective customer s interest to a source
that he or she erroneously believes is au-

thorized; (2) the potential consequent effect of that diversion on the customer s ul-

When consumers do not exercise a high level
care in making their decisions , it is more likely that their

timate

caused by an

initial confusion will result in a
infringer from the use of the goodwill of the other firm. Checkpoint 269 F.3d at 296-97. Cost of the product , the sophistication of the consumer , and the length of the purchasing process are relevant here. Unsophisticated buy-

the two sources of a product may be associated; and (3) the initial credibility that the would -- be buyer may accord to the infringer s products -- customer considera-

tion that otherwise may be and that may be built on the
the protected mark, reputation and goodwill.

ers are more likely to be confused as to source or affiliation when confronted with similar trademarks , (*45) and
there is an inverse

product and the amount of care the
buyer will use in acquiring it. See id. at

284-85.

Australian Gold,

436

F.3d at

1239.

of (JR' s)

JR argues that " (t)he relatively modest price levels products -- even for the more costly premium

The probative value of initial interest confusion and its significance varies from case to case. Checkpoint 269
F.3d at

hand rolled cigars -unlikely to exercise undue care in gars. The moderate price levels further suggest that con-

297. (*43J Relevant

relatedness (i. , whether the goods or services are simi-

sumers may not be attentive to being
websites operated by JR' s

lar; whether the products at issue directly compete), (2)

competitors from an internet

the level of care exercised by consumers in making purchasing decisions , (3) the chaser/consumer; and (4) the
fringer in adopting the mark. Id. at

search result that superficially appears to be directing the consumer to JR's website. " (PI. Br. at 14). GoTo does not respond to JR' s arguments.
Without evidence in the record as to the price of JR' products , the sophistication of cigar and JR' s customers specifically, and the
purchasing process

296. " Initial

interest

confusion in the internet context derives from the unau-

thorized use of trademarks to divert
thereby capitalizing on a s good will." Australian Gold 436 F.3d at 1239; see also Broolifield, 174 F.3d at 1064. Thus, in this factual context, evidence

, all of

Internet user interested in cigars could be
from JR Cigar , the Court cannot address this issue. Upon hearing such evidence , the trier of the facts may find that consumers are unlikely to exercise care in their purchasing decisions and may not be attentive about (*46) being redirected away from JR' S website, but JR' s unsupported
allegations on this issue are insufficient to meet its bur-

of the diversion of traffic
Product Relatedness

s website to

those of its competitors is also a significant factor.

This factor examines whether the goods and services are similar and

den of proof on summary judgment.

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Intent of Alleged Infringer in Adopting the Mark
The proper inquiry here is whether GoTo intentionJR' marks to create confusion among consumers making purchasing Checkpoint 269
ally adopted F.3d at marks. 296. GoTo claims that it made fair use of JR that

The statistical evidence of JR has presented is arguably indicative of a likeliTaj Mahal Enter.

hood of confusion. See F.

Supp. 240

249

(D.N.J.

1990)

v. Trump, 745 (noting that the key to

JR'

claims that GoTo purposefully lured consum-

actual confusion is whether there has been a diversion of customers); Trade Media Holding v. Huang
Assoc. , 123 F. Supp. 2d 233, 241 (D. N.J. 2000) (evidence of diversion establishes likelihood of confusion).
JR

ers away from its website to those of its competitors for financial gain. The factual issue of GoTo s intent is in dispute.

has come forward with evidence of diversion in sup-

port of actual confusion.

Evidence of Diversion Supporting the Likelihood of
Confusion
JR JR

This state of the record favors

(*49) but the trier of fact must decide to credit this evidence of diversion of

points to evidence that Internet users who input

Search Terms on GoTo s search engine were directed to a list including JR' website , the first eleven of which were paid listings. (Rothman Decl. Ex. ) Between April 1999 and June 2001 , while GoTo
was selling the JR

traffic away from JR' website to those of its competitors , in deciding whether there is a likelihood of confusion.

To summarize,
of law ,

the Court has concluded , as a matter
JR'

that GoTo made trademark use of

advertising rights to the highest bid-

As to

marks.

, however

ders

JR

Cigar maintains
407 searches reflected in Rothman Conf.

000 of
Ex.

there are material issues in dispute; namely, the third

the 70

fourth and sixth Lapp factors dealing with evidence of
confusion and the impact , if any, of initial interest confusion , and the fifth Lapp factor dealing with GoTo s intent

were made on the GoTo search system , meaning Internet

users were thwarted in their efforts
website on some 20 000 occasions. (Rothman Decl. PlO and Conf. Ex. ) According to such searches resulted in the Internet users who conducted these searches
being shown 170
other than the JR

in adopting the mark. These factors are highly relevant to

the analysis of this action and preclude
ment for either party.
As summary
claims for trademark infringement and unfair competi-

847
website and caused approximately

I 000 of those consumers to " click through" to the sites f JR' S competitors. (Rothman Decl. PPll , 12 and Conf. Exs. D and Indeed, during a two-month period between May and June 2000, GoTo 98~o diversion rate " in click-throughs to JR Cigar competItors. (Rothman Decl. Conf. Ex.

tion the Court need not consider GoTo s affirmative "fair use ; defense, except to note that use of JR' marks by GoTo is probably fair in terms of its search engine business; that is,
where GoTo permits bids on JR purposes of comparative advertising, resale of

) These statistics

JR'

marks for pro

contends evidence a significant
traffic a~ay from

JR'

website to those of its competi-

ucts , or the provision of information about JR or products. However, fairness would dissipate , and (* 5~)
protection under a fair use defense

tors , which , in turn , represents confusion created GoTo s sale of advertising rights to JR' name.
fic from

by

, If

GoTo responds that complaints of diversion of trafJR' website to those of its competitors , absent proof that any customers were actually confused , is insufficient to prove confusion. GoTo again contends that there has been no diversion of customers from plaintiff to
defendant in that no one has bought a single cigar from

GoTo wrongfully participated in someone else s infringing use. Thus, the factual issue of whether GoTo s conduct supports a fair use defense is for the trier of fact.

V. Federal and State Anti- Dilution Claims
Dilution is defined as " the lessening of the capacity of a famous mark to identify services, regardless of the presence or competition between the owner of the famous mark and other parties, or (2) likelihood of confusion , mistake or deception. " 15 Us.e. 1125(c). To establish a prima facie case for relief under the federal anti- dilution act, a

GoTo. The Court finds that response cause (*48) there is JR has suffered from
the diversion occasioned by GoTo s
its use of v.

bidding process and

F. Supp. 286, 298 (D.N.J.1997) Infringement can be based upon confusion that creat initial customer interest, even though no actual sale finally completed as a result of the confusion. " ), rev d on other grounds, 166 F.3d 182, 186 (3d Cir. 1999) ("In this appeal , (appellant) does not challenge the district court'

JR' marks. See Securacom Inc. 984

Securacomm Consulting, Inc.

plaintiff must plead and prove (1) the plaintiff is t~e
owner of a mark that qualifies
light of the totality of eight factors listed in 9

famous" mark In 1125(c)(l)

nIl; (2) the defendant is

finding of infringement or order of injunctive relief. "

terstate commerce of a mark or trade dant's use began after the plaintiffs mark
mous; and (4) defendant' s
use causes dilution by lessen-

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ing the capacity of the plaintiffs mark to identify
Times Mirror Magazines v. Las Vegas Sports News 212 Inc. F.3d 157, 163 (3d Cir. 2000), 51) The underlying purpose of
distinguish goods or services.

Consumer Prods. Corp.

v.

Jennifer Leather Broadway,

1268, 1277 (SD.N.Y 1994), affd , 57 F.3d 1062 (2d Cir. 1995). The degree of distinctiveness of a mark informs whether the mark is
858 F. Supp. U.Se. at 1125(c)(I)(A); see also

Inc.

doctrine is that a gradual attenuation of the famous trademark occasioned s unauthorized
use constitutes an invasion of the holder s rights. Id. Factors to be considered in determining been dilution include: " actual confusion and likelihood of confusion, shared customers and geographic isolation the adjectival quality of the junior use , and the interre-

Times Mirror

212

F.3d

165 ("The degree of acquired or inherent distinctiveness of a mark bears directly upon the issue of whether that mark is famous. " ). Distinctiveness turns on the fol-

lated factors of duration of the junior use , harm to the
junior user,

action.

Id. at

and delay by the senior user in bringing the 168.

lowing considerations: (1) the use of the mark; (2) the size or prominence of the plaintiffs enterprise; (3) existence of substantial by the plaintiff; (4) established place in the market and (5) proof of intentional copying. Times Mirror 212 F.3d
at

165.

The fame of the JR marks may be tested within the
nIl Section 43(c)

of the

forth eight non-exclusive factors for determining
fame:

(A) mark not famous to the general public is nevertheless entitled to protection from dilution where both the plaintiff and defendant are operating in the same or related markets, so long as the plaintiffs (*53) mark cigar market. possesses a high degree of fame in its niche market."

1d.

(A)

the degree of inherent or ac-

at

164. As explained by the Third Circuit

quired distinctiveness of the mark;
(B) the duration and extent of use

of the mark in connection with the goods or services with which the mark is used; (C) the duration and extent of ad-

A mark that is highly distinctive only to a

vertising and
mark;

select group of purchasers tected from diluting uses directed at that particular class or group. For example , a mark may be highly
purchasers of a specific type of product.

(D) the geographical extent of the
trading area in which the mark is used;

In such circumstance ,

protections against
distinctiveness is

a dilution of the mark's

ordinarily appropriate only against users

(E) the channels of trade for the goods or
services with which the mark is used;
(F) the degree of

specifically directed at that

class of purchasers.

the mark in the trading areas and
channels of trade of the mark'

Id. (quoting 25 cmt. e

Restatement (Third) of Unfair Competition

(1995 Main Vol.)).

owner and the person against who the injunction is sought;

JR Cigar argues
terms, GoTo forces customers looking for the JR website to wade through numerous other websites and that using

(G) the nature and extent of use of the same or similar marks by third parties; and

(H) whether the mark was registered under the Act of March 3 1881 , or the Act of
1905 , or on the principal register.
15 u.Se.

its marks as search terms dilutes them within the meaning of anti-dilution laws. GoTo defends against the Federal Anti-Dilution Act and its New Jersey counterpart by arguing that it does not use the JR marks in The Court rejects that argument for the reasons already
stated.

GoTo s second defense against the dilution claims

1125(c)(I)(A)-(H).

54) is
der the anti-dilution statutes because the JR not famous. GoTo argues that there is no JR marks are strong money on promotional efforts does not

521

Whether a mark is
determination on the

Revlon

),

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JR Cigar has only nine retail locations , its billboard ad-

cannot be reasonably characterized as meeting the requi-

vertising is limited to one state , it has been selling on the Internet for only two years , and it has failed to produce a
fame survey.

site threshold for a consumer fraud violation -- " unconscionable " behavior.

JR Cigar
cency Act immunity may not cover GoTo since it may not qualify as an " interactive computer service. " PI.
Rply. Mem. in Opp. at 27. JR Cigar further

As discussed above, the record preeminent cigar marketer. The company is over thirty years old and has spent millions of dollars on promotion. (Rothman Decl. PPI5- , Colleton Decl. P9. ) The JR

relief under the
limited to consumers. Finally, it argues that GoTo s con-

marks have been in use for up to thirty
GARS, in particular, has been in use since 1970. (Colleton Decl. PP3-

duct is unconscionable under the NJCFA
under JR' s

) Two marks for JR ,

as well as JR-

ULTIMATE and JR ALTERNATIVE , are incontestable and are therefore presumed to have acquired secondary meaning. (Colleton Decl. at PP3- ) JR Cigar has nine retail locations and has been selling on the Internet , at the time of briefing, for two years. JR has earned more than a billion dollars in revenues under the JR marks and JR

GoTo solicited bids on and sold the right to marks to JR competitors despite knowledge of
Complaint. (*57)
Immunity
The purpose of the Communications Decency Act is

the filing of JR' s

to promote self-regulation of Internet service providers.
Basic;ally, the Act shields service providers from

Cigar tradename in the five-year span preceding (*55)
briefing. (Colleton Decl. Conf. Ex. P16. ) In addition, the JR marks have received extensive unsolicited third- party

for the content of websites of third parties that are accessed through the Internet. The Act affords immunity to interactive computer services " defined as " any information service, system , or access software provider that

recognition in the form
samples of which are in the record. (Colleton Decl. , Exs.
, 15. ) Also,

JR marks are prominent

provides or enables computer access by multiple users to

terms used by Internet browsers when looking for cigars.
(McCarthy Decl. PI2.
The Court is satisfied that JR' s marks are famous for

purposes of the dilution statutes.

a computer server, including system that provide access to the Internet and such systems offered by libraries or educational institutions. " 47 us.e. 230(c)(I).
The Court is not persuaded that GoTo qualifies for immunity under the Act. GoTo contends that it is an " interactive computer service " because it is an " information service. . . that
multiple users to a

Dilution claims under New Jersey law are subject to the same considerations as federal dilution claims. See Novartis Consumer Health, Inc. v. McNeil-PPC, Inc. Us.P. Q. 2d 1406, 1409 (D. NJ. 1999). Accordingly, fame of the marks is established as to the state law cause
of action as well.

Whether there has been dilution is another
Confusion, actual or likely, is one factor bearing on the dilution analysis, and especially important in the context of GoTo s unique use of the marks. As discussed above there are disputed issues of fact concerning likelihood of
confusion that preclude summary judgment.
V. Non- Lanham

access to the Internet. . . . " However, as far as this Court can tell , GoTo does not provide like service providers such as AOL. The only authority cited in support of GoTo qualifying for this designation
is an unpublished (*58)

case where it was undisputed that eBay qualified as an
interactive computer service. " Stoner v. eBay, Inc. , No. 305666 , 2000 WL 1705637, at * 1 (Cal. 2000). The Court does not find that argument persuasive.
Moreover , immunity under the Act cause of action that would make service providers liable for information originating with a third-party user of the service. Immunity does not seem to fit here because the alleged fraud is the use .of the trademark
bidding process , and not

Act Claims:

ing and Consumer Fraud

JR Cigar intellectual (*56) property claims: deceptive telemarketing under the Telemarketing and Consumer Fraud and Abuse Prevention Act ("Telemarketing Act" ), 15 us.e. 1602(b), and consumer fraud under the New Jersey Fraud Act ("NJCFA" NJ.S.A. 9 56:8- et seq. GoTo
cross-moves for summary judgment on these claims

third parties that appears on the search results page. It is not the purpose of the Act to shield entities from claims
forpriority advertising business, rather than from the actions
of fraud and abuse
of third parties.

arguing that (1) it is
Communications Decency Act, 47
us.e. 230;

(2) JR

Cigar does not have
claims or the consumer fraud claim; and (3) its behavior

Standing

,*

Case 1:06-cv-00040-SSB-TSB

Document 27-2

Filed 08/10/2006

Page 15 of 15
Page 15

2006 U. S. Dist. LEXIS 48279

GoTo also
standing to bring the state law consumer fraud claim and
the federal deceptive telemarketing claim.

The Court agrees with GoTo , and concludes that the facts of this case do not support a cause of action under the Telemarketing Act.

and commercial
claims under the NJCFA. v.

Conte Bros. Automotive,
Inc.
992

Inc.

CONCLUSION
There are factual

Quaker State-Slick 50,
1998); (*59) 743 F. Supp.

F. Supp. 709
1990).

716

(D, NJ.

General Development Corp.

Binstein

1115 1130 (D. N.J.

JR fails

to explain how it
competitor of GoTo. Instead, JR conclusory statement in support of standing: " Overture assertion that only the federal Fraud Act and the New Jersey Fraud Act is simply wrong. Under the New Jersey (Consumer) Fraud Act, a commercial competitor has standing
to bring a claim. . . . Thus , JR has standing to

judgment in favor of either particularly (*61) with respect to
sion. Moreover, summary judgment in favor of JR Cigar

is unwarranted because JR Cigar has failed to the legal theory which the Court feels best embraces the
facts of this case , contributory or indirect infringement.

The Court believes that any further case should be conducted under that theory, given that
GoTo is the only remaining defendant.
In sum , disputed issues of fact preclude granting

claims under (the statute). " (PI. Rply Mem. in Opp. at
29.

JR Cigar is
GoTo s services. As a cigar retailer, JR cannot be considered a commercial competitor of GoTo s search en-

gine. While JR may have had
search engine defendants (all of whom have already set-

summary judgment as to liability in favor of JR Cigar on Counts I (trademark infringement, 15 Us. e. 9 1114), (unfair competition, 15 USe. 1125(a)), III (dilution 15 USe. 1125(c)), V (common law trademark infringement), VI (New Jersey trademark infringement and dilution NJ.SA. 56:3- 13.16 and NJ.SA, 56:3- 13. 20),

tled with JR), JR has not provided the
arguments that would support standing under the NJCF A

and VIII (New
NJ.SA.

56:4-

et seq.

Summary judgment in favor of

GoTo is
Fraud Act a