case presents a cutting edge issue in trademark law as it applies to the internet in that is whether a direct competitor can use another's name or mark in paid search listings to target and attract the market owners customers and prospects to the competitors name and website and whether that conduct constitutes lanham act unfair competition this is a clean case in which to present that issue because it's direct competitor activity there are no change angela she's about free speech no vicarious or contributory liability problems what happened here is that i sold it well it actually doesn't dispute that fact there's some very clever wording in it what it says is that is that by the time they signed the declarations they had stopped the conduct the declaration  carefully worded in the present tense they say they're not doing it now they never denied that they didn't do it in the past in by the time we moved to the the a brief in this case they're saying that they they never did it on the logo as in the design but you can't you can't put colors in your search advertising and i think what we know now is that that was actually misleading because they were buying picture it sold combination of words popping up some numbers diverting your potential customers to their website do i have that roughly right but if they do they do if they kept that negative on there forever we'd be happy that the concern in and at the time of the hearing they had placed a negative which means that is long as the word picture is not in the searchers group the words their ad wouldn't display that their ad would display as long as picture was not in it and it accomplishes our goal which is when the searcher types in picture extol they're looking for the appellants business and and in those circumstances they shouldn't  listing for i sold it i guess that that sort of turns my mind to a couple of questions i know there was some discussions about attentional settlement before litigation was started but have the parties considered the possibility of mediating this case i mean it's before a court for us now in a factual situation where the current behavior is is my understanding advice hold that is satisfactory to picture it so that that the you can see the purchase of the negative means that th confusion that you're concerned about when the lawsuit was filed and we understand why you're bringing him far because there is no commitment to do that for a long time and they're still doing it on the other competitors which is strong evidence t we just have these two competitors exactly before us now or you will incur to risk the possibility that this panel may say it's perfectly appropriate for them to do it without the negative we are willing to take that risk because we believe clearly that the conduct is wrong and you're brookfield in we have had settlement discussions and appellants would be happy to go back but i i think where they left which judge sieberg is that maybe some  i think the real problem is initial interest confusion and the goodwill analysis and whether the that the movement of the court in playboy versus netscape which found initially just confusion but went on and discussed the sleep traffic factors at to test the theory to be certain whether that erodes the good will now analysis but what's important from our standpoint is is the goodwill aspect of trademark protection the function of trademark law is to protect marks as an identifier of source which which serves a valuable public purpose how is this different when you're driving the freeway they want you know i picture him as a billboard and they too you drive down and it as a billboard right beside how's the because in your analogy from the brick and mortar world you're not targeting picture and souls customers and what's different about this is the search engine offers a metatags did for a company to come in and specifically target exactly the customers and prospects of the established business the only reason somebody would tie picture and sold into a search window is because they're looking for the business associated with that mark it's not a generic term like even a drop off stores it's a mark and it's just different enough that people aren't going to be typing it in unless they're looking for this business and i sold that specifically and deliberately wanted to capitalize on the goodwill associated with the marc picture it sold by going not to everybody who might be interested in selling something the going specifically to picture it sold customers and that's the inherent wrong here it's the diversion of goodwill this is an equally important reason that we protect trademarks but it's less talked  about then the more classic source confusion issue in and we think the brookfield court recognized the importance of protecting a mark on his good will at the bottom if your time book feel as if it was the dominant element of the trademark is the words in particular when you get down to search engine searches i suppose it's possible that if the mobile oil court were faced with the pegasus problem in internet prospected for the same reasons that they found that the flying that the word pegasus was close to the flying horse symbol that they might find some association here but here we actually have a word mark although it's stylized and the dominant feature especially in the internet are the words picture it sold and what you have here is i sold it buying keyword advertising on picture it sold a second problem act it is that technically correct and the question was well whether it was the answer to a joke about a panda coming into a bar or a description of the value of a panda and then go where you put the comma but they did they did not purchase a quote picture  correct my understanding is they did not put quotations around the phrase inside i'm doing that myself and i'm doing that myself well that's a fair would have to do if they're if they're trying to get the whole truth well no they wouldn't in that actually gets into how the search engines operate just so i have this clear they purchased the word sold they purchase by making a good picture of the works all right the picture of the work it right and they purchased the word picture right at the same time yes in combination together some of the so that before the negative if you type in picture of sold you probably go to their website if you are wrong get a list that included their website as the top one ok our view that the only reason they would do that is to target picture itself customers you have an intentional intention to capitalize on the goodwill of another business and its mark and and that in you have to protect the business owners investment in its mark or the whole trademark scheme will fall apart and we think that brookfield rightly recognize that other important goal that's less talked about but which is essential in order to protect trademarks in general you know it happens that in our case we also satisfy the sleep craft factors and and i think one of the problems is that sleep craft isn't necessarily the best analytical framework for looking at keyword advertising because it kind of all collapses down into into the intent and the similarity in the mar s we think that the good will announce this is a better analytical tool when a customer goes out in targets and when a competitor goes out and targets it's another businesses customers that's wrong in brook that even prior to the negative that what i sold was doing did not create a national interest confusion is that correct the district court didn't see the problem because the district court didn't see the similarity between that the tags and keywords and the similarity is that both of them are used purposely by i understand and disagree with what the district court did i'm just trying to analytically get on the table the district court even prior to the purchase of the negativity i sold it found that what they were doing did not create a national interest confusion is that correct my saying whether the district court was right about doing that is that what they did i think that's not exactly i think the district court didn't see the confusion so we didn't see the initial interest confusion because it couldn't find the confusion it correct that the district court held there was no initial interest confusion i believe that's correct ok all right now this is the lead up to this question i just did it made any findings in connection w before or after the purchase of the negative light my understanding is after that i sold it purchased the negative that you you suggested or asked the district court to at least preliminarily enjoying the defendants from doing that were there any findings before or after the purchase of the negative you know the district court didn't make findings one way or the other looking yeah the there are number of things court didn't do with it it didn't think that picture it sold offered any evidence whatsoever of likelihood of confusion and that's just not a problem with the weight of the evidence but that's not seeing the evidence as evidence  the fundamental problem there is that inferences are our evidence and the judicial comparison of the mark of course is is the most common kind of the inferences from that is the comparison are the most common quotes or the actual phrase which ever the record on appeal is devoid of any evidence that i sold it ever did that the only evidence offered by engine picture it so there's no quotes around it there's certainly no exclamation point at the end of soul as reflected in the mark that the plaintiff claims prior to the your client's purchase of the  are we talking about this is important are we talking about the phrase picture it's told entered into a search engine with quotes around it no homes no quotes well i do believe that the exhibits attached to the  injunction motion submitted by picture of sold are accurate i don't doubt their authenticity in the sense that it reflects what happens when you search for the individual words picture it sold and in that situation in fact it's abundantly clear picture its soul is the number one result on the natural search result it comes up number one as any user would expect it's clear also that i sold it does have an ad which is clearly listed as a and exhibit a page ninety i think is the best example of this there is no mark of the plaintiff anywhere in the ad for i sold it so these facts taken as a whole show that there would be no basis for any user to initially be confuse as to the source of the services being offered by i sold are you familiar with the gator com with legation the the pop up to be honest with you i haven't read the case recently and i'm not comfortable with its particular typed in picture it sold and and got a listing of their website and then clicked on that website and when their website came up up on the corner popped an ad for i sold it that said whatever you can get from picture it's sold you can get for a much cheaper than the appropriate i do believe that the long as the advertisement that popped up was a comparison of the products and services did not contain any misleading information did not leave any doubt as to the source of the advertisement as to whether there was any association between the two and it was covered in those types of clearly identifiable distinguishing characteristics so that  no confusion it might be appropriate  but again i would have to of course go back to look at the gator cases to see what was discussed but backing up this all puts the cart before the horse it is always the very first thing that a trademark plaintiff must is must show and that is what its mark is and whether the defendant is using something that is confusingly similar there's no evidence in the record here as to what venue did use or did not use it's just what picture it sold has put into a search engine and then asked the court to infer that because pictures sold put its name in a search engine therefore i sold it must necessarily have purchased the phrase there's no evidence from google or yahoo explaining that that inference would be correct there's no evidence from google or yahoo explaining that it's algorithm works in the way as depicted by  evidence that i sold it ever use the actual mark here we're forgetting to well the plaintiff has forgotten in some respects to first identify what its market is it is a logo it is a stylized mark where the word picture it appears in black letters the word sold a stamp on top of it with an exclamation point it is a stylized mark naturally there's no allegation that we have used that stylized mark in opening argument counsel indicated that the dominant feature of the logo are the words within it but they don't have a trademark on the words within the stylized mogo and just because the internet doesn't permit one currently to search for a logo doesn't transmute a stylized logo mark into a word mark which the plaintiff certainly could have applied for but it did not so it seeking to gain protections on a market it doesn't o so the record is what it is in that regard and it's our position that there is certainly no evidence of use by the defendant in commerce of a mark of his own by the plaintiff what's your client's position with respect to continuing the negative plaintiff that means you can stop tomorrow but we are not going to we're not going to mean you can stop tomorrow certainly yes no question about it and this comes back to what is the law the law is clear that to establish an infringement of a market you use the traditional sleep fact sleep craft factors where appropriate fix any of the eight that you feel are appropriate for the circumstances they tend to jump out at you at  the ones which are appropriate and then on top of that you can also apply the initial interest confusion analysis that brookfield used which some courts have used as part of one of the multi factor test but the initial interest confusion an has been skipped in this case that's the great surprise of us but getting back to brookfield what is an initial interest confusion you look at all the cases that  involved a situation where the defendant actually published to the public a confusing use of the plaintiff's mark that is there was an actual use that was put forth and put out into the public and that use and that actually publication is probably the better word is what triggers the confusion initially in the mind of the consumer so in the steinway case the defendant used the name stein vague when pronounced as directed by to the public the same also was true in the dr seuss case where there was a publication of trademark materials that are very similar to the plaintiff such as the stove top hat the name dr seuss which the parity it was an attempt to yes the court found that it truly was a parody has nothing to do with this well if there was a trademark component to the dr seuss case those three components were indeed similar and in fact published to the public that's the only important that the same also was true with the mobile pegasus petroleum face the defendant use the name pegasus which the court concluded was identical to the flying horse logo of mobile given the decades and decades of association with that very strong mark so in each of these instances there is an affirmative publication of something that triggers the initial interest confusing the brookfield case is a little different because the record didn't appear to be as well established to show what it was that was triggering the initial confusion on the part of the web user now in the discussion of the metatags the court was quick to note that there were two different kinds of meditations one that is descriptive and one that is a results and those trademarks appearing in the search results listing for the computing defendants website prior to judge thompson's opinion i think it was  the web user never sees any mark published by the defendant assume there is one of the first place and therefore there's i don't understand that the argument you just made if you type in small movie production company and instead you're going to have a guy who registers these the meanings so he can extort money from companies well sure there's an affirmative conduct on the part of the defendant to use a similar name to actually obtain the result of distracting you from where you want to go me physically what your client was doing before the negative is very similar is that there's no evidence in the record as to what my client was doing before the negative that's that's  others from using the words it and soul and advertising of any kind there's no reason that it should have the right in this particular instance to preclude those in a retail industry for either a consignment where everybody takes good and they sell it it's purely descriptive function particularly when used independent of any other claim distinctiveness of a mark on the part of the plaintiff and everybody needs to use the words it and sold in order to advertise as an either a consignment store i don't believe that the picture it sold i don't believe the picture of sold can essentially stop the defendant from using two words that comprise it's own federally trademark business thing i sold it c that's federally registered we have the rights to it and it is distinctive and that's why we use it and average advertising what was the reason for purchas i don't want to misrepresent the record i don't believe it's in the record it's my understanding that once the confusion concern was raised on the part of picture it sold that it was that decision was implemented sometime shortly there after some period thereafter is it fair to infer that it was necessary to purchase the negative to prevent confusion now and this all gets back to likelihood of confusion when when you when somebody searches just let's say you didn't have the negative is your and well i sold it always come up separately designated as a sponsored languor does it just come up and then general search it never comes up in a general search and least as far as the record on appeal is concerned and that's one of the most telling issues here and what  that attack situation you have a defendant using a trademark word and as a result the defendant the plaintiffs are competing for priority on the natural search results also with may minute tags you have the probability that the trademark word will appear in a description of the u r l on the natural search results page so you have a situation where you might have the defendant's u r l plainly disclosed but the plaintiff's trademark describing the u r l and that triggers some sense of confusion and i believe that is what may have underlie the net it meditate decision in the brookfield case so in turning to what the evidence actually is and i always turn to page ninety because that's a pretty good telling example natural search results do not reflect i sold it anywhere the entirety of the searchers will result in no way reflect a mark owned by the plaintiff used by i sold i sold it clearly identifies itself as a competitor in the sense that it's a leading auction drop off chain with multiple franchises under a heading of sponsored link and there's just simply no means by which somebody who views this page can have initial interest confusion as to the best of the source of the goods offered by the defendant indeed they just they were looking for picture it's old pitcher it's old appears number one and it has a link directly to their site so this is categorically different from the situation where there may be some doubt as to the association of an advertisement with the plaintiffs so this is very different from the playboy case in which case and unlabeled advertisement was triggered by use of the plaintiff's keyword the advertisement that popped up or it was a banner ad as it was described did not identify the source of the goods being offered through the advertisement the users who  on that banner ad had no idea where they were being taken to but because of that there was no disassociation with the plaintiffs mark there was some ability to be confused as to the source of the goods being offered by the current opinion gives a number of terrific examples in the regular world where if a consumer interested in a trademark that of the plaintiffs goes and seeks information about and then goes to the clothing store and says show me the calvin klein clo directed to the second floor and lo and behold they get to the second floor and right next to the calvin klein clothes are the store brand clothing which is marketed to the same person designed for the same market maybe even cheaper and a better deal and in that situation it happens every day in the retail world there can be no initial interest confusion because it does it in who's offering the store for brand goods an evident who is offering the calvin klein brands and the concurring opinion has far better analogies than i could muster on my own but a classic example that everybody sees in the daily world is go into a pharmacy looking for tylenol and directly next  is the source of each of those goods and the customer simply is presented with an opportunity to choose and there's no confusion there and that's what makes this case very different from the initial interest confusion cases the metatags cases and the playboy and i'm running out of time i'll be happy to respond any further questions i don't see thank you council for your argument r this different from the calvin klein example he gave it's completely different you know but he's targeting calvin kleins customers when you go into macy's you expect to see lots of different brands in clothing and you look for the section the designer clothes section and you find calvin klein and in walk into the building in the little guards there and i say work and i find calvin klein product for men in the guard says second floor and i come up on the escalator and there's calvin klein and kenneth cole and nineteen other labels and how are then confused on the night on looking for calvin klein is right there but if i'm want to look at izod or some other product on the over there i can it's right there and opens confuse me it's not confusing i'm in a department store that sells lots of brands i'm in a different venue it's like being on amazon and looking for a particular book and somewhere it says if you enjoy reading this author you might enjoy these two i mean a venue that sells lots of different products but the problem we have here is we're not in that venue and importantly  we're getting source confusion and the goodwill analysis mixed up i think what's important to go back to is the definition of initial interest confusion which is the use of another's trademark to capture an initial customer attention even though no actual sale is finally completed as a result that's from the dr seuss case importantly what brookfield said at ten sixty three is although there is no source confusion in the sense that consumers know who they are patronizing there is nevertheless an initial interest confusion in the sense that by using the metatags to divert people looking for movie buff to its website west coast improperly benefits from the goodwill that brookfield developed in its market and that's really the key analytical difference here is whether you're looking at the goodwill the diversion of goodwill in the intentional diversion of goodwill or whether you're looking at source confusion as as i mentioned if you make a sleek craft analysis you have source confusion in this case but the real injury here is that search engine paid search advertising offer the ability to deliberately target a particular businesses customers and prospects it would be is if i had some clever electronic device so that when someone phone directory assistance asking for north beach pizza i could stuff in my response which says press such and such a number sequenced for new york pizza preserv'd one of these you know other places and then after that i could give them the number for north beach pizza you know some people don't care they want to pizza close by and they're going to dial the number because it says press eight or pant to dial the number now i technology just offers all these new great clever ways for businesses to get their name out and to develop custom but with that technology delivers systems for not what we're doing here the facts the facts are a little different and i suppose the ford dealer could come out and and shoo them off the street too i mean it has some  you went directly to west coast video and nothing else m r i know what happened in brookfield case was when you typed movie buff into a search engine window you got a page of listings just like the kind of search results pages we have here and there was a link that said west coast video and if you clicked on that link you went to west coast videos website and there was another link for brookfield that went to its movie path product and those listings are just as labeled as the listings we have here in the whole the whole labeling discussion is another issue that wasn't addressed by the district court but when you when you target somebody says goodwill for the purpose of diverting it you have to ask how much of a label it takes to undo or dispel that initial interest attention that happens and it might be a little different than passing out flyers in front of the ford dealer it might be that when you target it you have to do something extra like they have in newspapers and magazines where it has right across the top advertising session and that little pale grey mention of sponsored link isn't the same as saying advertising session not everybody understands that it's a paid advertising and it's not clear which ones are and aren't what you have on the search result page is a list and it's a list of listeners and you can click at the one at the top or the second or third or fourth one but i sold it comes up at the top every time there's no clear break that says above this are paid advertising kevin mcginnis which includes requests ols statements to him that it's not illegal and everybody does it the second is well in everybody  what the well i'll read it clear ation again i am going to said please stop buying search engine advertising on picture it sold or what's not said what you want and he said i want you to stop buying search engine advertising on picture and sold engine reports and the inferences to be drawn from the search engine reports not only the search engine reports that show that i sold it was buying not only the search engine reports that bring up the ad on picture but i sold its ad displays for all the competitors auction drop snappy options quick drop new market in and there's nothing similar enough between i sold it and those other competitors that it could happen by some search engine x accident the reality is that they were buying on all the competitors of which picture it sold is only one we don't represent the other competitors they're not an issue here today but but those search engine reports are probative in giving rise to an inference that's what they're doing the third thing is they can year over year i understand you're well over your time thank you for your argument the case just argued movie