06 - 48 81 - cv

R e sc u e c o m v . G o o g le

1 1 UN ITED STA TES C OU RT OF AP P EA LS 2 F OR THE SE CO ND CI RC UI T

3 August Term, 2007 4 (Argued: April 3, 2008 Dec ided: April 3, 2009 5 Errata Opinion: J uly 28, 2009) 6 Docke t No. 06-4881-c v

7 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -X 8 Rescuec om Corp., 9 Plaintif f-Appellant , 10 v. 11 Goog le Inc., 12 Defendant- Appellee , 13 14 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - X 15 16 17 18 Be fore : L EVAL , CALAB RESI , WES L EY, Circuit Judges

. 19 Appea l by Plaintiff Rescuec om Corp. from the judg ment of the United States District 20 Court for the Nor thern District of N ew Yor k (Mordue , Chief Judge ), dismissing Rescue com’s 21 action ag ainst Goog le Inc. for trade mark infr inge ment, false de signation of orig in, and dilution 22 under the L anham Ac t, 15 U.S.C. § 1114 & 1125, pursuant to F eder al Rules of Civil P roce dure 23 12 (b )( 6) fo r f

a ilure to s tate a

c la im f or re lie f, on the g ro un ds tha

t G oo g le did

no t us e 24 Rescuec om’s trade mark in commer ce w ithin the meaningof the L anham Ac t. The Court of06 - 48 81 - cv

R e sc u e c o m v . G o o g le

2 1 Appea ls (L eval, J. ) vac ates a nd rema nds. The Complaint’s alleg ations that Goog le’s 2 rec ommendation and sale of Rescue com’s mar k to Goog le’s adve rtisers, so as to trig g er the 3 appea

ranc e of the ir adve rtisements and links in a manner likely to cause consumer c onfusion 4 when a

Goog le user la

unches a sear ch of Resc uecom’ s tradema rk, prope rly

alleg es a c laim under 5 the L anh am A c t.

6 E DMUND J. G EG AN , Rescuec om Corporation, 7 Sy rac use, Ne w York, f

or Appellant

. 8 M I CH A EL H. P AGE , Ke k er& V an Ne st, L L P, San 9 F ra nc isc o, Ca lif

or nia (M ark A. L e mle y and Jose phC. 10 Gratz, on t he brie f), f or Appellee

. 11 L EVAL , Circuit Judge : 12 Appea l by Plaintiff Rescuec om Corp. from a judgment of the United States District Court 13 for the N orthern D istrict of NewYork (Mor due, Chief Judge ) d ism iss ingits a c tio n a g a ins t 14 Goog le, Inc., under Rule 12(b)(6) for f

ailure to state a

claim upon which r elief ma y be grante d. 15 Rescuec om’s Complaint allege s that Goog le is liable under §§ 32 a nd 43 of the L anham Ac t, 15 16 U.S.C. §§ 1114 & 1125, for infring ement, fa lse designation of orig in, and dilution of 17 Rescuec om’s epony mous trademar

k. The district cour

t believed the dismissal of the a ction was 18 compelled by

our holdingin 1-800 Contacts, Inc. v . W henU.c om, Inc

. , 414 F.3d 400 ( 2d Cir. 19 2005) (“ 1-800 ”), be cause , acc ordingto the district court’s unde rstandingof that opinion, 20 Rescuec om failed to alleg e that Goog le’s use of its mark was a

“use in c ommerce ” within the 21 meaningof § 45 of the L anham Ac t, 15 U.S.C. § 1127. W e believe this mi sunderstood the06 - 48 81 - cv

R e sc u e c o m v . G o o g le

3 1 holding of 1-800 . Whil e we express no view as to whe ther Resc uecom c an prove a L anham Ac t 2 violation, an actionable claim is adequately alleg ed in its pleading s. Acc ording ly , we va cate the 3 judgme nt dismi ssing the a ction and re mand for f urther pr ocee dings. 4 BACK GR OUND 5 As thi s a

pp e a l f oll ow s th e g ra

nt o f a mot ion to d ism iss , w e mus t take a s tr ue the fa c ts 6 alleg ed in the Complaint and draw all rea sonable infe renc es in favor of Rescue com. Lentell v. 7 Merrill Lynch &Co., Inc. , 396 F.3d 161, 165 ( 2d Cir. 2005). Rescue com is a national c omputer 8 service fra

nchisingcompany

that offe rs on-site computer service s and sales. Resc uecom 9 c on du c ts a

su bs tanti a l amou

nt o f b us ine ss o ve r t

he Inte rn e t and

re c e ive s b e tw e e n 1 7, 00 0 to 10 30,000 visitors to i ts website ea ch month. It also adver tises over the Interne t, using manyweb11 based se rvice s, including those of fer ed by Goog le. Since 1998, “Re scuec om” has be en a 1 2 r e g i s t e r e d

f e d e r a l tr a d e m ar

k , an d th e r e i s n o d i s p ut e a s t o i t s v a l i d i ty. 13 Goog le oper ates a popular Interne t searc h eng ine, which use rs ac cess by visiti ng

www. g oo g le .c om. UsingGoog le’s we bsite, a per son sear chingfor the w ebsite of a particula r 14 15 e nti ty

in t ra de (o r s imp ly

fo r i nf or matio n a bo ut i t) c an e nte r t

hat e nti ty ’s name or

tr a de mark

int o 16 Goog le’s sea

rch e ng ine and launc h a sea rch. G oog le’s propr ietary sy stem responds to such a 17 sear ch re quest in two way s. First, Goog le provides a list of links to websites, orde red in what 18 Goog le dee ms to be of desc endingrele vance to the user’ s sear ch ter ms based on its proprieta

ry 19 a lg or ithms. Go og le ’s se arc h e ng ine a ssi sts the pu bli c no t on ly

in o bta ini nginf

or matio n a bo ut a 20 provider, but a lso in purchasingproducts and se rvice s. I f a pr ospective pur chase r, lookingfor 21 g oods or servic es of a particula r provider , enter s the provider ’s trade mark a s a sea rch te rm on06 - 48 81 - cv

R e sc u e c o m v . G o o g le

4 1 Go og le ’s we bs ite and c lic ks to a c tiv ate a

se arc h, wi thi n s e c on ds , th e Go og le se arc h e ng ine wi ll 2 provide on the se arc her’ s computer sc ree n a link to the webpa g e maintained by that provider ( as 3 well as a

host of other links to sites that Google ’s program de termines to be r eleva nt to the searc h 4 term ente red) . By clickingon the link of the provider , the sea rche r will be direc ted to the 5 pr ov ide r’ s w e bs ite , whe re the se arc he r c an o bta in i nf or matio n s up pli e d b y

the pr ov ide r a

bo ut i ts 6 pr od

uc ts a nd se rv ic e s and

c an p e rh a

ps a lso make purc ha se s f

ro m th e pr ov ide r b y

pla c ingor de rs . 7 The sec ond way Goog le re sponds to a sear ch re quest is by showingcontext-based 8 a dv e rt isi ng . Wh e n a se arc he r u se s G oo g le ’s se arc h e ng ine by su bmi tti nga

se arc h te rm , G oo g le 9 may

place adver

tisements on the user’ s scre en. Goog le will do so if an adve rtiser, having 10 deter

mined that its ad is likely to be of intere st to a sear cher who enter s the particula

r term, ha s 11 purcha sed fr om Goog le the plac ement of its ad on the sc ree n of the sea rche r who e ntere d that 12 sear ch ter

m. What Google pla ces on the sear cher ’s scre en is more than simply an adve rtisement. 13 It is also a link to the advertiser ’s website, so that in re sponse to such an a d, if the sea rche r clicks 14 on the link, he will open the adve rtiser’s w ebsite, which of fer s not only

additional information 15 about the adve rtiser, but also per haps the option to purcha se the g oods and ser vices of the 16 a dv e rt ise r o ve r t

he Inte rn e t. G oo g le us e s at le a st t wo pr ogra

ms t o o ff e r s uc h c onte xt-b a se d li nk s: 17 AdWor ds and

Ke y wo rd Sug g e sti on

To ol. 18 AdWords is Google ’s program through which adve rtisers purc hase te rms (or ke y words). 19 When entere d as a se arc h term, the ke y word trig g ers the a

ppear ance of the a dvertiser ’s ad a nd 20 link. An adver

tiser’s purc hase of

a par ticular ter m cause s the adve rtiser’s a d and link to be 21 display ed on the use r’s scr een wheneve r a se arc her la unches a Goog le sea

rch ba sed on the06 - 48 81 - cv

R e sc u e c o m v . G o o g le

Although w e g ener ally

ref er to a single adver

tiser, there is no lim it on the number of 1 adver tisers who ca

n purcha se a pa

rticular ke y

word to trig g er the appea ranc e of the ir ads. 5 1 purcha sed sea

rch te rm. Adver

tisers pay Goog le base d on the number of times Interne t users 1 2 “click” on the adve rtisement, so as to link to the adver tiser’s we bsite. For e x ample, using 3 Goog le’s AdWords, Company Y, a c ompany

eng ag ed in the business of f urnac e re pair, c an 4 cause Goog le to display its advertisement a

nd link wheneve r a use r of Goog le launche s a sea rch 5 based on the sear ch ter m, “furna ce r epair .” Company Y ca n also ca use its ad and link to appea r 6 whene ver a

user se arc hes for

the term “ Company

X,” a competitor of Company

Y in the furna ce 7 repa ir business. Thus, whene ver a sear cher interested in pur chasingfurna ce r epair service s from 8 Com

pa ny X l a un c he s a se arc h o f t

he te rm X ( Com pa ny X’ s tr a de mark), an a d a

nd link w ou ld 9 appea

r on the sea

rche r’s scr een, invitingthe sea rche r to the fur

nace repa ir servic es of X’ s 10 competitor, Company Y. And if the se arc her c licked on Company Y’s link, Company

Y’s 11 we bs ite wo uld

op e n o n th e se arc he r’ s sc re e n, and the se arc he r m ight b e a

ble to o rd e r o r p ur c ha se 12 Com

pa ny Y’ s f ur na c e re pa ir

se rv ic e s. 13 In addition to Adwords, Goog le also employ s Key word Sug g estion Tool, a program that 14 rec ommends key words to adve rtisers to be pur chase d. The program is designed to improve the 15 eff

ectivene ss of adve rtising by helpingadver

tisers identify

key words re lated to their a

rea of 16 c omm e rc e , r e su lti ng in t he pla c e me nt o f t

he ir a ds be fo re us e rs wh o a

re lik e ly to b e re sp on siv e to 17 it. Thus, continuing the e x ample g iven above , if Company Y employed Goog le’s Ke y word 18 Sugg estion Tool, the Tool might sug g est to Company Y that it purcha se not only the term 19 “fur

nace repa ir” but also the ter m “X,” its compe titor’s brand name and tra demar k, so that Y’s ad06 - 48 81 - cv

R e sc u e c o m v . G o o g le

6 1 would appea

r on the scr een of

a sea rche r who sea

rche d Company

X’s tra demar

k, seeking 2 Company

X’s we bsite. 3 Once an adve rtiser buy s a par ticular ke y

word, Goog le links the key word to that 4 a dv e rt ise r’ s a dv e rt ise me nt. Th e a dv e rt ise me nts c on sis t of a c omb inatio n o f c onte nt a nd a link to 5 the adve rtiser’s w ebpag e. Goog le display s these adve rtisements on the sea rch r esult pag e either 6 in the rig ht marg in or in a horizontal band immediately above the column of re levanc e-ba sed 7 s e ar c hr e s u l t s . T h e s e a dv e rt i s e m e n t s ar e g e n e r a l l y a s s o c i at e d w i tha l a b e l , w h i c hs ays 8 “sponsore d link.” Rescuec om alleg es, howe ver, that a user might easily be misled to believe that 9 the adve rtisements which a ppear on the scre en ar e in fa ct par t of the re levanc e-ba sed sea rch 10 result and that the a ppear ance of a c ompetitor’s ad a nd link in response to a sea rche r’s sea

rch f or 11 Rescuec om is li kely to cause trade mark c onfusion as to aff iliation, origin, sponsorship, or 12 approva l of servic e. This ca n occur , acc ordingto the Complaint, because G oog le fa ils to l abel 13 the ads in a ma

nner which would clea

rly identify them as purc hased a ds rather than sea rch 14 results. The Complaint alleg es that whe n the sponsored links appe ar in a horizontal bar at the top 15 of

the se arc h r e su lts , th e y

may a pp e ar t o th e se arc he r t o b e the fi rs t, a nd the re fo re the mos t 16 re le va

nt, e ntrie s r e sp on din gto t he se arc h, a s o pp os e d to pa id a dv e rt ise me nts . 17 Go og le ’s ob je c tiv e in i ts A dWo rd s a

nd Ke y wo rd Sug g e sti on

To ol p ro g ra

ms i s to se ll 18 key

words to adve rtisers. Rescue com alleg es that Goog le makes 97% of its reve nue fr om selling 19 a dv e rt ise me nts thr ou g h it s A dWo rd s p ro g ra m. G oo g le the re fo re ha s a n e c on omi c inc e nti ve to 20 incre ase the number of a dvertisements a nd links that appear

for e very term ente red into its searc h 21 eng ine.06 - 48 81 - cv

R e sc u e c o m v . G o o g le

7 1 Many

of Rescue com’s compe titors advertise on the I nterne t. Through its Key word 2 Sugg estion Tool, Goog le has re commended the Rescuec om tradema rk to Rescue com’s 3 c omp e tit or s a s a

se arc h te rm

to b e purc ha se d. Re sc ue c om’ s c omp e tit or s, so me re sp on din gto 4 Goog le’s re commendation, have purcha sed Rescue com’s tra demar k as a ke y word in Goog le’s 5 AdWords prog ram, so that whe never a user launche s a sea

rch f or the ter m “Rescue com,” se eking 6 to be conne cted to Rescue com’s we bsite, the competitors’ a dvertisement a nd link will appear on 7 the sea

rche r’s scr een. T his practice alleg edly allows Rescue com’s compe titors to deceive a nd 8 divert user s sear chingfor Resc uecom’ s website. Ac cordingto Rescuec om’s alleg ations, when a 9 Go og le us e r l a

un c he s a se arc h f or the te rm “ Re sc ue c om” be c a

us e the se arc he r w ish e s to purc ha se 10 Re sc ue c om’ s se rv ic e s, links to w e bs ite s o f i ts c omp e tit or s w ill a pp e ar o n th e se arc he r’ s sc re e n in 11 a manne r likely

to cause the sea

rche r to believe mistakenly that a compe titor’s adver tisement 12 (and w ebsite link) is sponsored by , endorse d by , approve d by , or af filiated with Rescue com. 13 The District Court grante d Goog le’s 12(b) (6) motion and dismissed Rescuec om’s claims. 14 The c ourt believe d that our 1-800de c isi on c omp e ls t

he c on c lus ion

that G oo g le ’s a lle g e dly 15 infring ing a ctivity does not involve use of Resc uecom’ s mark in commer ce, which is an esse ntial 16 element of

an ac tion under the L anham Ac t. The district court e x plained its decision say ing that 17 even if

Goog le employed Rescue com’s mar k in a manner

likely to cause confusion or de ceive 18 sear cher s into believing that competitors are aff iliated with Rescuec om and its mark, so that they 19 believe the service s of Rescue com’s compe titors are those of Rescuec om, Goog le’s ac tions are 20 no t a

“ us e in c omm e rc e ” un de r t he L anh am A c t be c a

us e the c omp e tit or ’s a dv e rt ise me nts 21 trig g ere d by

Goog le’s programs did not exhibi t Rescuec om’s trade mark. The court re jected the06 - 48 81 - cv

R e sc u e c o m v . G o o g le

8 1 argume nt t

hat G oo g le “ us e d” Re sc ue c om’ s ma rk in r e c omm e nd ingand

se lli ngit a s a

ke y wo rd to 2 trig g er c ompetitor’s adve rtisements bec ause the court re ad 1-800to compel the conc lusion that 3 thi s w a s an inte rn a l us e and the re fo re c ann ot b e a

“ us e in c omm e rc e ” un de r t he L anh am A c t. 4 DI SCU SSIO N 5 “ Th is C ourt re vie ws de novo a

dis tr ic t c ourt ’s g ra

nt o f a mot ion to d ism iss purs ua

nt t o 6 Fe dera l Rules of Civil Procedur e 12(b) (6).” PaineW ebber I nc. v. B ybyk , 81 F.3d 1193, 1197 ( 2d 7 Cir. 1996). When review ing a motion to di smiss, a court must “ac cept a s true all of the fac tual 8 alleg ations set out in plaintiff’s complaint, drawinfere nces f rom those alleg ations in the light 9 most favora

ble to plaintiff, and c onstrue the c omplaint liberally .” Gre go ry v . D aly , 243 F.3d 10 687, 691 (2d Cir. 2001) (c itations omi tted). 11 I. Google ’s Use of Resc uecom ’s Mar k Was a “Use in Com m erc e” 12 Our c ourt ruled in 1-800that a complaint fa ils to st ate a claim under

the L anham Ac t 13 unless it alleg es that the de fenda nt has made “ use in commerc e” of the plaintiff’s tra demar

k as 14 the te rm

“ us e in c omm e rc e ” is d e fi ne d in 15 U. S.C. § 1 12 7. Th e dis tr ic t c ourt be lie ve d th at th is 15 case was on a ll fours with 1-800 , and that its dismis sal was r equire d for the sa me re asons as 16 g iven in 1-800 . We believe the c ases a re materially

differ ent. The a lleg ations of Rescue com’s 17 complaint adequately plead a use in commerc e. 18 In 1-800 , the plaintiff alleg ed that the de fenda nt infring ed the plaintiff’ s tradema rk 19 throug h its proprietary softwar e, which the defe ndant fre ely distributed to computer user s who 20 wo uld

do wn loa d a

nd ins ta ll the pr ogra

m on the ir c omp ute r. Th e pr ogra

m pr ov ide d c onte xtua lly 21 rele vant adve rtising to the use r by g ener atingpop-up adve rtisements to the user de pendingon the06 - 48 81 - cv

R e sc u e c o m v . G o o g le

Th e Ap pe nd ix to this op ini on dis c us se s th e a

pp lic a bil ity of § 1 12 7' s d e fi nit ion

of “ us e in 2 c omm e rc e ” to s e c tio ns of the L anh am A c t pr os c ri bin ginf ri ng e me nt. 9 1 website or se arc h term the user enter ed in his browser

. Id. at 404-05. F or example, if a use r 2 ty ped “e y e ca

re” into his browser, the de fenda nt’s program would ra

ndomly display a pop-up 3 adver

tisement of a c ompany

eng ag ed in the fie ld of eye ca re. Similarly , if the sea

rche r launc hed 4 a sea

rch f or a pa rticular c ompany

eng ag ed in eye ca

re, the defe ndant’s program would display the pop-up ad of

a compa ny associate d with eye ca

re. See id. at 412. The pop- up ad appe are d in a 5 6 separ ate br owser w indow from the we bsite the user a cce ssed, and the de fenda nt’s brand w as 7 display ed in the window f rame surroundingthe ad, so that ther e wa s no confusion as to the 8 nature of the pop-up a s an adve rtisement, nor a s to the fac t that the defe ndant, not the trade mark 9 owner , was re sponsible for displaying the ad, in re sponse to the par ticular ter m searc hed. Id. at 10 405. 11 Sections 32 and 43 of the A ct, which we also ref er to by their codifie d desig nations, 15 12 U.S.C. §§1114 & 1125, inter alia, impose liabilit y for unpe rmitted “use in commer ce” of 13 another ’s mark which is “likely to cause confusion, or to c ause mistake, or to dece ive,” §1114, 14 “as to the a ffiliation . . . or as to the or igin, sponsorship or a pproval of his or he r g oods [or] 15 service s . . . by

another person.” §1125(a) (1)( A)

. The 1-800opinion looked to the definition of 16 the term “ use in commerc e” pr ovided in § 45 of the Ac t, 15 U.S.C. § 1127. That definition 17 provides in par

t that “a mar

k shall be dee med to be in use in commer ce . . . ( 2) on ser vices whe n 18 it i s u se d o r d isp lay e d in the sa le or

a dv e rt isi ngof

se rv ic e s a

nd the se rv ic e s a

re re nd e re d in 19 commerc e.” 15 U .S.C. § 1127. Our c ourt found that the plaintiff f ailed to show that the 206 - 48 81 - cv

R e sc u e c o m v . G o o g le

We did not imply

in 1-800tha

t a we bs ite c an n e ve r b e a

tr a de mark . In f

a c t, t he op po sit e 3 is true. SeeTrade mark Manua l of Examini ngProcedur es § 1209.03(m) ( 5 ed. 2007) ( “A mar k th c omp ri se d o f a

n Inte rn e t do ma in n ame is r e g istra ble a s a tr a de ma rk or se rv ic e mark

on ly if it fu nc tio ns a s an id e nti fi e r o f t he so ur c e of

g oo ds or se rv ic e s. ” ); see also Two Pesos, Inc. v . Taco Cabana, Inc. , 505 U.S. 763, 768 (1992) (Sec tion 43(a) of the L anham Ac t protects unre g istered tr a de mark s a s lo nga s th e mark c ou ld q ua lif y fo r r e g istra

tio n und e r t

he L anh am A c t.) ; Thompson Med. Co., Inc . v. Pfizer Inc ., 753 F.2d 208, 215- 216 (2d Cir. 1985) (same). The question whether the plaintiff’s we bsite addre ss was an unr eg istered tra demar k was ne ver pr operly

befor e the 1- 800court be cause the plaintiff did not claim that it used its website addre ss as a tra demar k. 10 1 defe ndant made a

“use in c ommerce ” of the plaintiff’s mar k, within that definition. 2 At the outset, we note two signific ant aspe cts of our holdingin 1-800 , whic h d ist inguis h 3 it from the pre sent ca se. A key element of

our cour t’s decision in 1-800was that unde r the 4 plaintiff’s alleg ations, the defe ndant did not use, repr oduce, or display the plaintiff’s mar

k at a ll

. 5 Th e se arc h te rm

that w a s a lle g e d to tr ig g e r t he po p- up a d w a s th e pla int if f’ s we bs itead

dress . 1- 6 800noted, notwithstanding the simil arities betwe en the we bsite addre ss and the mar k, that the 7 website a ddress wa s not used or cla imed by the plaintiff as a

trade mark. Thus, the tra nsactions 8 alleg ed to be infr ingingwer e not transa ctions involving use of the plaintiff’s tra demar

k. Id. at 9 408-09. 1-800sug g ested in dictum that is highly rele vant to our ca se that had the defe ndant 3 10 us e d th e pla int if

f’ s tra de ma rk

a s th e tr ig g e r t o p op -u

p a n a dv e rt ise me nt, su c h c on du c t mi g ht, 11 dependingon other e lements, have been a ctionable. 414 F .3d at 409 & n.11. 12 Second, as a n alternate basis for its dec ision, 1-800explained why the def endant’ s 13 program, whic h might ra ndomly trig g er pop- up adver

tisements upon a sea

rche r’s input of the 14 plaintiff’s we bsite addre ss, did not constitute a “ use in commerc e,” a s defined in § 1127. Id. at 15 408-09. In explaining why the plaintiff’s mar

k was not “use d or displayed in the sale or 16 adver

tising of se rvice s,” 1-800po int e d o ut t hat, u nd e r t he de fe nd ant’ s p ro g ra

m, a dv e rt ise rs c ou ld06 - 48 81 - cv

R e sc u e c o m v . G o o g le

11 1 not reque st or purcha se key words to trig g er the ir ads. Id. at 409, 412. Even if a n adver tiser 2 wa

nte d to dis pla

y its a dv e rt ise me nt t o a

se arc he r u sin gthe pla int if f’ s tr a de mark

a s a se arc h te rm , 3 the def

endant’ s program did not offe r this possibil ity . In fac t, the defe ndant “did not disclose the 4 proprieta

ry contents of [its] direc tory to its advertising c lients . . . .” Id. at 409. I n addition to not 5 se lli ngtr a de mark s o f o the rs to i ts c us tom e rs to t ri g g e r t he se a ds , th e de fe nd ant d id n ot “ oth e rw ise 6 manip ulate wh ic h c ate g or y -r e late d a dv e rt ise me nt w ill po p u p in re sp on se to a

ny pa rt ic ula r t e rm s 7 on the interna l directory .” Id. at 411. The display of a pa rticular a dvertisement wa s controlled by 8 the categ ory

associate d with the website or ke y word, rather than the website or ke y word itself. 9 The de fenda

nt’s program re lied upon cate g orica l associations such as “ eye ca re” to select a

pop10 up ad ra

ndomly from a pr edef

ined list of ads appropriate to that categ ory . To the extent that an 11 adver

tisement for a

competitor of the pla intiff was displayed whe n a user opened the plaintiff’s 12 website, the trig g er to display the ad wa s not based on the de fenda nt’s sale or r ecommendation of 13 a par

ticular tra demar

k. 14 The pre sent ca se contra sts starkly with those important aspec ts of the 1-800decision. 15 First, in contra st to 1-800 , wher e we emphasized that the def endant made no use whatsoever of 16 the pla int if

f’ s tr a de mark , h e re wh at G oo g le is r e c omm e nd ingand se lli ngto i ts a dv e rt ise rs is 17 Rescuec om’s trade mark. Sec ond, in contrast with the fa cts of 1-800wher e the de fenda nt did not 18 “ us e or

dis pla y ,” muc h le ss s e ll, tr a de mark s a s se arc h te rm s to its a dv e rt ise rs , h e re Go og le 19 dis pla

y s, of fe rs , a nd se lls Re sc ue c om’ s ma

rk to G oo g le ’s a dv e rt isi ngc us tom e rs wh e n s e lli ngits 2 0 adv ert i s i n g s erv i ce s . Inad d i t i o n , Go o gl e e n co ura ges th e p urc h as e o f R es cu ec o m ’s m ark thro u gh 21 its Key

word Sug g estion Tool. Goog le’s utiliz ation of Rescue com’s mar k fits literally

within the06 - 48 81 - cv

R e sc u e c o m v . G o o g le

12 1 te rm s sp e c if

ie d b y 15 U. S.C. § 1 12 7. Ac c or din gto t he Com pla int , G oo g le us e s a

nd se lls 2 Re sc ue c om’ s ma

rk “ in t he sa le

. . . o f [G oo g le ’s a dv e rt isi ng ] se rv ic e s . . . re nd e re d in 3 commerc e.” § 1127. 4 Go og le , s up po rt e d b y amic i, a rgue s th at 1-800sug g ests that the inclusion of a tra demar k 5 in an interna l computer dire ctory cannot c onstitut e tra demar k use. Sever al district court 6 decisions in this Ci rcuit appe ar to have re ache d this conclusion. See e .g. , S& L Vitamins, Inc. v. 7 Au strali an Go ld, Inc. , 521 F. Supp. 2d 188, 199-202 (E .D.N.Y. 2007) (holdingthat use of a 8 trade mark in metadata did not constitute trademar k use within the meaningof the L anham Ac t 9 beca

use the use “ is strictly

internal a nd not communicated to the public” ) ; Me rck &Co., Inc. v. 10 Mediplan He alth Consul ting, Inc. , 425 F. Supp. 2d 402, 415 (S.D.N.Y. 2006) (holdingthat the 11 internal use of

a key word to trig g er a dvertisements did not qualify as trade mark use) . This over12 rea ds the 1-800de c isi on . F ir st, re g ard le ss o f whe the r G oo g le ’s us e of Re sc ue c om’ s ma

rk in i ts 13 internal sea

rch a lgorithm could constitut e an a ctionable tra demar k use, Goog le’s 14 rec ommendation and sale of Rescue com’s mar k to its advertising c ustomers are not internal uses. 15 Fur

thermore , 1-800did not impl y that use of a

trade mark in a sof

tware program’s inter

nal 16 direc tory

prec ludes a findingof trade mark use. Rather, influenc ed by the fa ct that the def

endant 17 was not usingthe plaintiff’s tra demar k at all, much less usingit as the basis of a c ommercia l 18 tr ans a c tio n, the c ourt a sse rt e d th at th e pa

rt ic ula r u se be fo re it d id n ot c on sti tut e a us e in 19 commerc e. See 1-800 , 414 F.3d at 409-12. We did not imply in 1-800that an alleg ed infring er’ s 2 0 u s e o f atra d em ark i nani n t ern al s o ft ware p ro gra mi n s u l at es th e a l l ege d i n fr i n ger fr o ma c h ar ge 21 of infring ement, no matter how likely

the use is to cause confusion in the mar ketplace . I f we06 - 48 81 - cv

R e sc u e c o m v . G o o g le

For example, instead of havinga sepa rate “sponsore d links” or paid adve rtisement 4 se c tio n, se arc h e ng ine s c ou ld a llo w a dv e rt ise rs to p ay to a pp e ar at th e top of

the “ re le va

nc e ” lis t based on a

user e nteringa compe titor’s tradema rk—a f unctionality

that would be highly

likely to cause consumer c onfusion. Alternatively , sellers of pr oducts or ser vices c ould pay

to have the operators of sea

rch e ng ines automatica lly divert user s to their website whe n the users e nter a competitor’s tra demar

k as a se arc h term. Such conduc t is surely not beyond judicial revie w me re ly be c a us e it i s e ng ine e re d thro ugh th e int e rn a l w or kin g s o f a c omp ute r p ro g ra

m. 13 1 we re to a do pt G oo g le and its amic i’ s argume nt, the op e ra tor s o f s e arc h e ng ine s w ou ld b e fr e e to 2 us e tr a de mark s in

wa y s d e signe d to de c e ive and c a us e c on sume r c on fu sio n. Th is i s su re ly 4 3 ne ith e r w ith in t

he int e nti on

no r t he le tte r o f t

he L anh am A c t. 4 Goog le and its amici conte nd further that its use of the Rescue com trade mark is no 5 dif fe re nt f ro m th at of

a re ta il v e nd or

wh o u se s “ pr od

uc t pl a c e me nt” to a llo w o ne ve nd e r t o 6 benef

it from a compe titors’ name re cognition. An example of produc t placeme nt occur s when a 7 store-br and g eneric produc t is placed ne x t to a trade marke d product to induce a customer who 8 sp e c if

ic a lly so ught o ut t

he tr a de mark e d p ro du c t to c on sid e r t he ty pic a lly le ss e xpe ns ive , g e ne ri c 9 brand a s an alter

native. See 1- 800 , 414 F.3d at 411. Goog le’s ar gument misses the point. From 10 the fa ct that prope r, non-de ceptive pr oduct place ment does not result in liability under the 11 L anh am A c t, i t do e s n ot f oll owthat th e la

be l “ pr od uc t pl a c e me nt” is a

ma g ic sh ie ld a g a ins t 12 liability , so that even a dece ptive plan of produc t placeme nt desig ned to conf use consumer s 13 would simil arly

esca pe liability . It is not by

rea son of abse nce of

a use of a mar k in commerc e 14 that benign product plac ement esc apes liability ; it escape s liabilit y beca use it is a benign prac tice 15 which does not c ause a likelihood of consumer c onfusion. In contra st, if a re tail seller we re to be 16 paid by

an off -bra nd purveyor to arr ang e produc t display and deliver

y in such a wa

y that 17 customers see king to pur chase a fa mous brand would re ceive the off- brand, be lieving the y had06 - 48 81 - cv

R e sc u e c o m v . G o o g le

14 1 g otten the bra

nd they wer e see king, w e see no rea son to believe the pr actice would esca pe 2 liability

mere ly beca use it could claim the mantle of “produc t placeme nt.” The pr actice s 3 attributed to Goog le by the Complaint, which at this stage we must ac cept a s true, ar e 4 signif

ic antl y dif fe re nt f ro m be nign p ro du c t pl a c e me nt t hat do e s n ot v iol ate the Ac t. 5 Unlike the pra ctices discusse d in 1-800 , the pra ctices he re attributed to Goog le by 6 Rescuec om’s complaint are that Goog le has made use in commerc e of Resc uecom’ s mark. 7 Nee dless to say , a def endant must do more than use another ’s mark in c ommerce to violate the 8 L anh am A c t. T he g ist of a L anh am A c t vi olatio n is an una uth or ize d u se , whic h “ is l ike ly to 9 cause confusion, or to c ause mistake, or to dece ive as to the a ffiliation, . . . or as to the or igin, 10 sponsorship, or approva l of . . . g oods [or] service s.” See15 U. S.C. § 1 12 5( a ); Estee Lauder Inc

. 11 v. The Gap, I

nc. , 108 F.3d 1503, 1508- 09 (2d Cir. 1997). We have no idea whe ther Resc uecom 12 can pr ove that Goog le’s use of Rescuec om’s trade mark in its AdWords prog ram c auses 13 likelihood of confusion or mistake. Resc uecom ha s alleg ed that it does, in that would-be 14 purc ha se rs (o r e xplor e rs ) o f i ts s e rv ic e s who se arc h f or its we bs ite on

Go og le are mis le a din g ly 15 direc ted to the ads a nd websites of its competitors in a manne r which le ads them to believe 16 mis take nly

tha t th e se a ds or

we bs ite s a

re sp on so re d b y , o r a ff

ili ate d w ithRe sc ue c om. Th is i s 17 particula

rly so, Rescuec om alleg es, whe n the adve rtiser’s link appe ars in a horizont al band at the 18 top of the list of sear ch re sults in a manner whic h makes it appe ar to be the most releva nt searc h 19 result and not an a dvertisement. What Rescue com alleg es is that by the manner

of Goog le’s 20 display

of sponsored links of c ompeting br ands in response to a sea rch f or Rescue com’s bra

nd 21 name ( which fa ils adequate ly to identify

the sponsored link as a

n adver tisement, rather

than a06- 4881

R e sc u e c o m v . G o o g le

15 1 r e l e v an ts e ar c hr e s u l t ) , G o o g l e c r e at e s a l i k e l i h o o d

o f c o n s um e r

c o n f u s i o na s t o tr a d e m ar

k s . If 2 the sea

rche r see s a diffe rent bra

nd name a s the top entry

in response to the se arc h for 3 “Rescue com,” the se arc her is likely to believe mistakenly

that the diffe rent name which a ppear s 4 is affiliated w ith the brand name soug ht in the searc h and will not suspect, bec ause the fac t is not 5 adequately

signa led by

Goog le’s pre sentation, that this is notthe most releva nt response to the 6 sear ch. Whether G oog le’s ac tual prac tice is in fac t benig n or conf using is not for us to judg e at 7 thi s ti me . We c on sid e r at th e 12 (b )( 6) sta g e on ly wh at is a lle g e d in

the Com pla int

. 8 We conclude that the district court wa s mistaken in believingthat our pre cede nt in 1-800 9 re qu ir e s d ism iss a l. 10 CO NC LU SION 11 The judg ment of the district cour t is vacate d and the c ase is re manded f or fur ther 12 pr oc e e din g s.06- 4881

R e sc u e c o m v . G o o g le

In this discussion, all i terations of the phrase “use in c ommerce ” whe ther in the for m of a 5 noun (a “ use in commerc e”) , a ver b (“to use in c ommerce ”), or adjec tive (“use d in commerc e”) , are intended without distinction as inst ance s of that phra se. 16 1 AP P EN DI X 2 On the Meaning of “Use in Com m erc e” in Sections 32 and 43 of the Lan ham Act 5 3 In 1-800 Contacts, Inc. v . W henU.c om, Inc

. , 414 F.3d 400 ( 2d Cir. 2005) (“ 1-800 ”), our 4 court followe d the re asoningof two district court opinions from other circ uits, U-Haul Int’ l, Inc. 5 v. W

henU.c om, Inc

. , 279 F. Supp. 2d 723 (E.D. V a. 2003) a nd W ells Fargo &Co., v. 6 W henU.c om, Inc

. , 2 93 F . Su pp . 2 d 7 34 (E .D . M ic h. 20 03 ), wh ic h d ism iss e d s uit s o n v ir tua lly 7 identical cla ims ag ainst the same de fenda nt. Those two district courts rule d that the def endant’ s 8 conduct wa s not actionable unde r §§ 32 & 43(a) of the L anham Ac t, 15 U.S.C. §§ 1114 & 9 1125(a) , even a ssuming that conduc t cause d likelihood of tradema rk conf usion, beca

use the 10 defe ndant had not made a “use in commerc e” of the plaintiff’s mar

k, within the definition of that 11 phrase set forth in § 45 of the L anham Ac t, 15 U.S.C. § 1127. I n quoting de finitional languag e of 12 § 1127 that is crucia l to their holdings, howe ver, U- Ha ul and W

ells Fargo overlooke d and 13 omitted portions of the statutory textwhich make clea

r that the de finition provided in § 1127 was 14 not intended by

Congr ess to apply

in the manner

that the dec isions assumed. 15 Our c ourt’s rulingin 1-800 that the Plaintiff had fa iled to plead a via ble claim under

§§ 16 1114 & 1125( a) w as justified by numerous g ood rea sons and was undoubte dly the cor rec t result. 17 In addition to the questionable ground der ived from the district c ourt opinions, which had 18 overlooke d key

statutory text , our cour

t’s opinion cited other highly persua sive rea sons for 19 dismiss ing the action – amongthem that the plaintiff did not claim a tra demar k in the term that06- 4881

R e sc u e c o m v . G o o g le

17 1 serve d as the ba sis for the cla im of infring ement; nor did the de fenda nt’s actions ca

use any 2 likelihood of confusion, as is cr ucial for such a c laim. 3 We proce ed to explain how the district courts in U-Haul and W ells Fargo adopted 4 re a so nin gwh ic h o ve rl oo ke d c ru c ia l st atut or y te xt that w a s in c omp atib le wi th t he ir ult imate 5 conclusion. Section 43(a ), codie d at 15 U.S.C. § 1125(a), imposes liability on “any person who, 6 on or in conne ction with any g oods or servic es, uses in comme rceany wo rd , te rm , n ame , s y

mbo l, 7 or devic e . . . which– ( A) is likely to cause confusion . . . .” ( emphasis adde d). Section 32, 8 codified at 15 U.S.C. § 1114, si milarly imposes liabilit y

on one who “ without the consent of the 9 reg istrant–(a) use[s] in comme rceany re pr od uc tio n . . . [or ] co py

. . .o f a re g ist e re d ma

rk

. . . in 10 connec tion with which such use is likely to cause confusion, or to c ause mistake, or to dece ive” 11 (empha sis added). To de termine the me aningof the phra se “use s in commerce ,” which a ppear s 12 in both sections, the U-Haul and W ells Fargo courts quite under standably looked to the 13 definition of the ter m “use in commer ce,” set forth among the Act’s de finitions in § 45, codified 14 at 15 U.S.C. § 1127. That definition, ins ofa r a s q uo te d b ythec ou rt s, state d, wi th r e sp e c t to 15 service s, that a mark sha ll be deeme d to be “use d in commerc e only when it is used or displayed 16 in the sale or a dvertisingof ser vices a nd the servic es ar e re ndere d in commerc e.” W ells Fargo , 17 293 F. Supp. 2d at 757 (inter nal quotations omitt ed); U-Haul , 279 F. Supp. 2d at 727 (spe cifying 18 a similar re quirement with re spect to g oods). Adhering to this portion of the de finition, and 19 deter

mining that on the pa

rticular f acts of the case , the def

endant ha d not used or displayed a 20 mark in the sale or adve rtising of service s, those courts conc luded that the def endant’ s conduct 21 was not within the scope of the Act.06- 4881

R e sc u e c o m v . G o o g le

18 1 In quoting the § 1127 de finition, however, those district courts over looked and omitted 2 two portions of the statutory text , which we believe make cle ar that the definition provided in § 3 1 1 2 7 i s n o ti n t e n d e d t o a p p l y t o § § 1 1 1 4 & 1 1 2 5 ( a )

. F i r s t , th o s e c o urt s , n o d o u b tr e a s o n a

b l y, 4 a ssume d th at th e de fi nit ion of “ us e in c omm e rc e ” se t f

or th i n § 11 27 ne c e ssa

ri ly a pp lie s to a ll 5 usag es of that ter

m throug hout the Act. This was, how ever , not quite acc urate . Section 1127 6 does not state flatly that the def

ined terms have the assigned mea nings when used in the statute. 7 The de finition is m ore guarde d and tentative. It states rathe r that the ter ms list ed shall have the 8 g iven meaning s “unless the c ontrary is plainly appar ent from the c ontext .” 9 The sec ond part of § 1127 which those cour ts overlooked wa s the openingphrase of the 10 de fi nit ion

of “ us e in c omm e rc e ,” wh ic h ma ke s it “ pla inl y a pp are nt f ro m th e c onte xt” t

hat th e fu ll 11 definition set forth in § 1127 ca nnot apply

to the infring ement sec tions. The definition in § 1127 12 beg ins by

saying, “ The ter

m ‘use in commer ce’ means the bona fide use of a mark in the ordina

ry 13 c ours e of

tr a de , a nd no t ma de me re ly

to r e se rv e a

ri g ht i n a mark .” 15 U. S.C. § 1 12 7 ( e mph a sis 14 added) . The re quirement that a use be a bona fide us e in t he or din ary

c ours e of tr a de in o rd e r t o 15 be conside red a

“use in c ommerce ” make s clea r that the pa

rticular de finition was not intended as 16 a lim itatio n o n c on du c t of

an a c c us e d in fring e r t

ha t mi g ht c a us e lia bil ity . I f § 11 27 ' s d e fi nit ion is 17 applied to the def inition of conduct g iving r ise to liabilit y in §§ 1114 and 1125, this would mean 18 that an ac cused infringe r would escapelia bil ity , n otw ith sta

nd ingde lib e ra

te de c e pti on , p re c ise ly 19 beca

use he a cted in bad faith. A bad f aith infring er w ould not have made a use in c ommerce , and 20 the re fo re a

ne c e ssa ry e le me nt o f l ia

bil ity wo uld be la c kin g . L ia

bil ity wo uld fa ll o nly on tho se 21 defe ndants who ac ted in good faith. We think itinconce ivable that the statute c ould have06- 4881

R e sc u e c o m v . G o o g le

The W ells Fargo decision, which f ollowed and c ited U-Haul , unlike U-Haul , d id q uo te 6 the par t of § 1127 which re quires a “ bona fide use of a mark in the ordina

ry course of trade ,” 293 F. Supp. 2d at 758, but fa iled to note the incompatibility of that re quirement with a se ction definingprohibited ac tionable conduc t. In a dd iti on

to § 10 51 , a

no n- e xha us tiv e lis t of

oth e r s e c tio ns that e mpl oy the te rm “ us e in 7 commerc e” in the sa

me g ener al way , in definingwhat is nec essar y to secure the bene fits of the Ac t, i nc lud e § 1 06 5 ( inc onte sta bil ity of a mark); § 1 05 8 ( re ne wa l of a mark), § 1 09 1 ( e lig ibi lity for the supple mental re g ister); § 1112 (r eg istration of a mar k in plurality

of cla sses); and § 1062 (re publication of marks r eg istered unde r ac ts prior to the L anham Ac t). 19 1 intended to exempt infringe rs from liability beca use they acte d in bad fa ith. Such an 2 interpre tation of the statute make s no sense whatsoever. It must be that Congre ss intended § 3 11 27 ' s d e fi nit ion

of “ us e in c omm e rc e ” to a

pp ly to o the r i te ratio ns of

the te rm “ us e in 4 commerc e,” ( as we explore below) a nd not to the specifica

tion of conduct by

an alleg ed infring er 5 w h i c hc a

u s e s i mp o s i t i o no f

l i a b i l i ty. 6 6 A more de tailed examination of the construc tion of the L anham Ac t, and its historical 7 evolution, demonstrates how this unlikely circ umstance c ame to be. T he Ac t employ s the term 8 “use in c ommerce ” in two ver y differ ent contexts. The first context sets the standards and 9 circ umstances unde r which the owner of a ma rk ca n qualify to re gis te r the mark a

nd to rec eive 10 the be ne

fit s and protection provided by the Act. F or example, 15 U.S.C. § 1051 provides that 11 “[t] he owne r of a trade mark used in comm ercemay reque st reg istration of its trademar k on the 12 pr inc ipa l r e g ist e r, ” the re by re c e ivi ngthe be ne fi ts o f e nh anc e d p ro te c tio n ( e mph a sis a dd e d)

. Th is 7 13 part of the statute describes the conduc t which the statute see ks to encoura g e, re war d, and 14 protec t. The sec ond context in which the term “use in c ommerce ” appe ars is at the opposite pole. 15 As e xemp lif

ie d in §§ 11 14 & 11 25 (a ), the te rm “ us e in c omm e rc e ,” a s q

uo te d a bo ve , a lso06- 4881

R e sc u e c o m v . G o o g le

20 1 a pp e ars a s p art

of the Ac t’ s d e fi nit ion

of re pr e he ns ibl e conduct, i.e., the conduc t which the Ac t 2 i d e n t i f

i e s a s i n f r i n g i n go f th e r i g h t s o f

th e tr a d e m ar

k o w n e r , an d

f o r w h i c hi ti mp o s e s l i a

b i l i ty. 3 Whe n o ne c on sid e rs the e nti re de fi nit ion of “ us e in c omm e rc e ” se t f

or th i n § 11 27 , it 4 become s plainly

appar ent that this definition was intended to apply to the Act’s use of that term 5 in definingfavor ed conduc t, which qualifies to re ceive the protec tion of the Act. The definition 6 makes pe rfe ct sense in this context. In order to qualify

to reg ister one’ s mark and r ece ive the 7 enhanc ed prote ctions that flow from r eg istration (g iving the w orld notice of one ’s exclusive 8 ri g hts in t

he mark), the owne r m

us t ha ve ma de “ bo na

fi de us e of

the mark in t he or din ary

c ours e 9 of trade , and not mere ly to reser ve a right in the mar

k.” Id. § 1127. The bona fide “ use” 10 envisioned is, with respec t to “g oods, when [the mark] is placed in any manner on the g oods or 11 their conta iners or the display s associate d there with or on the tag s or labels a ffixed thereto . . . , 12 and the g oods are sold or transporte d in commerc e; and on se rvice s when [the mark] is used or 13 display ed in the sale or adve rtising of service s . . . rende red in c ommerce .” Id. This definition 14 sensibly

insures that one who in good f aith place s his mark on g oods or servic es in commerc e 15 qu a lif

ie s f or the Ac t’ s p ro te c tio n. In c ontr a st, it w ou ld m ake no se ns e wh atso e ve r f or Con g re ss 16 to have insisted, in relation to § 1114 for example, that one who “w ithout the consent of the 17 reg istrant . . . use[d] . . . [a] counter feit . . . of a reg istered mar

k in connec tion with the sale . . . of . 18

. . g oo ds [the re by] ca us [ing ] co nf

us ion ” wi ll b e lia

ble to t he re g istra

nt on ly if his use of the 19 counter feit wa s a “bona fide use of

[t he] mark in the ordinar y course of trade .” Id. §§ 1114 & 20 1127. Such a statute would pe rver sely penalize only

the fools while prote ctingthe knave s, which 21 was sure ly

not what Cong ress intende d.06- 4881

R e sc u e c o m v . G o o g le

Section 1127 define s “commer ce” to mean “a ll commerce which may lawfully be 8 regulated by

Congr ess.” 21 1 The que stion then arises how it came to pass that the sec tions of the statute identify ing 2 conduct g iving r ise to liabilit y included the phr ase “ use in commerc e” a s an esse ntial element of 3 liability . This answer results in part fr om a re arr ang ement of this complex statute, which resulted 4 in j oin ingtog e the r w or ds wh ic h, a s o ri g ina lly wr itt e n, we re se pa

ra te d f ro m on e ano the r. Th e fi rs t 5 incidence of employ ment of the phra se “use in commerc e” in § 1114 oc curr ed in 1962 as the 6 result of a

mere “re arr ang ement” of sections, not intended to have substantive signific ance , 7 which brought toge ther the jurisdiction-invokingphrase , “in commer ce” with the verb “ use.” 8 Prior to the 1962 rea rra ng ement, the ter

m “use in commer ce” appea red a s an esse ntial element of 9 a tra demar

k owner ’s qualification for re g istration and for the benef its of the Act, but did not 10 appea

r as a n essential ele ment of a de fenda nt’s conduct ne cessa

ry for liability . The Ac t 11 fre quently

employ s the term “in c ommerce ” for the distinct purpose of invokingCongr ess’s 1 2 C o m m e r c e C l a

u s e j ur i s d i c t i o nan d

s t ayi n gw i th i ni t s l i m i t s . T h e s t atut e a l s o f r e qu e n t l y e mp l o ys 8 13 the word “ use,” e ither as a noun or ver

b, beca use that word so naturally and aptly descr ibes what 1 4 o n e d o es wi tha t ra d em ark

. No ts urp ri s i n gl y , i nth e e x t en s i v e e l ab o ra t e c o urs e o f dra ft i n g, 15 revision, and r ear rang ement which the Act has unde rg one fr om time to ti me, as e x plained below, 16 the words “ use” a nd “in commer ce” came into prox imity with eac h other in circ umstances whe re 17 there was no intent to invoke the spec ialized restrictive mea ning g iven by

§ 1127. In 1988, when 18 Congr ess ena cted the pr esent for m of § 1127' s definition, which was de signe d to deny 19 reg istration to an owner who made me rely

token use of his mar

k, the ac company

ing06- 4881

R e sc u e c o m v . G o o g le

For example, in specifying how a tra demar

k owner would qualify

for the be nefits of 9 fe de ra l r e g istratio n o f t

he tr a de mark , th e statut e state d, “ [t]hat owne rs of tr a de -m ark s us e d in comme rce with foreign nations, or w ith the Indian tribes , . . . may obtain reg istration of [] trade

marks.” Id. at 50 2 ( e mph a sis a dd e d) ; see also Act of F ebrua ry 20, 1905, 33 Stat. 724, 724 (“[T]he owner of

a tra demar

k used in commerc e with fore ign nations, or amongthe seve ral States, or with Indian Tribes . . . ma y obtain [t rade mark] reg istration.”). And in spec ifying the conduct that would incur

liability for infr inge ment, the Act similarly presc ribed that a

n ag g rieve d party could “e njoin the wrong ful use of suc h trade -mark use d in foreign commerc e or c ommerce with Indian tribes.” A ct of Mar ch 3, 1881, 21 Stat. 502, 504; see also Act of F ebrua ry 20, 1905, 22 1 Congr essional re port made c lear that the def

inition was understood as apply ing only to the 2 require ments of qualification for re g istration and other be nefits of the A ct, and not to conduc t 3 c a u s i n gl i a b i l i ty. We briefly

trac e the history

of this evolution below, to show that the restric tive 4 definition of “use in commerc e” se t forth in § 1127 never was intende d as a r estriction on the 5 typ e s o f

c o n d u c tth atc o u l d

r e s u l ti nl i a

b i l i ty. 6 History of the Phrase “Use in Commerc e” in the Lanham Act 7 In 1879 in The Trade-Mark Cases , 100 U.S. 82 (1879), the Supre me Court struck down 8 the exist ing tr adema rk statutes passe d in the 1870s beca use the Copy

rig ht Clause of the 9 Con sti tut ion

wa s n ot a

pr op e r b a sis of

Con g re ssi on a l a

uth or ity to r e gulate tr a de mark s. Whil e 10 rulingthat the Copy rig ht Clause did not give Congress a uthority to protect tra demar

ks, the Court 11 specifie d that if Congr ess wished to invoke the Commerc e Clause to justify its assertion of the 12 power

to regulate tra demar

ks, it needed to invoke that authority “on the f ace of the law .” Id. at 13 96. Two year s later, Congress e nacte d a statute to “a uthorize the reg istration of trade -marks a nd 14 protec t the same,” Act of Ma rch 3, 1881, 21 Stat. 502, which e x plicitly and re peate dly

invoked 15 Congr ess’s Commerce Clause power on “the f ace of the law ,” usinglanguag e virtually identical 16 to the constitutional gra nt of power

. 906- 4881

R e sc u e c o m v . G o o g le

33 Stat. 724, 728 (“Any

person who sha ll, without consent of the owner there of, re produce , counter feit, copy , or colora bly imitate any

such trade -mark . . . a

nd shall use or shall have used, such re production, counte rfe it, copy , or colora ble imitation in commerce a mong the sever al States, or with a for eign nation, or with the Indian tribes, shall be liable ”.). 23 1 A major re vision to federa l tradema rk law c ame in 1946 with the passa g e of the L anham 2 Ac t. C on g re ssm an F ri tz L anh am, C ha ir man o f t he Sub c omm itt e e on

Tr a de -M ark s o f t

he Ho us e 3 Committe e on

Pate nts , h a d f

ir st i ntr od uc e d h is b ill , H R 90 41 , in 19 38 . A t th e tim e , in

or de r t o 4 qu a lif

y to r e g ist e r a

tr a de mark

and re c e ive the re su lti ngpr ote c tio ns , a tr a de mark

owne r n e e de d to 5 “af

fix ” his mark to g oods in interstate commer ce. SeeAct of F ebrua ry 20, 1905, 33 Stat. 724, 6 724 (statingthat one of the require ments for re g istration is that the trademar k owner must file an 7 a pp lic atio n th at st ate s th e “ mod e in whic h [th e tr a de mark ] is a pp lie d a nd a ff ixed to g oo ds ” ); see 8 also W

estern StoveCo. v. Geo. D . Roper Corp. , 82 F. Supp. 206, 216 (S.D. Cal. 1949) (stating 9 that to obtain a common law tra demar k or a tra demar

k under the Act of 1905, “ it is clear that the 10 trade -mark ha d to be af fix ed substantially

either to the pr oduct, or the c ontainer the reof ”). The 11 1939 version of L anham’ s bill t hus defined “ aff ix ation,” statingthat a “tr adema rk shall be 12 deeme d to be af

fix ed to an a

rticle whe n it is pl ace d in any manner in or upon either the article or 13 its c onta ine r o r d isp lay or up on ta g s o r l a be ls o r i s o the rw ise us e d in the a dv e rt ise me nt o r s a le 14 there of.” H .R. 4744, 76th Cong. § 46 (1st Sess. 1939). The ve rsion prese nted in Congr ess two 15 y ear s later in 1941, H.R. 5461, instead of defining“af

fix ation,” introduce d the less complicate d, 16 mor e a c c omm od atin gde fi nit ion of “ us e in c omm e rc e ” a s th e c on du c t by wh ic h a n o wn e r w ou ld 17 qualify

to reg ister a mar

k. The bill included in § 45 (which e ventually beca me § 1127) a 18 definition of “use [] in commerc e,” which was similar to the de finition of affixation in the prior06- 4881

R e sc u e c o m v . G o o g le

24 1 H.R. 4744 in 1939, but more expansive, including both g oods and ser vices. 2 This definition provided, 3 For

purposes of this Ac t a mark sha ll be deeme d to be used in commer ce ( a) on 4 g oods when it is placed in a ny manner on the g oods or their c ontainers or the 5 display s associate d there with or on the tag s or labels a ffixed thereto a nd the g oods 6 are so ld o r t ra ns po rt e d in

c omm e rc e and

(b ) o n s e rv ic e s whe n u se d o r d isp lay e d in 7 the sale of

adver tising of se rvice s in commerce

. 8 H. R. 5 46 1, 77 th C on g . § 45 (1 st Se ss. 19 41 ). Th is t e xt of § 4 5 o f t he 19 41 bil l w a s e ve ntu a lly 9 enac ted in the 1946 ver sion in subst antially the same f

orm, and in later

codification became the 10 definition set forth in § 1127. It is important to note that in the 1941 bill, in which first appea red 11 the def

ined term, “ used in commerc e,” that term serve d as a r equire ment for r eg istration, but the 12 term nowhe re a

ppear ed in the languag e def ining c onduct that would constitute infring ement 13 under § 32. Sec tion 32, which define d infring ement, made ref ere nce to “ commerc e” but did not 14 employ

the def ined term “ used in commerc e.” 15 In the form in which the Act wa s eventua lly passed in 1946, the ter

m “used in commer ce” 16 c ontin

ue d to be a

pr e re qu isi te to r e g istra

tio n, but r e ma ine d g e ne ra lly a bs e nt, wi th o ne sma ll 17 exception, from the statutory languag e def

ining infr inge ment. Section 32, eventua lly codified a s 18 § 1 11 4, at th e tim e c onta ine d n o in sta nc e of the te rm . Se c tio n 4 3( a ), e ve ntu a lly c od if ie d a s § 19 1125(a) , provided liability for infr ingingconduct by “[a]ny person who sha ll . . . cause or procur e 20 the [trademar

k] t o be tra

nsported or

used in commerc e or

de liv e r t he [tr a de mark ] to a

ny c arrie r t o 21 be tra

nsported or use d.” SeeL anham Ac t, 60 Stat. 427, 441 (1946) (empha sis added). Thus, the 22 Act allowe d the impositi on of liability on any infring er unde r § 32 without reg ard to whe ther he 2 3 “ u s e d

in c o mm e r c e ” th e ma

r k , an d un d e r § 4 3 ( a ) o nany

in f r in g e r w h o “ c a u s e [d ] o r p r o c ur e [d ]”06- 4881

R e sc u e c o m v . G o o g le

25 1 the transpor

tation of a mar

k in commerc e, or who “deliver [ed a mark] to any car rier to be 2 transporte d,” as w ell as to one who “ cause [d] or proc ure[d]” the mark or de livered it to a c arr ier 3 to be “use d in commerc e.” Re g ardle ss of whethe r the “ use in commerc e” la nguag e in § 43(a ) 4 wa s i n t en d edt o carry th e d ef i n i t i o ni n§ 4 5 , th e Lanh amAc tas p as s edi n1 9 4 6 , o nan y re ad i n g, 5 d i d

n o tre s tri ctl i ab i l i ty

fo r i n fr i n gem en tt o th o s e w h o “u s edi nco m m er ce , ” a s d ef i n edi n§ 4 5 's 6 restric tive terms. Such a “ use in commerc e” w as simply one of se vera l way s to satisfy one of 7 se ve ra l e le me nts of a c a us e of a c tio n und e r § 43 (a ). B y c ontr a st, to j us tif

y imp os iti on

of lia bil ity 8 on an in fring e r, the Ac t required, a s an e le me nt o f t he c a us e of a c tio n, that th e inf

ri ng e r “ c a us e 9 the [infringing ] goods or ser vices to ente r into commerc e” — a jurisdictional predicate for 10 Congr ess’s powe r to leg islate in this area

. See id. Thus, on the question whethe r the de finition 11 set forth in § 45 (§ 1127) should be understood a s applying to, a nd thus restricting , conduct 12 causingliability , one of the leadingcommentators on tra demar k law notes, 13 The L anham Ac t § 45 narrow ing de finition of what constitutes “use in c ommerce ” 14 is just a relaxed remnant of trade mark law ’s once -hy per- technica l “af

fix ation” 15 require ment. This statutory anac hronism cer

tainly was ne ver intende d to limi t the 16 sc op e of

“ us e s” that w ou ld c on sti tut e inf ri ng e me nt. 17 4 McCarthy

on Trade marks and Unfair Competition § 23:11.50 (4th ed. 1994 & updated 2008)

. 18 The Amendm ent of § 1114 in 1962 19 A conf

using c hang e in statutory

diction occur

red in 1962 whe n Congr ess amende d § 20 1114. The purpose of the amendment was to broa den liability for infringe ment. Previously , the 21 statut or

y re qu ir e me nt o f c on fu sio n, mis take , o r d e c e pti on a pp lie d o nly

wi th r e sp e c t to 22 “purc haser s as to the source of orig in of such g oods or servic es.” See1 McCarthy § 5:6 (4th ed.06- 4881

R e sc u e c o m v . G o o g le

26 1 1994 & updated 2008). Congress e liminated this requirement to expand the scope of dec eptive, 2 or misleadingconduct that c ould constitute infring ement. Id. (notingthat this amendment “ha s 3 been vie wed a s expanding the r ang e of a ctions that can c onstitut e infring ement of a trade mark by 4 not limi ting it to confusion of pur chase rs and not limiting it to confusion as to the sourc e of 5 g oods”). At the sa me time as makingthis broadeningsubstantive chang e, the 1962 amendment 6 made struc tural cha ng es to the orde r of the la nguag e in § 1114. SeeH.R. Rep. No. 1108, 87 th 7 Cong. at 8 (1961). Previously , § 1114 had listed a series of ac tions which, when take n by “any 8 person . . . in comme rce ” wo uld c a us e lia bil ity . Amon gthe lia

bil ity-c a us inga c tio ns lis te d w a s, 9 un de r c la

us e (a ), a pe rs on ’s “ us e , without the consent of the r eg istrant, [of] any repr oduction . . . 10 .” L anham Ac t, 60 Stat. 427, 437 § 32 (1946) (empha sis added). Thus, in the pr e-1962 ve rsion, 11 the te rm s “ us e ” and “ in c omm e rc e ” oc c ur

re d in se pa rate c la us e s. On e of

the c ha ng e s, wh ic h is 12 no t de sc ri be d in

the Ho us e or

Se nate Re po rt s a s h avin gany su bs tanti ve signif

ic anc e , w a s a 13 rea

rra ng ement of the order

of words so that “ use” a

nd “in commer ce” came to appea r side by side 14 in the amende d version, rather than in sepa rate clause s. In its amended for m, it read “ [a] ny 15 person who sha ll, without t he conse nt of the re g istrant (a) use in comm erceany repr oduction . . . 16 shall be liable in a c ivil action.” 76 Stat. 769, 773 (1962) (e mphasis added) . As the re sult of the 17 rea

rra ng ement, the c onsolidated phrase “use in c ommerce ” appe are d for the f irst time in § 1114. 18 The House and Senate repor ts describe these amendments as intended simply to “re arr ang [e] the 19 languag e.” SeeH.R. Rep. No. 1108, 87th Cong. at 8 (1961); S. Rep. No. 1685, 86th Cong. 1685 20 at 8 (1960). The only chang e to § 1114 spec ifically discussed in the Report wa s the deletion of 21 the phra se “pur chase rs as to the sourc e of suc h g oods or servic es” f or the stated pur

pose of06- 4881

R e sc u e c o m v . G o o g le

In 1962, Congr ess also ame nded six para g raphs of § 1127' s definitions of terms other 10 than “use in commerc e,” but lef t the “use in c ommerce ” def inition i ntact. SeeL anham Ac t, 75 Stat. 769, 774 (1962). Despite br oadeninginfring ement liability in § 1114, Congre ss did not re de fi ne “ us e in c omm e rc e ” a s a pp lyingon ly

to r e g istra

tio n a nd pr ote c tio n, and

no t to inf ri ng e me nt. The Tr adema

rk L aw Revision Act of

1988 was e nacte d on November 16, 1988 and 11 went into eff

ect Nove mber 16, 1989. Some cour ts and commentators r efe r to this Act as the 19 88 ame ndme nt whil e oth e rs re fe r t o it a s th e 19 89 ame ndme nt. 27 1 broade ning liability

. Id. It would be unre asonable to construe mer e “r ear rang e[ment] ” of 2 languag e in § 1114 as having intende d to conver t the broad liability -imposing ter m, “use” into a 3 restric tive, define d term, which ha d previously applied only

to a trade mark owne r’s qua lification 4 for r eg istration of the mark — e specia lly when Congress made no mention beyond descr ibing the 5 chang e as a

rea rra ng ement. See W

hitman v. Am. Trucking Assoc

. , 531 U.S. 457, 468 (2001) 6 (Cong ress doe s not “hide ele phants in mouseholes.”). 10 7 The 1988 Amendm ent to § 1127 8 I f there was a ny doubt prior to 1988 on the question whethe r the na rrowingdefinition of 9 “ us e in c omm e rc e ” se t f or th i n § 11 27 , w a s inte nd e d to a pp ly to t he uti lizatio n o f t

hat phra se in 10 the sec tions providing for the liability

of infring ers, the doubt wa s put to rest by the Tra demar

k 11 L aw R e vis ion

Ac t of 19 88 , wh ic h in se rt e d into § 11 27 the re qu ir e me nt t hat a “ us e in 11 12 c omm e rc e ” be a

“ bo na fi de us e of

a mark in t he or din ary

c ours e of tr a de and no t me re ly

ma de to 13 rese rve a

rig ht in a mark.” This was par t of a c hang e intended to br ing the fede ral tra demar k 14 reg istration sy stem into harmony with the reg istration sy stem of other nations, see Pub. L . No. 15 100-667, 102 Stat. 3935 (Nov. 16, 1988), by providingthe possibilit y of re servinga tra demar

k 16 for intende d future use . Previously , one could not esta blish ex clusive rights to a mark, or06- 4881

R e sc u e c o m v . G o o g le

28 1 elig ibilit y

to reg ister one’ s claim to the mark, e x cept by using the mark in commer ce. O ne who 2 had a bona

fide intent to use a mark in the f uture on a product not yet re lease d into commerce 3 could not be assur ed that, duringproduct de velopment pre cedingdistribution of the product 4 un de r t

he mark , a

no the r u se r m ight n ot e sta bli sha pr iority in t he same mark . In at le a st o ne c a se 5 in this C ircuit, an attempt to reserve priority in a mark by

makingtoken use duringthe produc t 6 development pe riod had be en found ine ffe ctive. Procter &Gamble Co. v. J ohnson &Johnson 7 Inc. , 485 F. Supp. 1185 (S.D.N.Y. 1979) , aff’d 636 F.2d 1203 ( 2d Cir. 1980). The 1988 8 amendment pr ovided re lief by allowingapplicants to file a n intent to use application, by which 9 the y

c ou ld r e se rv e the ir

pr iority in a mark fo r a lim ite d p e ri od

wi tho ut m akin gus e of

it i n 10 commerc e. Pub. L . No. 100-667, § 103. 11 Whil e these amendments provide d relief in the form of e ffe ctive re servation of a mark f or 12 a time on the basis of a filing of intent to use, reg istration of a mar k under § 1051 c ontinued to be 13 lim ite d to tho se wh o h ave in f a c t “ us e d [th e mark ] in c omm e rc e .” An d th e de fi nit ion of “ us e in 14 commerc e” se t forth in § 1127 was amended to re quire that the use be a “ bona fide use . . . in the 15 ordinary

course of trade and not made me rely to reser ve a right in the mar

k.” 15 U.S.C. § 1127. 16 Th os e wi sh ingto r e se rv e a ri g ht i n th e mark

we re pr ov ide d f

or by the ne w i nte nt- to- us e 17 pr ov isi on s. Ac tua l r e g istratio n, ho we ve r, wa s r e se rv e d to mark owne rs makin gbo na

fi de us e in 18 c omm e rc e . A s n ote d a bo ve , th is d e fi nit ion

of “ us e in c omm e rc e ” make s e min e nt g oo d s e ns e a s a 19 prer equisite for a mark owne r to reg ister the mar k and cla im the benef

its the Act provides to the 20 owner s of marks. It makes no conc eivable se nse as a limit ation shielding ba d-fa ith abusers of the 21 marks of othe rs from liability for c ausingtrade mark c onfusion.06- 4881

R e sc u e c o m v . G o o g le

29 1 The Senate Report for the 1988 amendme nt confirms that the de finition in § 1127 was 2 meant to apply

only to reg isteringa mar

k rathe r than infr ingingone. The Senate Repor t 3 explained that the “re vised [use in commerce ] definition i s intended to apply to all aspec ts of the 4 trade mark re g istration proce ss,” and that “ [c] lear ly , howeve r, use of any type will continue to be 5 considere d in an infring ement ac tion.” SeeS. Re p. 10 0- 51 5 1 00 th C on g . at 45 (1 98 8) (e mph a sis 6 added) . This, of course , is consistent with the L anham Ac t’s intent to make ac tionable the 7 dece ptive and misleadinguse of mar ks in commerce—an intent which ha s not chang ed since the 8 L anham Ac t was first ena cted. SeeL anham Ac t, 60 Stat. 427, § 45 (1946); 15 U.S.C. § 1127. 9 Ac c or din gto t

he Se nate Re po rt , a

purp os e in a

me nd ingthi s se c tio n w a s to a dd “ a re fe re nc e to 10 make c lear

that the sec tion applies only to acts or pr actice s which occ ur in [or] aff ect c ommerce .” 11 SeeS. Re p. 10 0- 51 5 1 00 th C on g . at 41 (1 98 8) . T he ame ndme nt l e ft on ly on e re fe re nc e to 12 commerc e in § 1125(a ), which w as the “ uses in commerc e” la nguag e. This term wa s thus 13 e mpl oye d in

the 19 88 re vis ion

to m ake c le ar t

hat li a bil ity wo uld be imp os e d f

or a c ts t hat oc c ur in 14 or af

fec t commerc e, i.e. those w ithin C ong ress’s Commerc e Clause powe r. Thus, the ter m “uses 15 in commerc e” in the c urre nt § 1125(a) is intende d to refe r to a use that falls within Congre ss’s 16 c omm e rc e po we r, and no t to the re str ic tiv e de fi nit ion of “ us e in c omm e rc e ,” se t f or th i n § 45 to 17 define standards of qualification for an owne r to reg ister a mar k and re ceive the bene fits and 18 protec tion of the Act. 19 It theref

ore a ppear s that the history

of the de velopment of the L anham Ac t confirms what 20 is also indicated by a common-se nse under standingof the provisions. The de finition of the term 21 “use in c ommerce ” provide d by § 1127, was intende d to continue to apply , as it did when the06- 4881

R e sc u e c o m v . G o o g le

30 1 definition was conc eived in the 1941 bill, to the sections g overningqualification for re g istration 2 and for

the bene fits of the Ac t. In that version, the ter m “use in commer ce” did not appear in § 3 32, which esta

blished the eleme nts of liability for infr ingingupon a fe dera lly reg istered mar

k. 4 The e ventual appe ara nce of that phrase in that section did not repre sent an intention that the 5 phrase car

ry the re strictive def

inition which defined a

n owner ’s entitlement to reg istration. The 6 a pp e ara nc e ra the r r e su lte d f

ro m ha pp e ns tanc e pa ir ingof

the ve rb “ us e ” wi th t

he te rm “ in 7 commerc e,” whose purpose is to claim the jurisdictional authority of the Commerc e Clause. 8 Section 1127, as noted, doe s not prescr ibe that its definitions necessa rily apply throug hout the 9 Act. The y

apply “unless the c ontrary

is plainly appar ent from the c ontext .” 10 The Interpretation of § 1127's Definit ion of “Use in Commerce”with Respect to Allege d 11 In fri nge rs 12 In light of the prec edingdiscussion, how should courts today interpre t the definition of 13 “use in c ommerce ” set for th in 15 U.S.C . § 1127, with respec t to acts of infring ement pre scribed 14 by

§§ 1114 and 1125(a )? The for eg oing r eview of the evolution of the Ac t seems to us to make 15 clea

r that Cong ress did not intend that this definition apply to the sections of the L anham Ac t 16 which def

ine infring ing c onduct. The de finition was rathe r intended to a pply to the sections 17 which used the phrase in prescribing e ligibility for r eg istration and for the Act’s pr otections. 18 Howeve r, Cong ress doe s not enac t intentions. I t enac ts statutes. And the proce ss of ena cting 19 leg islation is of such complexi ty that understanda

bly the words of

statutes do not alway s confor m 20 perf

ectly to the motivating intentions. This can c reate for c ourts difficult problems of 21 interpre tation. Be cause pertinent amendments wer e passe d in 1962 and in 1988, and bec ause the06- 4881

R e sc u e c o m v . G o o g le

31 1 19 88 ame ndme nt d id n ot c ha ng e the pr e -e xistin gpa

rt s o f t he de fi nit ion

in § 11 27 , b ut m e re ly 2 added a

sentenc e, it seems usef

ul to approac h the question of the c urre nt meaningin two steps. 3 F i r s t , w h atd i d

th i s d e f i n i t i o nm e anb e tw e e n1 9 6 2 an d 1 9 8 8 – p r i o r t o th e 1 9 8 8 am e n dm e n t ? 4 Th e n, ho w w a s th e me anin gc ha ng e d b y the 19 88 ame ndme nt? 5 Be tween 1962 a nd 1988, notwithstanding the likelihood shown by the leg islative history 6 that Co ngre ss intended the de fi nit ion

to a pp ly on ly to r e g ist ratio n a nd qu a lif ic atio n f or be ne fi ts 7 and not to infring ement, a c ourt addre ssing the issue none theless would proba bly have c oncluded 8 that the sec tion applied to alleg ed infring ement, as w ell. Section 1127 states that its definitions 9 apply

“unless the c ontrary

is plainly appar ent from the c ontext .” One who consider ed the 10 qu e sti on

at th e tim e might w e ll h ave wo nd e re d why Con g re ss w ou ld h ave pr ov ide d th is 11 restric tive definition for a cts of tra demar k infring ement with the conse quence that dece ptive and 12 c on fu sin gus e s o f a no the r’ s ma

rk wi th r e sp e c t to g oo ds wo uld e sc a pe lia bil ity if the c on du c t di d 13 no t in c lud e the pla c e me nt o f t he mark on g oo ds or the ir c onta ine rs , d isp lay s, or

sa le do c ume nts , 14 and with re spect to ser vices if the c onduct did not include the use or display of the mar

k in the 15 sale or a dvertisingof the ser vices. It is easy

to imagine pernic iously

confusingconduct involving 16 another ’s mark which does not involve plac ement of the mark in the manne r spec ified in the 17 definition. Nonethele ss, in spit e of those doubts, one could not have sa id it was“plainly appar ent 18 fr om t

he c onte xt” that th os e re str ic tio ns did no t a pp ly to s e c tio ns de fi nin ginf

ri ng e me nt. In a ll 19 probability , there fore , a cour t construingthe provision betwee n 1962 and 1988 would have 20 conclude d that in order to be actionable under §§ 1114 or 1125(a) the alleg edly

infring ing 21 c on du c t ne e de d to inc lud e pla c e me nt o f t he mark in t he mann e r s pe c if

ie d in the de fi nit ion

of “ us e06- 4881

R e sc u e c o m v . G o o g le

32 1 in commerc e” in § 1127. 2 The ne x t question is how the meaningof the § 1127 de finition was chang ed by the 1988 3 amendment, whic h, as noted, lef t the pree x isting languag e about plac ement of the mark 4 un c ha

ng e d, but a dd e d a

pr ior se nte nc e re qu ir ingtha

t a “ us e in c omm e rc e ” be “ a bo na fi de us e in 5 the or din ary

c ours e of tr a de , a nd no t ma de me re ly

to r e se rv e a

ri g ht i n a ma rk .” Whil e it i s 6 “ pla inl y

a pp are nt f ro m th e c onte xt” that th e ne w f ir st s e nte nc e c ann ot r e a so na bly a pp ly to 7 statut or

y se c tio ns de fi nin ginf

ri ng ingc on du c t, t

he qu e sti on

re ma ins wh e the r t

he a dd iti on

of thi s 8 ne w s e nte nc e c ha

ng e d th e me anin gof

the se c on d s e nte nc e of

the de fi nit ion

wi tho ut c ha

ng ingits 9 words. 10 We s e e at le a st two po ssi ble ans we rs to t he qu e sti on , n e ith e r o f whic h is e nti re ly 11 satis fa c tor

y . O ne int e rp re tatio n w ou ld b e tha t, b y a dd ingthe ne w f

ir st s e nte nc e , Co ngre ss 12 c ha

ng e d th e me anin gof

the se c on d s e nte nc e of

the de fi nit ion

to c on fo rm

to t he ne w f ir st 13 sentenc e, without alteringthe words. The languag e of the definition, which, prior to the a ddition 14 of the ne w first sentenc e, would have been c onstrued to apply both to sections defining 1 5 i n fr i n gem en t , an d t o s ec t i o n s s p ec i fyi n g el i gi b i l i ty fo r r egi s tra t i o n , wo u l d

ch an ge i t s m ean i n g, 16 despite the a

bsence of any

chang e in its words, so that the entire definition now no long er a pplied 17 to t

he se c tio ns de fi nin ginf

ri ng e me nt. Cha

ng e of me anin gwi tho ut c ha

ng e of wo rd s is ob vio us ly 18 problematic. 19 The a lternative solution would be to interpre t the two sentenc es of the statutory definition 20 as of diff

ere nt scope. The second se ntence of the de finition, which survived the 1988 21 amendment unc hang ed, would re tain its prior meaningand continue to a pply as bef ore the06- 4881

R e sc u e c o m v . G o o g le

We e xpre ss n o v ie w whic h o f t he a lte rn ativ e ava ila

ble so lut ion s w ou ld s e e m pr e fe ra ble 12 if our Circuit had not pre viously applied the se cond sente nce to se ctions of the Ac t defining inf ri ng e me nt. 33 1 amendment to sec tions defining inf ring ement, as w ell as to sections re lating to a mark owne r’s 2 e lig ibi lity

fo r r e g istratio n a

nd fo r e njo y me nt o f t he pr ote c tio ns of

the Ac t. T he ne w f

ir st 3 sentenc e, which pla inly was not intended to a

pply to infring ements, would apply only to sections 4 in the latter c ateg ory – those relating to an owner’ s elig ibilit y to reg ister its mark and e njoy the 5 Act’s pr otection. Under this int erpr etation, liability for infr inge ment under §§ 1114 a nd 1125(a) 6 would continue, as be fore 1988, to require a showingof the infr inge r’s plac ement of a nother’s 7 mark in the manne r spec ified in the sec ond sentenc e of the § 1127 definition. It would not 8 require a showingthat the alleg ed infring er ma de “bona fide use of

the mark in the or dinary 9 course of trade , and not mere ly to reser ve a right in the mar

k.” On the othe r hand, e ligibility of 10 mark owne rs for r eg istration and for the protec tions of the Act would depe nd on their showing 11 compliance with the require ments of both sentenc es of the de finition. 12 We rec og nize that neither of the two a vailable solutions is altoge ther satisfa ctory . Eac h 13 has adva

ntag es and disadva

ntag es. At lea st for this Circuit, especia lly g iven our prior 1-800 14 prec edent, whic h applied the se cond sente nce of the def inition t o infring ement, the latter 15 so lut ion , a c c or din ga dif fe re nt s c op e of

a pp lic atio n to the tw o s e nte nc e s o f t he de fi nit ion , s e e ms 16 to be pre fer able. 12 17 The judg es of the 1-800pa ne l ha ve re a d th is A

pp e nd ix an d h ave a

uth or ize d u s to state 18 that they

agree with it. At the same time we note that the discussion in thi s Appendix does not 19 aff

ect the r esult of this case. We a ssumed in the body of the opinion, in acc ordanc e with the06- 4881

R e sc u e c o m v . G o o g le

34 1 holding of 1-800 , th at th e re qu ir e me nts of the se c on d s e nte nc e of

the de fi nit ion

of “ us e in 2 commerc e” in § 1127 a pply to infring ing c onduct and f ound that such use in commer ce w as 3 adequately

pleade d. The discussion in this Appendix is theref ore dic tum and not a binding 4 opinion of the court. It would be helpful for Congr ess to study

and cle ar up this ambiguity

.