Internet search engine operators such as Google, Microsoft, and Yahoo generate significant revenue by selling words or phrases (referred to as "keywords") that trigger paid advertisements that appear on their search result Web pages. There has been much litigation over the past five years concerning the sale or purchase of trademarks as keywords to trigger sponsored search engine results. Federal courts have struggled to determine whether such trademark usage constitutes actionable trademark infringement. This report first provides a brief general overview of trademark law and then reviews court opinions in this rapidly changing area of law. A "trademark" is any word, name, symbol, or device or any combination thereof adopted and used by a manufacturer or merchant (1) to indicate the source of his or her goods or services and (2) to identify and distinguish the goods or services from those offered by others. The principal federal statute governing trademarks is the Trademark Act of 1946 (conventionally known as the Lanham Act). Unlike the other major branches of intellectual property law (copyright and patent), the constitutional basis for federal trademark law is not the Intellectual Property (IP) Clause of the U.S. Constitution, but rather the Commerce Clause. Under the Lanham Act, a merchant or manufacturer that wants to use a particular word or symbol (referred to as a "mark" in trademark law parlance) in association with a product or service must register the mark with the U.S. Patent and Trademark Office to obtain federal protection for the mark. The Lanham Act provides a trademark owner with the right to prevent business competitors from using that mark. The purpose and benefits of trademark law have been described by the U.S. Supreme Court as follows: In principle, trademark law, by preventing others from copying a source-identifying mark, reduces the customer's costs of shopping and making purchasing decisions ... for it quickly and easily assures a potential customer that this item – the item with this mark – is made by the same producer as other similarly marked items that he or she liked (or disliked) in the past. At the same time, the law helps assure a producer that it (and not an imitating competitor) will reap the financial, reputation-related rewards associated with a desirable product. The law thereby encourages the production of quality products ... and simultaneously discourages those who hope to sell inferior products by capitalizing on a consumer's inability quickly to evaluate the quality of an item offered for sale. The trademark owner may pursue several federal private causes of action to prevent, and obtain damages for, unauthorized uses of the trademark (called "infringement"). The following sections of the Lanham Act govern federal trademark infringement claims: Section 32(1): "Any person who shall, without the consent of the registrant—use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive ... shall be liable in a civil action by the registrant...." Section 43(a): "Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which—is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person ... shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act." In order to establish a violation of either Section 32(1) or Section 43(a) of the Lanham Act, the trademark owner (plaintiff) must demonstrate that the following elements are satisfied: 1. The plaintiff possess a mark that is valid and protectable under the Lanham Act. 2. The defendant used the mark in commerce in connection with any goods or services without the consent of the plaintiff. 3. The defendant's use of the mark is likely to cause consumer confusion concerning the origin or sponsorship of the goods or services. The first element is typically straightforward for the plaintiff to show. According to the Lanham Act, a certificate of registration issued by the U.S. Patent and Trademark Office serves as "prima facie evidence of the validity of the registered mark and of the registration of the mark, of the registrant's ownership of the mark, and of the registrant's exclusive right to use the registered mark in commerce on or in connection with the goods or services specified in the certificate." The second prerequisite to establish a defendant's liability is to show that the defendant's use of the plaintiff's trademark is a commercial use of the mark as a trademark—that is, the defendant used the mark "in commerce," in connection with the sale of goods or services. However, this second element has caused courts interpretive difficulties because there are two relevant statutory definitions that may apply to the phrase "use in commerce." The first definition provides that the word "commerce" means "all commerce which may lawfully be regulated by Congress." The second definition defines the specific phrase "use in commerce" to mean the bona fide use of a mark in the ordinary course of trade, and not made merely to reserve a right in a mark. For purposes of this Act, a mark shall be deemed to be in use in commerce—(1) on goods when—(A) it is placed in any manner on the goods or their containers or the displays associated therewith or on the tags or labels affixed thereto, or if the nature of the goods makes such placement impracticable, then on documents associated with the goods or their sale, and (B) the goods are sold or transported in commerce, and (2) on services when it is used or displayed in the sale or advertising of services and the services are rendered in commerce, or the services are rendered in more than one State or in the United States and a foreign country and the person rendering the services is engaged in commerce in connection with the services. As this report will discuss later, the "use" prong of a trademark infringement claim has been the focus of much of the keyword advertising litigation. Under the third element, "likelihood of confusion," the plaintiff need not show that actual consumer confusion has occurred as a result of defendant's use of the trademark, but rather that consumer confusion as to the source of the goods is probable . The likelihood of confusion analysis is a fact-specific inquiry that examines whether "the allegedly infringing conduct carries with it a likelihood of confounding an appreciable number of reasonably prudent purchasers exercising ordinary care." Evidence to prove or disprove this third element often takes the form of customer surveys. Specific court opinions in each of the federal circuits have set forth a list of factors that courts are to consider in trademark infringement cases when analyzing "likelihood of confusion." For example, the U.S. Court of Appeals for the First Circuit has identified the following eight relevant criteria: the similarity of the marks; the similarity of the goods; the relationship between the parties' channels of trade; the relationship between the parties' advertising; the classes of prospective purchasers; evidence of actual confusion; the defendants' intent in adopting its mark; and the strength of the plaintiff's mark. However, as one federal court has explained, "[n]ot all of the factors are always relevant; nor are they of equal importance in each case.... Consequently, no one factor is dispositive on the determination of likelihood of confusion." Even if the plaintiff can establish a prima facie case of trademark infringement by satisfying the three elements discussed above, the defendant can assert several defenses to escape liability. One of these defenses is the first sale exhaustion doctrine, in which there is no trademark infringement when the defendant is reselling a "genuine" good that bears the trademark. A second defense is "nominative fair use," in which the defendant is using the plaintiff's trademark to specifically identify the plaintiff for certain purposes—such as comparative advertising or advertising repair services or replacement parts for the plaintiff's goods. In order to qualify for a nominative fair use defense, the following three-part test may be applied: First, the product or service in question must be one not readily identifiable without use of the trademark; second, only so much of the mark or marks may be used as is reasonably necessary to identify the product or service; and third, the user must do nothing that would, in conjunction with the mark, suggest sponsorship or endorsement by the trademark holder. A third defense is "descriptive fair use." Descriptive words that directly inform the consumer of a characteristic, quality, ingredient, or function of a product may be protectable as a trademark if such words have acquired "secondary meaning." For example, if a substantial part of the public has come to regard certain descriptive words as signifying a single and unique source of the product, rather than merely a description of the product itself, then the words or phrase has "secondary meaning." An example of such a trademark is "PARK 'N FLY," which not only is descriptive of the functional aspects of an off-site long-term parking lot near airports, but the mark is associated by frequent air travelers with a particular business that operates such a parking service. The defendant that asserts the "descriptive fair use" defense is claiming that he is using, in good faith, the particular descriptive words to communicate information to the public about the defendant's own goods or services.