D. Expansion of Inwood Standard to “Non-Product” Cases: The “Direct Control and Monitoring” Test: 2. Internet Activity: (g) Affiliate Marketing (ii) Keyword Advertising
There has been one case addressing secondary liability arising out of keyword advertising by affiliates. In that case, 1-800 Contacts v.Lens.com, the online company Lens.com was held neither vicariously nor contributorially liable for the alleged trademark infringement in connection with the keyword advertising of one of its affiliate marketers. 755 F.Supp.2d 1151 (D. Utah 2010). The highly attenuated nature of the relationship between the advertiser and its affiliate precluded a finding of liability. Indeed it would seem that, notwithstanding the weaknesses in the plaintiff’s pleadings in this particular case, secondary liability would be hard to prove in situations where a defendant retailer’s affiliate infringes on a plaintiff’s trademark. See 1-800 Contacts, supra at 1182. See also Sellify v. Amazon, where the court held the online sales company Amazon was neither vicariously nor contributorially liable for the allegedly infringing Internet advertisements posted by its Associates and linking to its website. 2010 WL 4455830 *2 – *3 (S.D.N.Y.).
Although 1-800 Contacts was litigated as a “keyword advertising case,” it ultimately turned not on the purchase of keywords – the court held that that alone could never be trademark infringement – but on the actual infringing advertisements generated by one of the defendant’s affiliates. 1-800 Contacts v. Lens.com, supra at 1174, 1181 n200 (D. Utah 2010). It involved two companies that sold contact lenses on the Internet, 1-800 Contacts and Lens.com. The plaintiff, 1-800 Contacts, had discovered through routine Internet monitoring that when its name was used as a search term, advertisements for its competitor, the defendant Lens.com, would appear. The plaintiff contended that Lens.com and its affiliates bid on its service marks as keywords to generate sponsored links on Google and other search engines and that those sponsored links were likely to cause confusion as to source, affiliation, or sponsorship. 1-800 Contacts v. Lens.com, supra at 1157. The plaintiff sued Lens.com, alleging among other things, claims for trademark infringement and secondary liability arising out the defendant’s affiliates’ keyword advertising.
The court held that the purchase of a keyword standing alone did not constitute trademark infringement. 1-800 Contacts v. Lens.com, supra at 1174. It therefore turned to the content of the advertisements themselves, and found that of the over 10,000 affiliates employed by Lens.com, one had generated approximately 65,000 infringing impressions containing the plaintiff’s service mark. Significantly, the plaintiff did not name the affiliate as a party. The court therefore turned to the question of whether liability for the affiliate’s infringing advertisements could be imputed to the defendant under theories of either vicarious or contributory liability.
Arguably, the facts in 1-800 Contacts raised a question of whether the affiliates acted as agents of the defendant and thereby triggered vicarious liability. But neither the complaint nor the briefing for summary judgment made clear what the plaintiff’s theory of secondary liability was. 1-800 Contacts v. Lens.com, supra at 1182 (“Plaintiff asserts a claim for secondary infringement against Defendant that lumps all theories of secondary liability under one cause of action”). The court, with little discussion, consequently granted summary judgment for the defendant with respect to any claim based on inducement or vicarious liability premised on an actual or apparent partnership between the defendant and its affiliates. See Id. (“The court will not consider theories of liability that a plaintiff spends so little effort in developing.”) As to the plaintiff’s remaining claims for secondary liability, the court also granted summary judgment to the defendant. The vicarious liability claim based on agency is discussed infra at III.B.2.
Turning to the plaintiff’s claim of contributory liability under the second prong of Inwood, the court held that the plaintiff must prove both “knowledge and that [the] defendant continued to supply its “service” despite knowing its affiliates were engaged in trademark infringement.” 1-800 Contacts v. Lens.com, supra at 1185. Although the court did not make entirely clear how the defendant Lens.com provided its affiliates with a “service,” it impliedly concluded that by virtue of “authoriz[ing] its affiliates to use its name in their advertisements” it was “subject to the law of contributory infringement.” See 1-800 Contacts v. Lens.com, supra at 1185. See also Nomination Di Antonio E Paolo Gensini S.N.C. v. H.E.R. Accessories, Ltd., 2010 WL 4968072 (S.D.N.Y)(“Nomination II”)(court treated defendants who had licensed their intellectual property rights to direct infringers as providers of a “service”). It focused its inquiry on the 65,000 infringing impressions generated by one Lens.com affiliate, and found that the plaintiff failed to show that the defendant knew about them and failed to take action or was willfully blind to them. 1-800 Contacts v. Lens.com, supra at 1186.
In particular, general information that the plaintiff had supplied to the defendant in the months prior to the lawsuit was insufficient to charge the defendant with knowledge or willful blindness, the court reasoned in reaching its decision. The plaintiff had been able to show no more than that non-infringing advertisements were triggered by certain search terms. 1-800 Contacts v. Lens.com, supra. That information was not a basis to charge the defendant with knowledge or willful blindness. Id. Nor did it impose a burden on the defendant “to go search out all of its [10,000] affiliates’ actions to make sure none of them were using [the p]laintiff’s mark. Id.
Similarly, the information contained in the complaint was insufficient to show that the defendant failed to take appropriate action to stop its affiliate from publishing the infringing advertisements. 1-800 Contacts v. Lens.com, supra at 1187. That information included a screenshot of one of the affiliate’s infringing impressions with the following text:
1-800 Contacts Simple online ordering of lenses.
Compare our prices and Save!
Id. at 1186.The court noted that while the foregoing advertisement gave the defendant notice that an affiliate may have been engaging in trademark infringement, the plaintiff had not included any other information from which the defendant could have determined its source. Referencing Tiffany v. eBay, the court held that the defendant “had no obligation to cease licensing its name to all of its affiliates while it took steps to identify the one who generated this particular impression.” See 1-800 Contacts v. Lens.com, supra at 1186, and earlier citation to Tiffany at 1184 nn.218-219.
The defendant further convinced the court that working alone, it would have been unable to identify which affiliates were publishing the infringing advertisements. Moreover, even with the help of Commission Junction, the company that managed and interacted with the defendant’s network of affiliates, doing so was a time-consuming process. The court acknowledged a series of email exchanges the defendant had had with Commission Junction. The emails were dated from the months following the filing of the complaint and showed that the defendant was trying to identify the source of the infringement and put a stop to it. 1-800 Contacts v. Lens.com, supra at 1187. The court therefore concluded that such evidence was insufficient to show that the defendant failed to take appropriate steps to stop its affiliate from publishing the infringing advertisements. It found further that there was nothing to show that the defendant intended to benefit from the infringement, nor even how any of the impressions and clicks occurred during the time period commencing with the filing of the complaint. It therefore dismissed the contributory liability claim. See also Sellify v. Amazon, where the court held the online sales company Amazon was neither vicariously nor contributorially liable for the allegedly infringing Internet advertisements posted by its Associates and linking to its website. 2010 WL 4455830 *2 – *3 (S.D.N.Y.).