800-Jr Cigar, Inc. v. Goto.Com, Inc.
| Decision Date | 13 July 2006 |
| Docket Number | Civil Action No. 00-3179. |
| Citation | 437 F.Supp.2d 273 |
| Parties | 800-JR CIGAR, INC., Plaintiff, v. GOTO.COM, INC. et al., Defendants. |
| Court | U.S. District Court — District of New Jersey |
Jan Alan Brody, Carella, Byrne, Bain, Gilfillan, Cecchi, Stewart & Olsten, Roseland, NJ, for Plaintiff.
Peter Joseph Pizzi, Connell Foley, LLP, Roseland, NJ, for Defendant.
Before the Court is the Motion of Plaintiff 800-JR Cigar, Inc. ("JR" or "JR Cigar") pursuant to Federal Rule of Civil Procedure 56 for summary judgment as to liability on Counts I (trademark infringement, 15 U.S.C. § 1114), II (unfair competition, 15 U.S.C. § 1125(a)), III (dilution, 15 U.S.C. § 1125(c)), V (common law trademark infringement), VI (New Jersey trademark infringement and dilution, N.J.S.A. 56:3-13.16 and N.J.S.A. 56:3-13.20), and VIII (New Jersey statutory unfair competition, N.J.S.A. 56:4-1 et seq.) against Defendant GoTo.com, Inc. ("GoTo"), now known as Overture Services, Inc., and the cross-motion of Defendant GoTo for summary judgment in its favor on all claims asserted against it.1 For the reasons explained herein, Plaintiff's motion will be denied and Defendant's cross-motion will be granted in part and denied in part.
JR Cigar is a prominent seller of cigars at discount prices. JR Cigar has marketed its products for more than thirty years under the service mark "JR Cigars," more recently under other marks featuring the formatives "JR" or "JR Cigar," and, even more recently, under the trade name "jrcigars.com," which is the address for JR's Internet website that was launched in April 1999. JR Cigar is the ultimate owner of six federal trademarks that utilize the formative "JR" or "JR Cigar."2
GoTo is a pay-for-priority Internet search engine formed in 1997. Its service reaches approximately 75% of all Internet users. A search engine allows users to find information by entering a search term and receiving a list of results. Pay-for-priority search engines solicit bids from advertisers for key words or phrases to be used as search terms, giving priority results on searches for those terms to the highest-paying advertiser. Thus, each advertiser's rank in the search results is determined by the amount of its bid on the search term entered by the user. The list of paid results on GoTo's web site discloses the amount of each advertiser's bid. Advertisers pay GoTo only when a user clicks on their listings in the search results. After all paying advertisers' sites are listed as search results, GoTo lists unpaid or "natural" search listings, i.e., those whose sites are most logically relevant to the search criteria. GoTo receives no revenue when a user clicks on unpaid listings.
Search terms are displayed on GoTo result pages only if a user enters those particular search terms. And if the search terms are displayed in web site descriptions in the search result listings, it is only because the owner of the listed web site included the term in its description for the listing.
It is arguable that GoTo does not use "jr cigar" or any other JR Cigar trademark to promote or advertise its own services. However, in addition to accepting bids for search terms and earning revenue therefrom, GoTo assists prospective and current advertisers in selecting search terms by providing an automated "Search Term Suggestion Tool." This tool enables an advertiser to assess the usefulness of a search term. When an advertiser enters a search term for which it is considering a bid, the Search Term Suggestion Tool applies various algorithms and automatically generates a list showing how many times that term and related terms were searched during the prior month. GoTo applies its standard editorial review process to search terms identified through the use of the Search Term Suggestion Tool.
Between April 1999 and June 2001, GoTo earned revenue of about $345 from paid listings for "jr cigar" and related search terms. Portions of that revenue stemmed from the term "jr" and clicks to web sites entirely unrelated to cigars, such as J & R Music. Another portion of this revenue resulted from clicks to a web site maintained by JR Cigar's attorneys.
JR Cigar itself did not pay GoTo for a priority listing, but some of its competitors (the non-search engine defendants) did. According to GoTo, some of the bids for "jr cigar" search terms were accepted because the advertisers' web sites contained content that was relevant to JR Cigar or its products under GoTo's relevancy guidelines. In other cases, GoTo accepted bids because its editors believed that the term "jr cigar" was a reference to a "junior" or small cigar.
In June 2000, JR became aware that GoTo was selling to the non-search engine defendants the right to use the term "JR Cigar" and slight variations of that term, including "J R Cigar," "J & R Cigar," "JR Cigar," "JRCigars.com," and "800 JR Cigar" (collectively the "JR search terms"), as Internet keywords or other devices to generate advertising revenues for GoTo. According to JR Cigar, that enabled JR Cigar's competitors to "pass themselves off as JR" and "divert internet shoppers and purchasers from JR's website to their own competitive websites."
At no time did GoTo enter into any agreement with any advertiser encouraging the advertiser to bid on "jr cigar" or related search terms. According to GoTo, its advertisers represent to it that their web sites and search listings will not violate trademark rights of any third party. Moreover, GoTo claims that it exercises no control over the content of the web sites that appear among paid and unpaid listings.
At one time GoTo's "Editorial Manuals" and "Relevancy Guidelines" prohibited bidding on trademarks and on the names of advertisers' competitors, stating that:
• For line listings, GoTo does not permit the mention of specific competitors or bidding for search terms that are trademarked names;
• We do not accept search terms based on the products of our advertisers' competitors, unless our advertisers' websites present actual, significant information about their competitors' products by comparing them to their own.
These prohibitions were removed in 1999 and 2000, reportedly because it was impractical for editors to determine who owned trademarks and whether an advertiser's use was infringing.
On June 28, 2000, JR Cigar filed suit against GoTo and the non-search engine defendants.3 GoTo responded to the receipt of the Complaint and demand letter by reviewing the paid listings for "jr cigar" and related search terms, and removed a number of listings that were not relevant. The two remaining paid listings include advertising by a JR Cigar attorney and by a site providing financial and other information about JR Cigar.
In response to JR Cigar's complaint that its web site was not appearing among unpaid listings, GoTo apparently investigated and learned that the company that supplied unpaid results to GoTo and other search engines had applied an adult content rating to JR Cigar's site that blocked the site from GoTo's unpaid listings unless users set the adult filter to view all listings. Within days, the rating was changed. As a result, JR Cigar's site appears at or near the top of GoTo's unpaid listings.
Summary judgment is appropriate if there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law. Fed. R.Civ.P. 56; Serbin v. Bora Corp., 96 F.3d 66, 69 n. 2 (3d Cir.1996). In evaluating a summary judgment motion, a court must "draw all reasonable inferences in favor of the non-moving party." Armour v. County of Beaver, PA, 271 F.3d 417 (3d Cir. 2001) (quoting Reeves v. Sanderson Plumbing Products, Inc., 530 U.S. 133, 150, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000)). A motion for summary judgment requires the non-moving party to set forth specific facts showing that there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The initial burden of showing that no genuine issue of material fact exists rests initially on the moving party. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Huang v. BP Amoco Corp., 271 F.3d 560, 564 (3rd Cir.2001). Once the moving party has made a properly supported motion for summary judgment, the burden shifts to the non-moving party to "set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e); Anderson, 477 U.S. at 242, 106 S.Ct. 2505.
The mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Quiroga v. Hasbro, Inc., 934 F.2d 497, 500 (3d Cir.1991) (). Rather, only disputes regarding facts that might affect the outcome of the lawsuit under the governing law will preclude the entry of summary judgment. Anderson, 477 U.S. at 247-48, 106 S.Ct. 2505. If the evidence is "such that a reasonable factfinder could return a verdict for the nonmoving party," summary judgment should not be granted. Id. at 248, 106 S.Ct. 2505; Lawrence v. Nat'l Westminster Bank of New Jersey, 98 F.3d 61, 65 (3d Cir.1996).
JR Cigar seeks monetary and injunctive relief, arguing that GoTo (1) profited from the unauthorized sale of the JR marks as search terms to its customers; (2) used the JR marks to attract search customers to its site; and (3) created and implemented a scheme to divert Internet users seeking to find "jr cigar" to JR Cigar's competitors and rivals. JR Cigar argues that such conduct constitutes trademark...
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