Searching for Answers over Keyword Searches: CDA Blocks State Law IP Claims

By now, most consumers are familiar with those sponsored links that appear on Yahoo!, Google, or Bing after they search for something on the Internet. Those “keyword” advertisements are a significant source of revenue for the online search engines, appearing on consumers’ computer screens next to the “organic” search results when consumers type in relevant phrases or terms. The ads work because they are designed to mirror the consumer’s search and ideally to provide the consumer with exactly what they were looking for. But some companies are crying foul – arguing that the keyword ads are so close to consumer searches that they violate the companies’ intellectual property rights.

That is the argument being made by a company called Parts.com, LLC, against Yahoo! in a case in the US District Court for the Southern District of California. Parts.com claims that when consumers do a Yahoo! search for their domain name – a trademarked term – Yahoo! generates sponsored links that include the term parts.com. In this case, when a user searched for “Parts.com,” Yahoo! generated a keyword ad from a third-party entity called CarParts.com as well as two “parts.com” links that redirected to other pages of Yahoo! advertisements rather than the website of Parts.com, LLC. Consequently, the company is suing Yahoo! for, among other things, trademark infringement under federal and state law.

Now, however, a federal judge has blocked the state law trademark infringement claims, finding that Section 230 of the federal Communications Decency Act (CDA), 47 U.S.C. § 230, confers immunity on Yahoo! as an Internet service provider. Under the CDA – a 1996 law aimed at regulating obscene and indecent Internet content – an Internet service provider cannot be treated as the “publisher or speaker of any information” provided by a third-party content provider and plaintiffs are thus barred from holding service providers legally responsible under state law for information created and developed by content providers. Yahoo! successfully argued that it qualifies for CDA immunity because it acts purely as a seller of advertising space while advertisers provide the content. Notably, the Court found that Parts.com failed to provide any facts to support its claim that Yahoo! does more than provide ad space and in fact participates in the creation of the advertising content.

In dismissing the state trademark claims, the Court noted that the Ninth Circuit has broadly interpreted Section 230, holding that the CDA bars state law intellectual property claims even as other federal courts have split over the issue of how broadly the provision should apply. Although courts are in agreement that Section 230 does not bar federal intellectual property claims, some have held that it does not bar state law intellectual property claims either.

With regard to the federal trademark infringement claims, the Court found that the use of a trademark as a search engine keyword was sufficiently likely to cause consumer confusion to survive a motion to dismiss.

Arent Fox will continue to monitor this case as well as any other developments related to the CDA and intellectual property rights. 

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