The Ninth Circuit Court of Appeals recently departed from the 30-year-old standard by which federal courts evaluate trademark infringement claims. The issue in that case, Network Automation, Inc. v. Advanced Sys. Concepts, Inc., No. 10-55840 (9th Cir. Mar. 8, 2011), was whether a company infringes on another’s trademark by purchasing the competitor’s registered name or mark to use to promote their own business or products via Internet search engines, namely Google’s AdWords. As fellow New Jersey IP attorneys Lionel J. Frank and Richard A. Catalina Jr. noted in this article yesterday, the largest federal appeals court reversed a trial court’s decision granting an injunction to the company claiming infringement.

Here’s a little background on the subject matter involved in the infringement claim. In the beginning of the world wide web, developers and code writers figured out early on that they could trick search engines into driving traffic to their sites by embedding their competitors’ names and keywords in the metadata of their own websites. This practice may have been effective in the short run, but the search engines quickly figured out what was happening, and modified their search algorithms to ignore the metadata, which was easily manipulated, and to instead focus on the real (i.e., visible) content on webpages.

But when Google sells its AdWords advertisements, it effectively allows whatever company is the highest bidder to jump to the top of Google’s search list whenever a websurfer searches for certain (purchased) key words. (For more on how Google AdWords works, see the Frank & Catalina article.)

What the latest appeals court decision does is place different emphases on the factors that courts use to determine whether any infringement has occurred:

Given the nature of the alleged infringement here, the most relevant factors to the analysis of the likelihood of confusion are: (1) the strength of the mark; (2) the evidence of actual confusion; (3) the type of goods and degree of care likely to be exercised by the purchaser; and (4) the labeling and appearance of the advertisements and the surrounding context on the screen displaying the results page.

Although the court’s decision appears to draw a line in the sand that is more liberal than what’s been the rule, it’s probably too soon to call the proverbial floodgates open. First, this ruling is just from one circuit court of appeals; until the U.S. Supreme Court rules on the issue, one way or another, other circuits are free to distinguish (or even disregard) the Ninth Circuit’s holding. Something else to keep in mind—this was not a trial on the issue of trademark infringement; the only issue before the Ninth Circuit was whether it was appropriate to grant a preliminary injunction, which places a higher burden on the aggrieved party than that in a full trial.