North Carolina Business Litigation Report

Metatags And Google AdWords Lead To Personal Jurisdiction In North Carolina Trademark Infringement Case

The Internet advertising activities of the Defendants, including the use by Defendants of Plaintiff's trademark to generate "sponsored links" in a Google AdWords campaign and the use of the Plaintiff's trademark in metatags, supported personal jurisdiction in an infringement action.  The case, Market America v. Optihealth Products, Inc,  was decided by Magistrate Judge Eliason of the Middle District of North Carolina on November 21, 2008.

The parties compete in the sale of food supplements containing oligomeric proanthocyanidins, an antioxidant which is presumably good for you.  The Plaintiff's product is OPC-3, for which it has a registered trademark. The Defendants sell a competing product under the trademark OPCXtra. 

The Defendants had sold some of their product in North Carolina, but argued that none of their allegedly infringing activity had occurred in this State because none of the product shipped to the State included Plaintiff's trademark. The Court disagreed, however, and denied the Motion to Dismiss for lack of jurisdiction.  It found that "Defendants engage in a number of activities using Plaintiff's trademark, which is intended to draw individuals to their website, which, in turn, is used to make out-of-state sales." 

Among those activities was the Defendants' participation in Google's AdWords program.  The Defendants had purchased through AdWords the word OPC3, the name of Plaintiff's trademarked product.  That meant that if a person using Google searched for OPC3, a link to Defendants' website would be returned. 

The Defendants had also placed metatags on their website which used the Plaintiff's trademark.  Metatags aren't visible, but if a person searched for "OPC" or "OPC3," that person would be directed to the Defendants' website due to the metatags being "seen" by the search engine.

With regard to the metatags, Magistrate Judge Eliason held that "the mere fact that a defendant did not visually display the plaintiff's trademark through the use of a metatag is not determinative on the issue of use, but rather is more properly a factor to be used in deciding whether there is a 'likelihood of confusion' caused by defendant's activity." The Court declined to follow a Second Circuit decision, 1-800 Contacts v. WhenU.Com, Inc., 414 F.3d 400 (2nd Cir. 2005), which holds that the use of a metatag does not amount to use of a trademark.

The Court further held that the Defendants' use of the OPC3 metatags was "for the express purpose of increasing the chance that Internet search engines will point potential customers, including customers from North Carolina, to their website."

Another factor in the denial of the Defendants' Motion to Dismiss was their purchase of the domain name “www.opc3.com” so that Internet users typing in the “opc3” mark owned by Plaintiff would be directed to Defendants' website and Defendants' competing products.

The Court found the use of Google AdWords, metatags, and the OPC3 website were not "inadvertent choices," but rather "intentional activity seeking to use Plaintiff's trademark in order to draw potential customers of Plaintiff to Defendants' website. . . ."  That made out sufficient minimum contacts for personal jurisdiction, and the New York Defendant will as a result be defending this case in the Middle District of North Carolina.

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Mack Sperling
Brooks Pierce, LLP
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Greensboro, NC 27401
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