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Hysitron, Inc. v. MTS Systems Corp.: US District Court : TRADEMARK - Lanham Act; buying search engine advertisements as 'use in commerce'

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Hysitron Incorporated,
Plaintiff,
MEMORANDUM OPINION
v. AND ORDER
Civ. No. 07-01533 ADM/AJB
MTS Systems Corporation,
Defendant.
______________________________________________________________________________
Allen W. Hinderaker, Esq., and Brian N. Platt, Esq., Merchant & Gould P.C., Minneapolis, MN,
argued on behalf of Plaintiff.
David P. Pearson, Esq., and William A. McNab, Esq., Winthrop & Weinstine, P.A.,
Minneapolis, MN, argued on behalf of Defendant.
______________________________________________________________________________
I. INTRODUCTION
On May 29, 2008, the undersigned United States District Judge heard oral argument on
Defendant MTS Systems Corporations (MTS) Motion for Partial Summary Judgment [Docket
No. 87] on Counts III through VII of Hysitron Incorporateds (Hysitron) Amended Complaint
[Docket No. 21]. Counts I and II assert patent infringement claims unaffected by MTSs
Motion. Counts III through VII arise from Hysitrons assertion that MTS infringed Hysitrons
HYSITRON trademark when MTS purchased the term hysitron so that a link to MTSs
website would appear when a user typed the term into an internet search engine. Accordingly,
Hysitron brings claims under the federal Lanham Act, 15 U.S.C. 1125(a), analogous Minnesota
trade statutes, Minn. Stat. 325D.15 and 325D.44, common law trademark infringement, and
common law unfair trade practice. For the reasons set forth below, Defendants Motion is
denied without prejudice.
1On a motion for summary judgment, the Court views the evidence in the light most
favorable to the nonmoving party. Ludwig v. Anderson, 54 F.3d 465, 470 (8th Cir. 1995).
2
II. BACKGROUND1
Since 1995, Hysitron has sold nanomechanical test devices and related services under the
common law trademark and trade name HYSITRON. Am. Compl. 21. At the time of the
alleged infringement, MTS competed with Hysitron in the market for nanomechanical test
devices and related services. Id. 20. The nanomechanical testing devices sold by Hysitron and
MTS are highly sophisticated research instruments sold to university, industry, and government
research facilities engaged in nano research and testing projects. Johns Decl. [Docket No. 92]
4. The nanomechanical testing devices cost tens of thousands of dollars per unit and, fully
configured, can cost upwards of 0,000. Id. 6. Nanomechanical testing devices are not
available for immediate purchase through the Hysitron or MTS website; rather a visit to either
firms website typically represents the beginning of a lengthy sales process. Id. 4, 7.
After Hysitron began use of its HYSITRON trademark, MTS, as part of its internet
marketing strategy, purchased the term hysitron to generate a sponsored link through Google,
Inc.s (Google) AdWords program. Am. Compl. 32; Johns Decl. 12. When a user types a
term into Google or another internet search engine, the search engine provides links to websites
that include the term searched. Am. Compl. 25. Search engines produce two types of links:
sponsored and organic. Id. 26. Organic links are generated when the user keys in a term that
matches data from a website. Id. In contrast, a sponsored link is generated when a user keys in a
term that an advertiser has purchased. Id. 27. When the user keys in the purchased term, the
search engine generates a link to whatever content the advertiser desires. Id. These sponsored
3
links are typically displayed above or to the side of organic links. Id. 29.
As a result of MTSs sponsored-link advertising, when a user typed the term hysitron
into a search engine, a sponsored link to MTSs website would appear along with the normally
generated organic links, which included links to Hysitrons website. Platt Decl. [Docket No.
108] Exs. 1-3. MTSs sponsored link did not contain the trademark HYSITRON or any other
Hysitron trademarks. Id. MTS asserts that on February 25, 2008, it ceased using the term
hysitron to generate a sponsored link, and MTS claims to have no plans to use the term in the
future. Johns Decl. 12. In Counts III-VII, Hysitron seeks a permanent injunction preventing
MTS from using the HYSITRON mark to generate advertisements, sponsorships or displays.
III. DISCUSSION
A. Standard of Review
Federal Rule of Civil Procedure 56(c) provides that summary judgment shall issue if the
pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no
genuine issue as to any material fact and that the movant is entitled to judgment as a matter of
law. Fed. R. Civ. P. 56(c); see Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S.
574, 587 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986); Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986). On a motion for summary judgment, the Court views the
evidence in the light most favorable to the nonmoving party. Ludwig, 54 F.3d at 470. The
nonmoving party may not rest on mere allegations or denials, but must demonstrate on the
record the existence of specific facts which create a genuine issue for trial. Krenik v. County of
Le Sueur, 47 F.3d 953, 957 (8th Cir. 1995).
4
MTS argues that summary judgment is appropriate for three reasons. First, MTS asserts
that, as a matter of law, buying the HYSITRON mark for use in Googles AdWords program
does not violate the Lanham Act because it does not constitute a use in commerce as
contemplated by the Lanham Act. In the alternative, MTS asserts that, even if buying the
HYSITRON mark for use in the AdWords program is a use in commerce of Hysitrons
trademark, there is no trademark infringement because the sponsored link did not cause and was
not likely to cause consumer confusion. Finally, MTS asserts that summary judgment is
appropriate because Hysitron cannot demonstrate actual or potential harm entitling it to
injunctive relief.
B. Hysitrons Lanham Act Claim
1. Use in Commerce
As a threshold matter, for its Lanham Act claim to proceed, Hysitron must show that
MTSs use of the HYSITRON mark was a use in commerce. See DaimlerChrysler AG v.
Bloom, 315 F.3d 932, 939 (8th Cir. 2003). Use in commerce is defined in the Lanham Act as:
the bona fide use of a mark,
(1) on goods when-
(A) it is placed in any manner on the goods or their containers or
the displays associated therewith or on the tags or labels affixed
thereto, or if the nature of the goods makes such placement
impracticable, then on documents associated with the goods or
their sales, and
(B) the goods are sold or transported in commerce, and
(2) on services when it is used or displayed in the sale or advertising of
5
services and the services are rendered in commerce[.]
15 U.S.C. 1127.
MTS argues that it has not used the HYSITRON mark in the manner contemplated by the
Lanham Act because it has not placed the mark on any MTS goods and has not reproduced or
displayed the HYSITRON mark in its sponsored link. MTS cites case law from the Second
Circuit holding that there is no use when the trademark is not placed on goods or
communicated to the public. These decisions reason that using a trademark to generate
sponsored links or other advertising is an internal utilization of the mark and that, a companys
internal utilization of a trademark in a way that does not communicate it to the public is
analogous to an individuals private thoughts about a trademark. 1-800 Contacts, Inc. v.
WhenU.com, Inc., 414 F.3d 400, 409 (2nd Cir. 2005) (finding no use in commerce where the
defendants generated internet pop-up ads by including another plaintiffs trademark in an
unpublished directory of terms); see also Rescuecom Corp. v. Google, Inc., 456 F. Supp. 2d 393,
403 (N.D.N.Y. 2006) (finding no use in commerce where a company used another companys
trademark for sponsored link advertising in internet search engine).
The majority of courts that have addressed the issue have disagreed with the Second
Circuits reasoning and found that using a competitors trademark to create a sponsored link or
other advertising does constitute a use in commerce. See e.g. N. Am. Med. Corp. v. Axiom
Worldwide, Inc., 522 F.3d 1211, 1219 (11th Cir. 2008); Playboy Enters., Inc. v. Netscape
Commcn Corp., 354 F.3d 1020 (9th Cir. 2004); Boston Duck Tours, LP v. Super Duck Tours,
LLC, 527 F. Supp. 2d 205, 205 (D. Mass. 2007); Edina Realty, Inc. v. The MLSonline.com, No.
Civ. 04-4371, 2006 WL 737064 at *3 (D. Minn. March 20, 2006)(Tunheim, J.). These cases
6
reason that a companys use of a trademark to generate advertising is a use in commerce, even
when the customer never sees the mark.
This Court adopts the majority view that using a trademark to generate advertising
constitutes a use in commerce under the Lanham Act. This approach adheres to the plain
meaning of the Lanham Acts definition of use in commerce. The language used in the
definition suggests that a use in commerce is not limited to affixing anothers mark to ones
own goods but also encompasses any use of anothers mark to advertise or sell ones own goods
and services. MTS used the HYSITRON mark to generate a sponsored link as part of its effort
to advertise and sell its own goods over the internet. Johns Decl. 12. Under the plain language
of the Lanham Act, MTS used the HYSITRON mark in commerce.
2. Consumer Confusion
MTS next argues that summary judgment is appropriate because Hysitron cannot
demonstrate that MTSs sponsored link caused consumer confusion. To prevail under the
Lanham Act, Hysitron must show that MTSs sponsored link would likely cause confusion
among an appreciable number of consumers. Gateway Inc. v. Companion Product, Inc., 384
F.3d 503, 509 (8th Cir. 2004). The factors to be considered in evaluating a likelihood of
confusion are: 1) the strength of the plaintiffs mark; 2) the similarity between the plaintiffs and
the defendants mark; 3) the degree to which the allegedly infringing product competes with the
plaintiffs goods; 4) the alleged infringers intent to confuse the public; 5) the degree of care
reasonably expected of potential consumers, and 6) evidence of actual confusion. Davis v. Walt
Disney Co., 430 F.3d 901, 903 (8th Cir. 2005). Hysitrons counsel has filed a Rule 56(f)
Declaration [Docket No. 109] explaining that Hysitron needs further discovery to fully
7
determine MTSs intent, the degree of consumer care, and incidents of actual confusion.
Hinderaker Decl. [Docket No. 109] 5-7.
Hysitron has demonstrated that additional discovery is necessary on the issue of
consumer confusion. Significantly, after MTS filed its Motion for Summary Judgment,
Magistrate Judge Arthur J. Boylan partially granted Hysitrons requests for discovery of data
related to MTSs use of the HYSITRON trademark. May 13, 2008, Order [Docket No. 112].
These materials could provide evidence demonstrating a likelihood of confusion. Accordingly,
at this stage in the litigation, summary judgment on the likelihood of consumer confusion is
inappropriate.
3. Actual or Potential Harm
Finally, MTS asserts that summary judgment is appropriate because Hysitron cannot
demonstrate any actual or potential harm entitling it to injunctive relief. MTS re-asserts that
Hysitron cannot demonstrate any actual harm resulting from the sponsored link advertising
because there was no consumer confusion. However, for the reasons discussed above, further
development of the record is necessary on the consumer confusion issue.
MTS also asserts that there is no longer a likelihood of future harm because MTS
discontinued sponsored link advertising using the HYSITRON mark on February 25, 2008.
Johns Decl. 12. Thus, MTS asserts, there is no basis for the Court to grant injunctive relief to
address potential harm. Hysitron disputes whether MTS has actually stopped using the
HYSITRON mark. In support of this assertion, Hysitron relies on a February 27, 2008, email in
Googles internet Gmail service in which the word hysitron is the only text and the MTS
sponsored link appears. Platt Decl. Ex. 6. MTS has submitted a declaration asserting that
8
Gmails association of hysitron with MTS did not result from MTSs use of the HYSITRON
trademark. Rochelle Decl. [Docket No. 105] 7-9. At oral argument, MTS submitted May 29,
2008, web page printouts reflecting that the term hysitron in Gmail and in Googles search
engine did not trigger sponsored links to MTS. Judge Boylan has ordered that MTS produce
materials regarding its use of the term hysitron for sponsored link advertising on the internet.
May 13, 2008, Order at 3. Those materials are not in the record. At this stage of the litigation,
the Court finds there is a genuine issue of material fact regarding whether MTS has stopped
using the HYSITRON mark. Accordingly, summary judgment based on Hysitrons inability to
demonstrate potential harm is inappropriate.
C. MTSs State and Common Law Claims
Counts IV through VII of Hysitrons Amended Complaint allege that MTSs use of the
HYSITRON mark in MTSs sponsored link advertising constitutes unfair competition and
trademark infringement under Minnesota statutory and common law. The parties agree that for
the purposes of MTSs Motion for Summary Judgment, the analysis of the state law claims
should be identical to the analysis of the Lanham Act claim. Accordingly, MTSs Motion for
Partial Summary Judgment on Counts IV-VII is denied.
9
IV. CONCLUSION
Based upon the foregoing, and all the files, records, and proceedings herein, IT IS
HEREBY ORDERED that Defendant MTS Systems Corporations Motion for Partial Summary
Judgment [Docket No. 87] is DENIED.
BY THE COURT:
s/Ann D. Montgomery
ANN D. MONTGOMERY
U.S. DISTRICT JUDGE
Dated: August 1, 2008.
 

 
 
 

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