The opinion of the court was delivered by: Morrison C. England, Jr. United States District Judge
Through this action, Plaintiff Daniel Jurin ("Plaintiff") alleges several violations of state and federal law arising out of the use of its trademarked name "Styrotrim" by Defendant Google, Inc. ("Defendant"). Presently before the Court is Defendant's Motion to Dismiss Plaintiff's Second and Sixth Causes of Action for failure to state a claim upon which relief may be granted pursuant to Federal Rule of Civil Procedure 12(b)(6)*fn1 .
As set forth below, Defendant's Motion will be granted in part and denied in part.
Plaintiff challenges the lawfulness of Defendant's keyword suggestion tool in its for-profit "Google AdWords" program.
A. Background On Search Engines
Defendant is a highly recognized corporation most known for its widely used search engine website. As part of operating its search engine, Defendant "indexes" websites, and collects information regarding their contents so that it, in turn, can store the information for use in formulas which respond to search queries. Generally, when a user enters a query into Defendant's website, the search engine will process relevant websites based on several information factors and then return results to the user.
Web designers routinely use this process to influence their ranking on Defendant's results page. Prior to building a site, web designers will often conduct a keyword search using various available keyword tools in order to determine what terms or phrases internet users are most commonly searching for. A web designer will then build its site around more popular search terms in order to ensure a higher rank on a search engine results page.
Additionally, those with more capital may advertise their websites by "bidding" on keywords. A web designer can construct an ad using popular keywords, and then pay a search engine provider a fee to bid on those keywords in an effort to appear on a search engine results page as a "Sponsored Link" whenever users enter those keywords in their search queries. The higher a web designer bids, the higher the "Sponsored Link" placement when those bid-upon keywords are searched for. "Sponsored Links" appear either at the top or along the side of a search engine results page. As part of its business, Defendant allows advertisers to bid on keywords in a program called "Google AdWords" ("AdWords") and through this program, encourages advertisers to bid on additional relevant keywords using a "keyword suggestion tool."
Plaintiff owns a company which markets and sells its trademarked "Styrotrim" building material to homeowners, contractors, and those in the construction and remodeling industries. Plaintiff filed suit in this case based on Plaintiff's competitors' alleged unauthorized use of its trademarked name as a generic keyword, with the alleged encouragement of Defendant's keyword suggestion tool in its AdWords program.
Defendant's keyword suggestion tool picked up the trademarked name "Styrotrim" as a commonly searched term and thereafter suggested it as a keyword to bidders in AdWords.
Defendant's AdWords program has a policy recognizing the importance of trademarks and states in its terms and conditions that it prohibits intellectual property infringement by advertisers. In this policy, Defendant states it will investigate matters raised by trademark owners. Additionally, the terms and conditions of this policy lay out precisely the scope of investigation it will conduct based on the region in which the trademark holder resides. In the United States, the scope of the investigation will only cover trademarks appearing in the text of advertisements, and not bid-upon keywords.
By both allowing and encouraging Plaintiff's competitors to bid on the keyword "Styrotrim," Defendant caused their advertisements to appear as "Sponsored Links" on a results page whenever a user searches for "Styrotrim." And, where Plaintiff's competitors have placed a higher bid on its own trademark, they will appear at a higher rank in the list of "Sponsored Links."
Plaintiff now alleges that through AdWords, Defendant misappropriated Plaintiff's trademark name for its own profit and breached its contract with Plaintiff by failing to investigate trademark infringement as required by the Adwords policy. Plaintiff alleges Defendant generates advertising revenue from Plaintiff's competitors, and facilitates their infringement of Plaintiff's trademark. Plaintiff alleges that Defendant's actions have caused a dilution of its consumer base by often causing competitors to appear in a position higher than Plaintiff on a results page where they have placed a higher bid on its trademark name.
Plaintiff argues this arrangement confuses consumers into believing that a competitor's product is preferable to Plaintiff's and is a form of "bait and switch" advertising purposefully using Plaintiff's trademarked name to misdirect "Styrotrim" consumers away from Plaintiff's site. Additionally, Plaintiff alleges that consumers may become confused as to whether its competitors are associated with Plaintiff's product.
On a motion to dismiss for failure to state a claim under Rule 12(b)(6), all allegations of material fact must be accepted as true and construed in the light most favorable to the nonmoving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). Rule 8(a)(2) requires only "a short and plain statement of the claim showing that the pleader is entitled to relief" in order to "give the defendant fair notice of what the...claim is and the grounds upon which it rests." Bell Atl. Corp. v. Twombly, 127 S. Ct. 1955, 1964 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the "grounds" of his "entitlement to relief" requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Id. at 1964-65 (internal citations and quotations omitted). Factual allegations must be enough to raise a right to relief above the speculative level.
Id. at 1965 (citing 5 C. Wright & A. Miller, Federal Practice and Procedure § 1216, pp. 235-36 (3d ed. 2004) ("The pleading must contain something more...than...a statement of facts that merely creates a ...