Contextual advertising — advertising placed where it will be seen by consumers looking for competitors’ products — is everywhere. Supermarket coupons are strategically placed near shelves stocking competitive products. Yellow pages ads are published next to rivals’ listings. One company’s billboards may appear near a competitor’s store. Contextual advertising is particularly significant on the Internet because the ability to display advertisements or Web site links when consumers search for particular terms gives advertisers a powerful tool for targeting consumers and provides a critical source of revenue for Internet search engines.

While contextual advertising is well accepted in brick-and-mortar businesses and traditional publications, it is controversial on the Internet. Courts have not worked out whether (and if so how) an advertiser may use a competitor’s trademark to trigger banner ads or sponsored links displayed along with search results. A recent U.S. Court of Appeals for the 2d Circuit decision, Rescuecom Corp. v. Google Inc. , 562 F.3d 123 (2d Cir. 2009), confirms a trend favoring trademark holders at the expense of maximally effective contextual advertising. Rescuecom held that Google’s practice of selling trademarked terms as keywords to trigger advertising accompanying search results is a “use in commerce” of the trademarks — a necessary element of a claim under the Lanham Act — even though the trademarks themselves do not appear in the advertising consumers see.

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