In 2006, the Second Circuit ruled in a case called 1-800 Contacts v. WhenU, that an adware program that detected visits to corporate web sites via their URLs, and triggered competitor's ads in a separate popup window, did not make any "use in commerce" of the trademarks embodied in those URL's, and that therefore the conduct was not actionable under the Lanham Act.

That ruling was applied in a number of other cases by lower courts in the Second as standing for the proposition that any "internal" computer use of a trademark is not actionable as a "use in commerce," and hence the use by Google's Adword program was held to be not actionable.

The Second Circuit clarified that conclusionlast week in this opinion, where it distinguished use of the URL to trigger a pop-up, and use of the trademark to trigger a competitor's sponsored ad, holding the latter to, in fact, be a "use in commerce." With that ruling,the only remaining issue in the case is whether the resulting triggered ad caused any customer confusion. That being a fact issue, the case is of Rescuecom v. Google is now proceeding to trial.

The case is a huge break for trademark holders in the U.S.who loathe the use of their valuable trademarks to trigger the ads of their competitors, and breathes new life into their claims against Google. The use of trademarks to trigger sponsored ads has been held unlawful in other countries, and Google's current policy allows the practice only in the US and Canada.