American Airlines has become the latest company to sue over search engines placing competitors’ ads next to search results for trademarked terms. American filed a federal court suit last week against Google, even though Google and other search providers have prevailed in similar suits in U.S. courts.
American argues that competitors should not be allowed to bid on keywords that result in paid search ads from airlines like United and Delta or comparison shopping sites like Expedia appearing when someone searches for American Airlines.
Insurance company Geico made similar claims in a federal court suit that ended with a decision that Google could sell ads to companies based on their competitors’ trademarked terms so long as the trademarked names did not appear in the text of the ads. Online contact lens distributor 1-800 Contacts lost a similar suit in 2002 against Internet adware company WhenU.com. A lawsuit by American Blind & Wallpaper Factory Inc. against Google is pending in federal court
American’s lawsuit is noteworthy because its trademarks are so well known, Eric Goldman, a law professor at Santa Clara University and director of the High Tech Law Institute, wrote on his blog. “But my working theory is that this was not a good lawsuit for American Airlines to bring,” Goldman says. “I wonder how many consumers pick an American Airlines competitor instead of American Airlines solely due to keyword advertising.”
For its part, Google said through a spokesman, “We are confident that our trademark policy strikes a proper balance between trademark owners’ interests and consumer choice, and that our position has been validated by decisions in previous trademark cases.”
While Google has prevailed in U.S. courts, it has lost similar legal battles in Europe where trademark laws are generally more favorable to trademark owners. As a result, outside of the U.S. and Canada, Google does not allow competitors to place paid ads next to search results for competitors’ trademarked terms. Yahoo, Google’s closest competitor in search, does not allow competitors’ to place ads based on trademarked names. Google accounted for nearly 59% of U.S. paid search advertising in 2006 and Yahoo 15%, according to research firm eMarketer.
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