September 27, 2007, 12:00 AM

Retailer gives up trademark suit against Google

American Blind & Wallpaper Factory Inc. has ended its legal fight against Google Inc.’s practice of allowing competitors to buy American Blind trademarks as keywords to trigger ads on Internet search results pages. Google has so far prevailed in all lawsuits filed against it.

American Blind & Wallpaper Factory Inc. has ended its legal fight against Google’s practice of allowing competitors to buy American Blind trademarks as keywords to trigger ads on search results pages. But American Airlines has picked up the fight, filing its own suit against Google over the same issue.

American’s legal action is the latest in a string of similar lawsuits filed against Google. So far, Google has prevailed in U.S. court rulings and in the American Blind case obtained a settlement without paying any damages or legal fees.

The outcome of the American Blind case “reiterates that keyword-related lawsuits can be a sucker’s bet,” says Eric Goldman, director of the High Tech Law Institute at Santa Clara University’s law school and an assistant professor at the school.

American Blind agreed to settle the case out of court rather than proceed with a federal court trial set to begin Nov. 9 in San Jose. American Blind, a multi-channel home furnishings retailer, agreed not to sue Google as long as Google follows its current trademark policy.

Google’s policy in the U.S. is to allow anyone to bid on a trademarked term as a keyword. That means, for instance, that United Airlines can buy the term “American Airlines” and present its ads when someone searches for American on Google. However, competitors are not allowed to use trademarked terms in the text of their ads.

Different deal in Europe

Google’s policy sets it apart from such search engine rivals as Yahoo and MSN, which will prevent competitors from bidding on a trademarked term if the trademark owner complains. Google has adopted a similar policy in Europe after losing some legal battles there with trademark owners.

“From a practical standpoint it’s very difficult to police when you have hundreds of thousands of advertisers bidding on millions of keywords,” says John McAteer, head of the retail practice at Google. He suggests trademark owners take up the matter with the company buying their trademarked terms.

So far, Google has prevailed in several cases in U.S. courts, although the American Blind suit would have been the first to go before a jury. While American Blind remains convinced that Google’s policy violates trademark law, the company said in a statement that it “made the business decision to put its time and money into its business rather than into completing this case.”

The settlement announcement came shortly after American Airlines filed its own suit against Google in federal court. And American Blind said in its statement on the settlement, “American Airlines’ decision to file the same claims against Google made the decision by our company that much easier.”

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