Google Faces Trademark Suite Over Search Ads

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Google was hit with a lawsuit this week that accuses the search giant of trademark infringement through its keyword-advertising system, setting the stage for a legal fight that could have far-reaching consequences for the paid search industry.


American Blind & Wallpaper filed the suit Jan. 27 in U.S. District Court in New York. The suit alleges that Google's AdWords paid search program violates trademark law by selling keyword advertising on searches for trademarked terms. Also named in the suit are Google search partners AOL, Ask Jeeves and EarthLink.


American Blind's lawsuit comes two months after Google, Mountain View, CA, asked a federal judge in California for a judgment that selling keyword-based advertising through its AdWords program does not constitute trademark infringement. Google filed the request in response to threats of legal action from American Blind. American Blind also filed a motion to dismiss the case in California.


The suit alleges that Google violates trademark law by selling paid links triggered by three separate trademarked terms owned by American Blind. The company said its competitors have purchased ads on the terms, potentially causing consumer confusion and harming American Blind's business. American Blind seeks an injunction against Google selling ads that appear on searches for its terms, as well as monetary damages and lawyer fees.


In a statement, American Blind chief executive Steven Katzman said the case was a simple matter of Google making money off the hard work done by companies to build their brands.


"We spent millions of dollars to build brand awareness and cannot stand idle while Google allows our competitors to ride our coattails," he said. "We've worked hard at building our online business and cannot allow those efforts to be undermined so Google can make a profit."


A Google representative was unavailable for comment.


The case could clarify the extent to which companies can protect their trademarks when it comes to search advertising, which is bought by bidding on a specific search term. Google holds its advertisers responsible for obeying trademark law, while also giving companies the chance to object to misuse of their trademarks. Google removes AdWords links found to violate trademarks. This summer, eBay successfully petitioned Google to remove links that it claimed violated its trademarks.


"It's absolutely a gray area," said Martin Schwimmer, a trademark attorney in New York. "If decided, this will be an important case that's going to give much-needed guidance to the online advertising industry."


In the case of American Blind, Google acquiesced to a request to remove ads on some of the company's terms, like "American Blind Factory" and "DecorateToday" (the name of the company's Web site), but refused to act on more generic, descriptive search terms such as "blind," "wallpaper" and "factory." In a letter to Google in July 2002, American Blind attorney Susan Greenspon requested Google remove ads for 37 search terms.


The company charges that consumers are doubly confused by Google's labeling of paid results as "sponsored listings," without mention that they are ads. American Blind's complaint labels this "inherently deceptive."


"This case provides the opportunity for an evaluation of how people perceive a search result screen," Schwimmer said.


The trademark issue is particularly confused because of Google's "broad match" option, which expands keyword listings to show paid listings on related terms. With broad matching, an advertiser bidding on a generic term like "blind" would show up in a search for "American Blind," Google said in its complaint. American Blind notes that these searches often return results for competitors.


Danny Sullivan, editor of industry newsletter Search Engine Watch, said Google could not realistically stop ads from appearing on any search that involved a trademarked term. "You would cripple both search engines and any other industry that involves keyword searching," he said.


Last week, AOL and Playboy settled a case that had implications for the area. Playboy objected to AOL serving banner ads triggered by searches for its trademarked terms, such as "Playboy" and "Playmate." Terms of the settlement were not disclosed.


Abroad, Google has suffered some setbacks. In October, Louis Vuitton sued Google and its French subsidiary in a French court for selling ads using keywords on its trademarks. Google does not currently display ads to searches for "Louis Vuitton" on its U.S. site. In another case, a French court ordered Google to stop selling keywords containing the trademarks of two French travel companies.


"There are some troubling precedents in the industry right now," said Nate Elliott, an analyst with Jupiter Research. "Combined, these precedents all tell marketers that if you fight to protect your copyright on the search engines, you can get what you want."


The trademark lawsuit comes as Google is expected to file shortly for a public offering of stock that some analysts think could value the company as high as $20 billion.


Brian Morrissey covers search marketing for DM News.com. To keep up with the latest search marketing news subscribe to our free e-mail weekly newsletter Search Engine Marketing by visiting www.dmnews.com/cgi-bin/newslettersub.cgi .


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