American Airlines sues Yahoo! for use of trademarks as keywords

Fresh from its settlement of a similar case with Google, American Airlines Inc has filed suit against another internet search engine, Yahoo! Inc. In a complaint filed on October 17 2008 in the US District Court for the Northern District of Texas (American Airlines Inc v Yahoo! Inc (4:2008-CV-626)), American Airlines alleged that Yahoo! and its subsidiary Overture Services Inc infringed and diluted its AMERICAN AIRLINES trademark and other marks by selling them as advertising keywords.

 

The case is the most recent effort by a US company to stop an activity of great concern to trademark owners - the use of trademarks as keywords by search engines and advertisers to drive internet traffic away from the websites of the trademark owners and toward the websites of competitors or other companies which are not affiliated with the trademark owner.

 

The complaint alleged that under Yahoo!’s sponsored search service, advertisers can purchase certain keywords, including American Airlines’ trademarks. When typed into the Yahoo! search engine, these keywords trigger a 'sponsor result' advertisement with a link to the advertiser’s website. Some of the sponsor result advertisements display the keyword as part of the advertisement itself. According to the complaint, Yahoo! publishes the sponsor results based on which advertisers pay Yahoo! the most money, with the top-paying advertisers receiving the most prominent placement. Moreover, the complaint alleged that the sponsor results are not sufficiently distinguished from 'natural' search results, since the sponsor results are displayed in a colour, typeface and font size that are similar to Yahoo!’s natural search results. 

 

American Airlines alleged that this system was likely to cause consumer confusion because consumers would not understand that the sponsor results generated by a user’s search on 'American Airlines' are organized based on the amount paid by advertisers, rather than the 'natural' relevance of the search results. In addition, American Airlines alleged that consumers would falsely believe that American Airlines had paid for the sponsor result advertisements that appeared alongside the 'natural' search results. 

 

American Airlines further alleged that Yahoo!’s display of American Airlines’ trademarks within the text of the sponsor result advertisements falsely communicated to consumers that such links were endorsed or sponsored by American Airlines. For example, the complaint asserted that a sponsor result advertisement for LowFares.com prominently displayed the AMERICAN AIRLINES trademark. Therefore, consumers were likely to assume that LowFares.com was sponsored or endorsed by American Airlines. 

Trademark owners and practitioners will no doubt wish to monitor this case closely, as the state of US law with respect to use of trademarks as keywords remains in flux. Federal courts have taken divergent views on the question of whether a search engine’s sale of another’s trademark constitutes 'use in commerce' under the Lanham Act, which is a prerequisite to a federal infringement or dilution action. Courts in the Second Circuit have consistently held that the sale of another’s trademark as a keyword is not a use in commerce of those marks. However, courts in other circuits have taken the opposite view, holding that such activities do constitute use in commerce and could constitute a violation of the Lanham Act if the defendant’s use causes a likelihood of consumer confusion or dilution.