Google faces another trademark keyword ads lawsuit

With the American Blind & Wallpaper Factory trademark infringement case behind it (see "Google's motion to dismiss fails in American Blind Case" and "Legality of online trademark keyword ads still in question"), Google Inc now faces another lawsuit making substantially similar claims of trademark infringement, false representation and dilution, and a number of misappropriation and unfair competition state claims.

In a complaint filed on August 16 2007 in the Northern District of Texas, American Airlines Inc alleged that Google is violating federal and state trademark laws through its use of keyword-triggered advertising. American Airlines claimed that the search engine company is illegally trading off the goodwill and reputation of the airline by selling keywords which include trademarks owned by American Airlines, thereby allowing the ads of the airline's competitors to appear next to specific search results for American Airlines. According to the complaint, the paid advertisements or 'sponsored links', which are displayed on the right-hand side of the Google search results, "appear in close and confusing proximity" to 'natural' listings - that is, those listings resulting from a search algorithm.

In contrast, Google describes the proximity of the sponsored link ads as "good, old-fashioned competition and... no different than locating a fast-food restaurant next to another restaurant with the hope and intent of taking advantage of the latter restaurant's name brand recognition".

The issue of whether the sale of a trademark in a sponsored link constitutes 'use in commerce' under the Lanham Act has been before various courts over the years, but no case has ever made it through a decision at trial. Furthermore, there is a split on the issue of use itself: some district courts in the Second and Third Circuits have concluded that selling trademarks as keywords does not constitute use under the Lanham Act, while district courts in other circuits have reached the opposite conclusion.

Another issue before the Texas court in this case was whether the term 'sponsored links' is confusing in its name, placement or design. Specifically, American Airlines argued that users might assume a connection between the advertisers listed in the sponsored links and American Airlines itself.

The lawsuit was filed less than a month before a settlement was reached between Google and American Blind & Wallpaper Factory for substantially identical claims in a case involving keyword-triggered sponsored links. In that case, however, American Blind suffered a setback when the district court concluded that two of American Blind's trademarks were descriptive and therefore unenforceable in the absence of proving secondary meaning. In contrast, American Airlines' trademark registrations have become incontestable under 15 USC § 1115(b).

Lara A Holzman and Rowan E Morris, Alston & Bird LLP, New York