Google seeks declaration on AdWords program

Following on the heels of a French court ruling in October 2003, ordering the French subsidiary of internet search giant Google to pay a fine of €70,000 to two companies for the use of their trademarks in its controversial AdWords program, Google has taken the offensive in the US courts (see Google's sponsored links infringe trademarks). It has filed a preemptive lawsuit on the same issue, seeking a judicial declaration that the AdWords program does not violate US trademark laws.

The AdWords program permits advertisers to register keywords to ensure preferred ad placement; when a Google user enters a registered keyword in a search query, it triggers the placement of the keyword registrant's advertisement (ie, sponsored link) prominently on the search results page. This program is a major revenue generator for Google and is so effective that advertisers often buy keywords related to their competitors in an attempt to grab a share of their traffic.

In two separate letters to Google, American Blind and Wallpaper Factory (ABWF), a Michigan-based seller of home furnishings and accessories, had demanded that Google prohibit other parties from purchasing certain keywords related to ABWF's trademarks. It claimed that its competitors had bought words substantially similar to its trademarks to "confuse customers and capitalize illegally on [ABWF's] goodwill and reputation". Although Google indicated that it was willing to prohibit third-party registration of specific terms that were registered trademarks of ABWF (namely AMERICAN BLIND & WALLPAPER FACTORY, AMERICAN BLIND FACTORY, and DECORATETODAY), it was unwilling to protect more descriptive terms that it claimed were merely variants and not actual trademarks of ABWF, such as, among others, 'American blind', 'American wallpaper' and 'American home decorating'. ABWF claimed that such variants were also protected. It based this contention, in part, on a permanent injunction entered in its favour by the US District Court for the Eastern District of Michigan in another case. In that ruling, the court enjoined the defendants from using ABWF's "trademarks, service marks or the word 'American' in any variation or combination with the word 'Blinds' either singular or plural [...]".

Google responded to ABWF's complaint by filing for a declaratory judgment, reiterating that although it is willing to prohibit others from using ABWF's actual trademarks, merely descriptive terms cannot enjoy the same protection. ABWF has moved quickly to counteract Google's action and has filed its own lawsuit against Google (and AOL and Netscape) in a district court in New York City. It is seeking dismissal of Google's declaratory judgment case, as well as injunctive relief barring Google from selling the disputed keywords. The case is currently pending.

This litigation comes at a time when disputes over trademark use in keywords are multiplying. In 2002, for example, a Texas-based diet firm, Mark Nutritionals, sued internet search companies Overture, AltaVista, FindWhat.com and Kanoodle for allowing its competitors to bid for advertisement placement triggered by the term 'body solutions', which is one of Mark Nutritionals' trademarks. In another case, the US Court of Appeals for the Ninth Circuit overturned a lower court's grant of summary judgment for Netscape and its Excite search engine, holding that a program used by Excite, which triggered adult-oriented banner advertisements based on searches for the terms 'playboy' and 'playmate', infringed and diluted Playboy's trademarks. (Playboy and Netscape have since settled for undisclosed terms.) These cases and others like them highlight the uncertainty surrounding keyword-triggered advertising.

Ethan Horowitz, Goodwin Procter LLP, New York