October 2007 Bar Bulletin

Keyword Advertising Under Air Attack

By Jaime Drozd Allen


Keyword advertising, also known as pay-per-click or cost-per-action advertising, has been one of the most successful ways for companies to market their products on the Internet. In many ways, Google's keyword advertising program, called "AdWords", is the model for this method of advertising.1

Keyword advertising allows a company to purchase keywords or phrases that, when entered into a search engine, result in its ad appearing in or near the results list.2 In the case of Google, the advertiser's site appears as a "sponsored link," either highlighted above the search results list or in a column to the right.3

These "sponsored links" are the subject of recent litigation over the way in which the keywords, including trademark-protected words and phrases, are sold to those who do not own the trademark. Up until now, the companies that have brought these suits against Google have been relatively small. But, in August, American Airlines became the largest and most prominent company to sue Google over its use of keyword-based advertising.

It is not the practice of keyword advertising that American Airlines complains about, rather it is the fact that Google sells trademarked keywords or phrases without the mark holder's permission or authority.4 American Airlines explains that "the dispute is centered on Google's process of allowing other companies to purchase the right to use American Airlines trademarks for Internet search."5

In essence, American Airlines' claim is that Google is acting as an infringing intermediary, allowing the advertiser to have the benefit of American Airlines marks by getting a prominently placed ad. The suit seeks to prevent Google from selling American Airlines' "trademarks to others who are purchasing them and related terms to confuse and/or divert consumers searching" for American Airlines products.6

American Airlines specifically claims that its trademark rights are being violated by Google's selling the rights to certain words or phrases, including ones that American Airlines has trademarked. For example, American Airlines alleges in its complaint that when a user enters "American Airlines," the "sponsored links" on the right-hand side of the screen contain competitor airlines or ticket sites.7 Additionally, when a user searches with the term "Aadvantage" - the trademark-protected name of American Airlines' frequent flier program - the second highlighted link on the results list is for a site called FlightBliss.com, not for American Airlines.

In response to American Airlines' suit, Google has said that it is confident that its "trademark policy strikes a proper balance between trademark owners' interests and consumer choice, and that [its] position has been validated by decisions in previous trademark cases."8

If Google's recent litigation is any indicator, its AdWords program is on solid footing and its keyword advertising will be spared. In the recent past, Google has litigated keyword advertising in federal courts in both California and Virginia.

In Google v. American Blind & Wallpaper Factory, Inc., Google sought declaratory relief declaring that AdWords did not infringe on American Blind & Wallpaper Factory's (ABWF) trademarks. Google was victorious, though not necessarily for reasons that will make any difference in the American Airlines case.

ABWF's argument was taken out from under it when the court declared two of its marks, "American Blind" and "American Blinds," unenforceable and invalid.9 Notably though, and of crucial importance to the American Airlines suit, the court held that the sale of trademarked terms in Google's AdWords program constituted a "use in commerce" for the purposes of the Lanham Act.10

In GEICO v. Google, the U.S. District Court for the Eastern District of Virginia found that GEICO did not establish that a likelihood of confusion was caused by either Google's use of keywords or "sponsored links" that do not reference GEICO's marks in their headings or text.11 The court explicitly left open whether GEICO's mark was infringed when the mark appeared in the text or heading of "sponsored links" and also whether Google itself was liable for "Lanham Act violations resulting from advertisers' use of GEICO's trademarks in the headings and text of their Sponsored Links."12 These two issues will be central to the American Airlines suit, as American brings both of these issues before the court.

It is unclear how these two previous cases will precisely factor into the American Airlines suit. From an outside perspective, numerous commentators have been puzzled at the American Airlines suit, when the case law seems to indicate that this sort of attack on Google's program is a losing effort.13

While it seems that American Airlines should avoid the pitfalls of ABWF, as its marks will likely be valid, it still will be faced with the holding in GEICO that Google's use of keywords and "sponsored links" without a trademark (™) designation appearing in the heading or text is non-infringing. American also will have to litigate anew the unanswered question of whether the trademarked terms in the headings or text of the "sponsored links" are infringing.

Finally, and seemingly the biggest hurdle, is whether Google itself can be liable for the individual advertisers' infringement, i.e., whether Google can be held liable as an intermediary infringer. One commentator has noted that "suing Google is going after the wrong party. Google isn't the one doing the advertising, they're simply providing the billboard on which advertisers can write what they want. If there is infringement then it should be the liability of the advertisers, not Google."14

American Airlines' suit is notable and should be taken seriously, if for no other reason than that American is a large company that apparently is poised for hard-fought litigation. Google can take some comfort in the previous court rulings, but will have to be prepared to argue over the unanswered questions from ABWF and GEICO. Regardless of how the court rules, if it reaches the merits of this case, its rulings will significantly impact not only Google's AdWords program, but the entire keyword advertising industry.

Jaime Drozd Allen is an associate in the Litigation Department at Ogden Murphy Wallace, PLLC. She can be reached at jallen@omwlaw.com.

1 See generally https://adwords.google.com.

2 See generally id.

3 Id.

4 See American Airlines Statement Regarding a Business Dispute with Google (Aug. 17, 2007) at http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/08-17-2007/0004647467&EDATE=.

5 Id.

6 Id.

7 See Complaint, American Airlines Inc. v. Google, Inc., No. 4-08CV-487-A (N.D. Tex. Aug. 16, 2007).

8 "American Airlines Slaps Suit on Google" (Aug. 17, 2007), at http://www.redherring.com/Home/22590.

9 Order Granting in Part and Denying in Part Motion for Summary Judgment at 13 (Apr. 18, 2007), Google Inc. v. American Blind and Wallpaper Factory, Inc., No. 03-5340 JF (N.D. Cal. 2003).

10 Id. at 10.

11 Memorandum Opinion of August 5, 2005 at 19, Gov't Employees Ins. Co. v. Google. Inc., No. 1:04cv507 (E.D. Va. 2004).

12 Id. at 20–21.

13 See, e.g., Eric Goldman, Technology and Marketing Law Blog: "American Airlines Sues Google over KeyWords" (Aug. 16, 2007) at http://blog.ericgoldman.org/archives/2007/08/american_airlin.htm (Aug. 16, 2007); Mike Masnick, "American Airlines The Latest to Sue Google Trademarked Keywords" (Aug. 17, 2007), at http://www.techdirt.com/articles/20070817/021228.shtml.

14 Mike Masnick, "American Airlines The Latest To Sue Google Over Trademarked Keywords" (Aug. 17, 2007), at http://www.techdirt.com/articles/20070817/021228.shtml.


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