Paid Search Ads & Trademarks: A Review Of Court Cases, Legal Disputes & Policies

Over the years, we’ve seen a number of lawsuits filed against search engines
or between companies regarding ads that are linked to trademark terms. Below, a
rundown on some of the more notable cases.

Before the recap, a little background. To those not familiar with trademark
law, the cases can seem like guaranteed victories for the trademark holders.
Surely no one has the right to run an ad linked to the word "apple" but Apple
itself, correct? However, trademark holders do not have complete control over
how their "words" are used.

Indeed, these cases aren’t technically about ads linked to trademarks but ads
linked to words that might also be trademarks. The word is only a trademark if
used in a trademark sense, in a way that the trademark owner has protected
rights. And to discover if those rights are violated in search advertising,
these cases deal with tricky questions such as:

• Is the word also a generic term?
   
• Is the person buying the ad trying to convince you they are Apple or
  instead fairly describing a product that requires the use of the word Apple?
   
• Is the ad coming up in response to a broad match bid? That’s where you
  might buy the word "computer," and your ad then appears for any search
  containing it, including "apple computer" or "windows computer."
   
• Is the ad a comparison of one product to another? Does the country where
  the ad appears allow such comparative advertising?

US Cases Against Search Engines

Within the United States, search engines have mostly found favor with the US
courts. Companies keep trying on the cases, however, in part it seems because
settlements have stopped more of the cases from building up definitive case law.

STATUS UNKNOWN
Estee Lauder Versus Excite
Jan. 1999 to ???
This
charged that Excite violated trademark law by letting iBeauty/Fragrance
Counter banner ads show up on searches related to Estée Lauder and Origins
trademarks. Excite

lost a similar case in Germany in March 2000. Estée Lauder
settled with
iBeauty, which was also sued, in August 2002. I haven’t been able to track
down whatever happened with the Excite case. Perhaps it died as part of Excite
going bankrupt.

SETTLEMENT
Playboy Versus Excite & Netscape
Feb. 1999 to Jan. 2004
At issue were banner
ads showing up linked to searches for "playboy." Playboy
lost in an preliminary
injunction ruling later that year, then that decision was reversed on appeal.
The case was then settled
in January 2004. Note: I was an expert witness in the case on behalf of Excite
& Netscape.

ABANDONED?
Mark Nutritionals Versus AltaVista, Overture & Others
Feb. 2002 to ???
Mark Nutritionals, which made the Body Solutions weight loss product,
moved
the focus of disputes from banner ads being linked to trademarks to search
listings themselves. Again, I haven’t been able to track down what happened in
the case, but it probably was abandoned when the FTC
closed Mark
Nutritionals in October 2003.

SETTLEMENT
American Blinds Versus Google
Jan. 2004 to Sept. 2007
This case
involved American Blinds competitors buying ads linked to terms like "american
blinds." It was settled in September 2007 without Google having to change its
policies or pay a settlement fee.

COURT VICTORY & SETTLEMENT
Geico Versus Google (& Overture)
May 2004-Aug. 2005
This case involved
Geico rivals buying its name linked to search ads. After a trial case, Google

won in December 2004 the right to link ads linked to trademarks. The
remaining issue was whether those terms could be used in ad copy — and Google
by that point had changed its policies in the US to prevent this. By the next
year, the case was entirely resolved in August 2005 through a private
settlement. Geico then started

going after its competitors directly. I’m not sure what happened with the
case against Overture — likely it was settled along the way.

COURT VICTORY
Rescuecom Versus Google
Sept. 2004 to Sept. 2005
The

case involved Rescuecom’s name being sold to others to trigger search ads
on Google. Google
won
the following year.

IN LITIGATION
Check ‘N Go Versus Google
January 2006 to ongoing
Filed in January
2006 (and see here), same old
thing — a lawsuit over Check ‘n Go’s name being linked to ads from
competitors.

IN LITIGATION
American Airlines Versus Google
August 2007 to ongoing
American Airlines, undeterred by the Geico case (and before the American
Blinds case was settled),
filed suit against
Google over ads linked to its name and other terms.

French Cases Against Search Engines

Outside the United States, France is probably the county that has seen the
most notable and widely reported case. There, ruling have consistently gone
against search engines.

COURT LOSS
Luteciel & Viaticum Versus Google
Dec. 2002 to March 2005
Filed in December 2002 against Google France, two travel agencies
won in October
2003 a fine against Google over allowing ads linked to generic terms "travel
market" and "airflight market," for which they owned rights. Google also
lost an appeal
in March 2005 and had to pay $100,000 in damages plus legal costs.

COURT LOSS
Louis Vuitton Versus Google
Aug. 2003 to June 2006


This case pitted fashion clothier Louis Vuitton against Google over ads
involving Vuitton’s name. A French court
ruled against
Google in February 2005, ordering a $250,000 payout. Google
lost again
on appeal in June 2006, with damages raised to around $350,000.

COURT LOSS
Le Meridien Versus Google
Oct. 2004 to Dec. 2004
Filed on October
25, a French court ruled
against Google on December 16, preventing it from linking ads to the name of
hotel chain Le Meridien, if those ads were about the hotel industry.

Other Cases & Laws Against Search Engines

Aside from cases in the United States and France, here are some other suits
and laws involving search engines and trademark-linked ads:

Matim Li Versus Google
April 2006

Complaint by Israeli fashion chain Matim Li that Google allowed ads to
appear linked to its name.

Utah Keyword Search Law
April 2007
Utah passed a
rule preventing ads from being linked to trademarks — against its own general
counsels recommendation, then
regretted the move
and
has yet to actually implement it.

Australia Competition & Consumer Commission Versus Google
July 2007
An Australian governmental body
views competitive
ads as misleading consumers and so is taking action against Google.

Cases Between Companies

Cases against the search engines have largely failed to stop trademark-linked
ads, so companies are now also going against other companies that buy these ads.
Note that there are probably many more cases than listed below. Not all come to
widespread attention.

IN LITIGATION
Edina Reality Versus TheMLSonline.com
March 2006 to ongoing


Filed in March 2006, this case pits competitors against each other over
ads, rather than a company versus a search engine.

SETTLEMENT
JP Enterprises Versus Yahoo
June 2006 to around Dec. 2006
Yahoo was sued
(and here) by
online dating site owner JP Enterprises over ads it placed on Google that used
the name of an online JP’s site lovecity.com. The case was apparently
settled by the end
of the year.

COURT RULES OK
JG Wentworth Versus Settlement Funding
April 2006 to January 2007
Wentworth sued Settlement Funding over ads showing up for its name, though
the ads themselves didn’t make use of Wentworth’s name. The court

ruled in favor of Settlement Funding, finding no foul.

Rhino Sports Versus Conner Sport Court
Late 2006 to ongoing

Another case with one company showing up in response to another company’s
name, with broad matching one of the issues involved. Plus, companies not
party to the case are also getting involved due to a
subpoena against
Google for keyword purchase histories.

Search Engine Trademark Policies

Google initially allowed some trademark holders to ask for their terms
to be banned from ad linking, with eBay being a classic example of
asking in June
2003 for a ban on "ebay" despite the company running thousands of ads that
triggered off trademarks of others. In April 2004,
dropped this policy
and let anyone buy any term. However, it later (I believe) made two key changes,
which remain in place
now:

• US & Canada: Ads can be linked to any word, but words that are also
  trademarks can NOT be used in ad copy if Google receives an objection from a
  trademark holder.
   
• Outside US & Canada: Words that are also trademarks can NOT be used
  in either ad copy or to trigger an ad, though Google only reviews for
  compliance if there’s a trademark holder complaints. Ads showing up for
  trademark terms through broad matching are not covered by the triggering
  policy.

Yahoo
allows the use of trademarks in ad copy or as a trigger as long you can
prove you are one of two types of sites:

• Reseller Site: A site can show that it sells the product or service
  related to the trademark.
   
• Informational Site: A site can show it provides information about a
  product or service but doesn’t compete with a trademark holder. (What happens
  if you are a protest site, say someone buying McDonald’s and opposed to them,
  is unclear).

FYI, the requirement for informational sites came out of Yahoo wanting to ban
companies from bidding on trademarks of their competitors back in 2004, after an
embarrassing situation where it
engineered a large branded keyword buy for Pontiac with TV tie-in only to
have Mazda ride in on the publicity

Microsoft’s

guidelines don’t allow trademarks to be used as triggers or in ad copy by
competitors but does allow it for affiliates and resellers. However, Microsoft

recently updated its policy to say it won’t maintain lists of approved
resellers or affiliates of brand owners.