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Paid search opponents’ keyword: lawsuit

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Search engine leader Google, enjoying the meteoric rise of the billion-dollar search marketing industry and on the cusp of its initial public offering, doesn’t need a court case challenging the legality of its core advertising methodology. But that’s what it may get.

American Blind & Wallpaper Factory, Plymouth, Mich., has accused Google of trademark violations for marketing 36 combinations of keywords—including "American blind" and "decorate today"—to an American Blind competitor. To date, the manufacturer has not yet filed a lawsuit against Google, but it began sending cease-and-desist letters to Google in July 2002.

Google responded to the accusations, asking a California court to rule that its advertising methodology is legal. Google filed a complaint against American Blind in U.S. District Court, Northern District of California, on Nov. 26, 2003. Google has asked the court for a "declaratory judgement of non-infringement."

"Google filed an action seeking that a court declare that certain display of ads on our Web site do not infringe trademark rights," said David Krane, director of corporate communications at Google. "Google filed this action because we were being threatened with an imminent lawsuit by American Blind & Wallpaper Factory."

A lawyer for American Blind said he hopes the companies will reach an amicable solution.

"I don’t think either side wants to face the ramifications of an adverse judgment against them," said David Rammelt, a partner at law firm Kelley Drye & Warren, Chicago, which represents American Blind.

Money at stake

One legal expert cut to the heart of the issue by citing the amount of money Google and its search engine counterparts derive from keyword sales. Search accounted for $1.6 billion in ad spending last year, and that number is expected to increase to $2.1 billion this year and $2.6 billion in 2005, according to Jupiter Research.

"[An adverse ruling] could throw a dramatic monkey wrench into the works, because it impacts Google’s business model, and marketers are planning their own activities and businesses around Google’s search functionality," said Matthew Furton, a partner at law firm Gordon & Glickson, Chicago. "They’re building a business model in an area where there’s no clear legal precedence," he said.

Another legal expert said Google faces an enormous risk by soliciting a court’s ruling.

"They are going in and establishing a precedent that could put them at a disadvantage to the other search engines," said Doug Wood, partner at ad law firm Hall Dickler, New York. "If the court says it’s illegal, they have to stop doing it, but that doesn’t mean MSN and Yahoo and others can’t do it."

"It would be helpful if the law stepped in at this point," said Barbara Coll, founder and CEO of WebMama.com, a Palo Alto, Calif., search engine marketing company. Coll said that in addition to the trademark questions, some companies experience problems with their own resellers bidding against them for trademarks.

The Google docket

This isn’t the first time Google has had a court date over trademark issues. Last year, two companies in France sued the search company for trademark violation. It lost those cases. The companies, Viaticum and Luteciel, together won an $89,000 judgment. Handbag designer Louis Vuitton reportedly also sued Google in France for trademark infringement.

"We seek to have the court confirm our view that this methodology properly respects trademark owners’ rights, while at the same time simplifying the ad-targeting process for our advertisers," said Google spokesman Krane. Krane added that "such a decision would ultimately benefit both users and the advertising industry."

Many search marketers and Google’s competitors agree.

Lance Podell, president, content division at Kanoodle, New York, a sponsored search listings provider and Google competitor, said the impact of a court ruling against Google would be dramatic. "If we had to police every ad that came in, we’d never be able to offer advertising networks to customers," he said.

"The paid search industry would benefit" from a decision in Google’s favor, said Jennifer Stephens, senior director of communications at Overture, Pasadena, Calif. Stephens said she applauds Google’s efforts, but maintains Overture’s policies of reviewing all keywords and descriptions manually helps it avoid trademark complaints. "If we believe there is trademark infringement, we will take the listing down," she said.

In related news, the Ninth Circuit Court of Appeals last week ruled that publisher Playboy Enterprises could proceed with a trademark infringement suit against Time Warner’s Netscape. It alleges Netscape is using keywords like "playboy" and "playmate" that link to adult-content sites that are Playboy competitors. Like the Google case, the outcome could set a precedent for online search.

And now for the defense

While Intuit, Mountain View, Calif., the maker of Quicken accounting software, is protective of its trademarks, "We see Google as a valuable resource for people to get information, and we want to make sure that’s an effective tool for our customers," said Elliott Ng, director of interactive marketing at Intuit. "We would not think about suing Google for these trademark violations."

Another defender of Google is James Spanfeller, president-CEO of Forbes.com. "Google is providing a service to the end user," he said. "I would be relatively shocked if a court did not rule in their favor."

Kanoodle’s Podell said he’s glad Google is defending its rights. "Google and I compete on a lot of things, but this is an industry issue," Podell said. "It’s nice to have Google fighting that battle for us."

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