Trademark lawsuit threatens Google's ad search revenue

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Google and its search engine advertising model is under threat following a recent court decision that could put the kibosh on the practice of allowing one marketer to buy another's name as a keyword.

A judge in California ruled that the first trademark infringement lawsuit against Google involving its AdWords keyword bidding program can go forward to trial. The search engine giant had asked the court to dismiss the case. But Judge Jeremy Fogel refused, saying that the plaintiff, American Blind & Wallpaper Factory, should have the chance to prove whether or not Google is responsible for violating its trademark by allowing a competitor to buy its name as a keyword.

"We look forward to presenting the facts to the judge, and we continue to believe this suit is without merit, and we'll defend ourselves against it," said Steve Langdon, Google spokesman.

The court documents name other search engines, but Google is the main defendant. The case will test the parameters search engines have set for the use of paid keywords, said attorney Monica Richman of Brown Raysman Millstein Felder & Steiner. "Advertisers need to know they can purchase trademark [keywords] and if there are any repercussions."

"What is at risk is that Google will be able to take companies' brands, which they have worked so hard to promote, and use it for its own profit," said David Rammelt, partner at Kelley Drye & Warren, representing American Blind.

Trademarks comprise 4%-8% of Google's AdWords business. American Blind, which filed its suit in U.S. District Court for the Northern District of California in 2003, charges that Google's automated system recommends to competitors that they bid to use its name, the company alleges. When consumers click through from one of these keywords, they could end up on a competitor's Web site. The issue of whether consumers became confused is at the center of the case. "We hope to quantify the number of consumers that were looking for us and were lost because of the deception that occurred," Mr. Rammelt said. "Damages will depend on that. It could be a few million dollars or tens of millions of dollars."

If the case is decided against Google, "marketers who have purchased [other firms'] trademarks could be held liable, and the search engines could be held liable," said Matt Naeger, VP-operations, general counsel, Impaqt, search marketing firm.

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