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Businesses sue Google for linking to rivals' ads

By David A. Vise
Washington Post

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From U.S. insurance giant Geico to Louis Vuitton in France, corporations have filed lawsuits recently to try to stop Google from selling ads linked to searches based on product names and trademarks. The companies charge that the lucrative practice tramples their legal rights and allows competitors to steal their customers.

Michael Page, outside counsel for Google, said additional lawsuits are likely to be filed against the company as online commerce grows but argued that the search-engine firm is doing nothing wrong.

"If you are Pepsi, you can say every time somebody searches for Coca-Cola, you want to put up a Pepsi ad," Page said. "As long as you don't deceive the viewer into thinking the ad is placed by your competitor, there is nothing wrong with that."

While Google once prevented competitors from buying ads linked to registered trademarks owned by other firms, the company relaxed that policy last month, saying it is in the consumer's interest to receive the broadest possible mix of ads when searching online.

"In order to provide users with more useful ads, we have recently revised our trademark policy in the U.S. and Canada," Google stated in a filing last month with the Securities and Exchange Commission. "As a result of this change in policy, we may be subject to more trademark-infringement lawsuits. Defending these lawsuits could take time and resources. Adverse results in these lawsuits may result in, or even compel, a change in this practice which could result in a loss of revenue for us, which could harm our business."

Steve Katzman, chief executive of American Blind and Wallpaper Factory, a business with more than $100 million in sales annually, said his company spent millions of dollars over the years building brand recognition, only to have Google come along and sell ads to competitors who snare people searching for his Web site and products.

"It has hurt a lot," Katzman said. "We know that our competitors have grown at our expense."

Katzman, whose company is in litigation with Google over the issues in federal court in San Jose, drew a sharp contrast between Google and its major competitor, Yahoo!

Unlike Google, Yahoo's commercial search-engine division, Overture Services, does not allow competitors to buy ads linked to his company's registered trademarks, Katzman said.

Jennifer Stephens, a spokeswoman for Yahoo's Overture subsidiary, said that unlike Google, her company has an editorial staff that tries to screen ads up front. The company also will respond to complaints when competitors purchase ads linked to trademarks owned by other firms.
 
"We take this very seriously," Stephens said. "It is clear that our policies are very different."

In a lawsuit filed May 4 in U.S. District Court in Alexandria, Geico alleged that Google and Yahoo's Overture have allowed competitors to link their ads to the terms "GEICO" and "GEICO Direct," both of which are registered trademarks. Geico alleged that the practice is unlawfully steering consumers who want to contact Geico to the Web sites of its competitors.

Steve Sturgeon, a Washington, D.C., attorney with expertise in Internet and trademark law who is not involved in the Google cases, said this area of the law is so new in the United States that no trademark cases involving search engines have made their way through the U.S. courts.

"There is nothing really definitive, there are no precedents, and the law will be interpreted as these lawsuits are decided," Sturgeon said. "Google has such resources they can easily combat any lawsuit and probably take a firm stand."

Google itself has expressed concern about its ability to protect its own trademarks.

In its SEC filing, the company said there "is a risk that the word 'Google' could become so commonly used that it becomes synonymous with the word 'search.' If this happens, we could lose protection for this trademark, which could result in other people using the word 'Google' to refer to their own products, thus diminishing our brand."