The Lawsuit That Could Cripple Google: Will American Airlines Ruin Everything?

A Federal Judge last week dismissed a motion by Google (GOOG) to dismiss a copyright infringement lawsuit brought on by American Airlines in August.

American Airlines is suing Google for letting competitors and internet marketers bid on trademarks owned by American Airlines in Google’s highly lucrative AdWords search advertising program.

Bidding on trademarked keywords means that competitors can show their own advertisements. What this means is that if someone did a search for “American Airlines” on Google, you will see competitors advertisements in the “sponsored results” portion of the page.

American Airlines says that buy allowing marketers to bid on their keywords, Google is in violation of trademarked terms, monetizing these keywords for themselves while taking business away from American Airlines.

Google had this to say in their request for dismissal:

"Advertisers and merchants in America regularly target their competitors' customers, seeking to capture their business for themselves," the company argued in its motion to dismiss. "Drugstores place their generic ibuprofen next to the Advil," the company added.

It should also be noted that Google does not currently allow competitors to use the actual name of the trademarked-term in the ad. For example, while a customer is allowed to bid on the phrase “American Airlines”, they may not actually use that phrase anywhere in the copy of the ad.

What could this mean for Google bottom line? Currently, 65% of Google’s revenues come from sponsored search results. We have no way of knowing for certain, however I would assume that a very large portion of that – upwards of 90% -- come from marketers competing on keywords that consumers associate with their competitors.

If AA is triumphant in its lawsuit, this will be devastating for Google, and will be a huge loss for everyone; Google, Consumers and Marketers.

It will be a loss for Google, obviously, because they will lose extraordinary amounts of revenue.

It will be a loss for Consumers because we will lose the ability to have easy access to alternative products, prices and market competition.

It will be a loss for Marketers because we will be stripped of our ability to be competitive in the marketplace and will lose the new customers that we wouldn’t otherwise have access to.

I can’t think of one good thing that can come from American Airlines winning this suit. Can you?

Comments

[User 118603]

All your articles are so negative against Google. Do you have puts on the company?

[DerrickSheilds]

If you had actually read the Article, I was actually in favor of Google winning this case.

[Jon T]

Crazy.

Do we want to kill any competition for products and services?

Your title for this article is outrageous.

AA should be ashamed.

[GeorgeRiddick]

Yes,

If this is what it takes to teach the executives and lawyers at Google that the laws of this country are in place for both small companies AND large companies to follow, then so be it. A small short term sacrifice will be well worth the ultimate advantages we will all eventaully see from "fair play".

I have not followed this trademark case closely, but I do know quite a bit about the many, many copyright cases currently filed, or soon to be filed, against Google. Google is a flagrant copyright infringer. Google simply has decided to make up it own new set of intellectual property rules, and pay whatever consequences it may have to down the line.

If you think this takes away all of the "free" in our free market, think again. Google didn't accumulate a market value of over $220 billion in less than three years as a public company by doing anything that truly benefits anyone other than themselves and their investment bankers.

Google operates one of the most "successful" scams this industry has seen since the early Internet days of 1999 and 2000 when practically everything in this space was "vaporware".

This will not be the only case against Google that goes to trial in 2008. Believe me.

George P. Riddick, III
Chairman/CEO
Imageline, Inc.

[e-mail]...

[SmartGuyStocks.com]

That was the most abstract complaint I have ever read. Glad I don't invest in your company.

Seriously, if Coke can put an ad next to Pepsi in a magazine or on TV, then why not on the web? It's called competition, and that's what makes capitalism work properly.

As a consumer, I want to know if there is a comparable good or service that may be better quality or priced lower. Too bad if American Airlines doesn't want you to see that you can get a better product from JetBlue for less money ...

[RhinoFish]

"I would assume that a very large portion of that – upwards of 90% -- come from marketers competing on keywords that consumers associate with their competitors."

As a Pay-Per-Click Advertising Consultant, I'd suggest you research your assumption further, keeping in mind that it's "pay per click".

[DerrickSheilds]

You're comment doesn't make sense. Care to elaborate?

[AndrewMelcher]

Rebuttal

1. Even if AA prevails, extending trademark protection to keywords is only an annoyance to advertisers. -- All they will have to do is find other keywords to use.

2. AA is a weak plaintiff in this particular legal action. AA has a trademark that is a descriptive term, and as such is not protected. Searching for +"American Airlines" is actually searching for all airlines that fly in America. In this context, the trademark "American Airlines" is clearly fair use and the legal action seems destined to be thrown out.

3. Even for powerful trademarks like GEICO, the argument against trademarking search terms is weak. We live in a business society that worships open and fair competition. We only have trademark protection insofar as it helps foster open and fair competition.

So we have developed the concept of fair use that limits trademark protection. Some uses are covered by the trademark, some are not. For examples, you can't pretend to be GEICO, but you can say "we have lower rates than Geico." You can also list the trademarked term Geico in a printed business directory without GEICO's permission. You can also sell ads to other insurance companies on the same page as this printed GEICO listing. -- Which is functionally very close to what Google is doing.

In other words, how is it different if you search the yellow pages for GEICO and find competitors ads on that page... or you use a search engine? No difference. Fair use.

[No Name orNumber]

"upwards of 90% -- come from marketers competing on keywords that consumers associate with their competitors."

Do a few minute of homework before you make statements like this. Look at the lists of most popular searches. Most of them are not trademarked, yet have many sponsored searches. The ones that are trademarked have many legitimate sponsors. I bet the real number is closer to 10% than 90%.