Where's The Beef? Yahoo Wins Pay-Per-Click Dispute

by Wendy Davis, Feb 18, 2009, 7:30 AM

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A federal court has handed Yahoo a victory in a lawsuit stemming from a dispute about pay-per-click ads.

The case, like many other complaints stemming from search ads, concerned whether Yahoo should have allowed a keyword allegedly associated with one company to trigger an ad for a rival.

High-end meat retailer Heartbrand Beef, based in Yoakum, Texas, says it's the only U.S. seller of "Akaushi" beef, or beef from cattle that were descended from a breed originally from Kumamoto, Japan.

The Texas company alleged that a rival beef marketer, Lobel's of New York, used the term "Akaushi" to trigger pay-per-click ads on Yahoo. Heartbrand argued that this use of the term Akaushi was misleading and constituted a "false designation of origin"--which is prohibited by the federal Lanham Act.

Yahoo argued that allowing a term to serve as a trigger for a search ad was not a use in commerce, which the company said was required for a Lanham Act violation.

Federal district court judge John Rainey of the southern district of Texas sided with Yahoo. "Heartbrand's allegation as to Yahoo is that, at the direction of other parties, Yahoo placed a link to lobels.com in response to a user searching for the term 'Akaushi.' To call this a 'statement' would stretch the meaning of that word," he ruled.

While other companies have sued search engines for allowing words closely associated with one company to trigger ads by rivals, no U.S. court has definitively ruled against a search company for doing so, according to Eric Goldman, director of the High Tech Law Institute at Santa Clara University.

Most famously, Google prevailed after a trial in a lawsuit brought by insurance company Geico. In that case, federal district court judge Leonie Brinkema in Alexandria, Va. found that Geico had not proven that consumers were confused when they typed "Geico" into the query box and paid search ads appeared for Geico rivals on the results page. (Google and Geico reached a settlement about another portion of the case.) Yahoo also was a defendant in that case, but Yahoo and Geico settled before trial.

But some U.S. courts have issued preliminary rulings against search companies. Recently, Google settled a lawsuit brought by American Airlines after a judge in Texas refused to dismiss the case at an early stage.

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