• by Wendy Davis  @wendyndavis, October 30, 2007

A federal judge in Fort Worth, Tex. has ruled that American Airlines' trademark infringement lawsuit against Google, stemming from its paid search program, can proceed to trial.

Judge John McBryde's two-sentence order, issued last week, doesn't set out any reasons for the decision. But while the ruling marks a setback for Google, it's not necessarily an indication that the search company will ultimately lose the case.

Defendants often win cases at trial after losing motions to dismiss. What's more, the ruling itself--saying only that Google's motion is denied--doesn't shed any light on what type of evidence the Fort Worth-based airline company would have to present to win at trial.

"Without a substantive ruling, we can't make any prediction," says Eric Goldman, director of the High Tech Law Institute at Santa Clara University. At this point, he says, the most that can be concluded is that the judge has decided to "let the case percolate a little longer."

A Google representative said that the company continues to believe American Airlines' case is meritless. "Google's trademark policy strikes a proper balance between trademark owners' interests and consumer choice and has been validated by prior court decisions," he said.

American Airlines didn't return phone calls by press time.

American Airlines is challenging Google's practice of allowing marketers to bid to have their ads appear as paid search links when people search for the names of their business rivals.

Google argues that the policy promotes competition. "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.

But American argues that consumers are misled by the paid search ads, and says Google's analogy is misplaced. "The more appropriate analogy would be that of a drugstore putting its generic ibuprofen inside Advil boxes and mixing them in among the real Advil products," the airline argued in its court papers.

Since Google officially began allowing companies to use trademarks to trigger search ads in 2004, the company has faced high-profile lawsuits by several marketers, including American Blind and Wallpaper Factory, insurance giant Geico and computer repair company Rescuecom. So far, Google has significantly prevailed in those cases, even though it initially lost motions to dismiss before trial in two of the three, American Blind and Geico.

A federal judge dismissed the key charges in the Geico case mid-trial, ruling that the insurance company hadn't proven that consumers were confused when they queried on the term Geico and paid search links for rivals appeared.

American Blind in late August agreed to have its lawsuit dismissed.

Rescuecom's lawsuit was dismissed before trial, with federal judge Norman Mordue of the northern district court in New York ruling that use of the Rescuecom name as a behind-the-scenes trigger for ads doesn't violate the company's trademark rights. In his written opinion, he suggested that the ruling would have been different had the ads themselves contained Rescuecom's names.

"In the absence of allegations that defendant placed plaintiff's trademark on any goods, displays, containers or advertisements ... plaintiff can prove no facts in support of its claim," Mordue wrote. Rescuecom filed an appeal, now pending in the 2nd Circuit.