• by Wendy Davis  @wendyndavis, August 14, 2008

For the third time this summer, Google has been hit with a fraud lawsuit stemming from its parked domain program, which serves pay-per-click ads on otherwise empty Web pages. 

This latest case, a potential class-action lawsuit filed this week in federal district court in Chicago, was brought by Bartlett, Ill. container company JIT Packaging. The case joins a putative class-action lawsuit filed in San Jose, Calif. last month by Hal Levitte, an attorney who took out search ads, and one brought in San Jose by online retailer RK West, which operates the e-commerce site Malibu Wholesale.

As in the other two lawsuits, JIT Packaging alleges that Google displayed search ads on "low-quality" sites that yielded almost no conversions.

The Illinois company specifically takes issue with Google's AdSense for Domains and AdSense for Errors programs, which place ads on sites that have little or no editorial content. Users often land on such sites after mistyping a URL. Examples cited in the complaint include jcpennycom.com and bedbathandbeyondcom.com.

"The quality of these sites as an advertising medium is substantially lower than sites on the rest of Google's network," the lawsuit alleges.

JIT also asserts that many of these sites violate trademark, copyright or cybersquatting laws because they include a brand name in the URL. Therefore, the company argues, Google should not have served ads on them.

"Google breaches its contractual obligations to JIT and the class when it displays and/or charges them for their AdWords advertisements displayed on sites that Google is not legally entitled to use, sites that violate trademark law, sites that violate cybersquatting law ... and sites that violate other Illinois, United States and/or international laws."

In fact, that appears to be an open issue. A separate case against Google, accusing it of trademark infringement stemming from its parked domains program, is currently pending. In that case, golf club manufacturer Vulcan Golf argues that Google violates the Vulcan Golf trademark by serving of ads on sites with URLs that appear similar, such as vulcanogolf.com.

Google did not respond to a request for comment.

To some extent, this wave of parked domain lawsuits reflects marketers' perceptions that they are not just paying for clicks when they advertise online, but are purchasing leads, said Greg Sterling, principal of Sterling Market Intelligence. Because the Internet offers greater targeting abilities than traditional media, marketers expect that their ads will not be shown to users who have no interest in the product, he said.

"On TV and radio, there are a lot of wasted impressions. But given the nature of the medium, people are not as angry about it. Nobody files a class-action lawsuit saying, 'Hey, there are a lot of people who may have seen these ads who aren't really bona fide prospects,'" he said.