• by Wendy Davis  @wendyndavis, December 2, 2008

Yahoo has asked a court to transfer American Airlines' lawsuit about search ads from the transportation company hometown of Fort Worth, Texas to Yahoo's base of northern California. The Web company also has filed a motion in California seeking declaratory judgment against the airline.

American sued Yahoo for trademark infringement in October in federal district court in Texas. American alleged that Yahoo and its subsidiary, Overture, unlawfully allowed other companies to use American's trademarks, such as "American Airlines," to trigger paid search ads.

"Defendants' search engine is being used by defendants and third parties to mislead consumers and misappropriate the American Airlines marks by using them as 'keyword' triggers to paid advertisements and by using them within the text of paid advertisements," the airline alleged in its complaint.

A Yahoo spokesperson said the company believes its practices are legitimate. "We have confidence in our trademark policies and are defending them in court," the spokesperson said.

American Airlines previously filed a similar case against Google in federal district court in Forth Worth. That case eventually was resolved with a confidential settlement.

Yahoo argues in its motion to transfer the case that American is also a search advertiser and agreed in its contract to settle disputes in California. But it's not clear that the court will determine that this trademark dispute is covered by American's search marketing contract with Yahoo.

Yahoo also filed a motion in federal district court in California seeking declaratory judgment against American Airlines on the grounds that the law allows the use of trademarks to trigger search ads.

Although Google settled with American, the search company has won several other cases. One key victory came in 2004, when Google prevailed at trial in a suit brought by insurance company Geico. Leonie Brinkema, a federal district court judge in Alexandria, Va., ruled that Geico had not proven that people were confused when they typed "Geico" into Google's query box and paid search ads for other companies appeared in the sponsored results. Yahoo also was a defendant in that case, but settled with Geico before trial. (Google and Geico resolved another portion of the case that dealt with the use of "Geico" in the text of the ads.)

Computer repair shop Rescuecom also lost a case against Google. In that instance, a trial judge ruled that arranging for a trademarked term to trigger a search ads is not a "use in commerce" under trademark law. The 2nd Circuit Court of Appeals is currently considering Rescuecom's appeal.