Google is facing a new lawsuit for allowing companies to use trademarks to trigger pay-per-click ads.
In papers filed this week in federal court in the eastern district of Texas, software development company Firepond seeks class-action status on behalf of all Texas trademark holders whose names have been used to trigger search ads. Google has been hit with other trademark infringement lawsuits stemming from paid search, but this appears to mark the first time the company has faced a potential class-action suit about the issue.
Firepond, based in Marshall, Texas, alleges that consumers are "duped into clicking through to a competitor's sponsored link" when they search for Firepond and are served ads for another company.
The lawsuit states that the search giant's AdWords policy "enables Google and plaintiff's competitors to use the 'Firepond' trademark to place their advertising hyperlinks in front of consumers who specifically search for the plaintiff, thereby confusing Internet users and diverting a percentage of such users from plaintiff."
Google declined to comment, except to say that it hadn't yet been served with the lawsuit.
Firepond is asking the court for monetary damages and an injunction ordering Google to stop allowing trademarks to serve as ad triggers. Firepond's lawyer, Scott Kline with the firm Andrew Kurth in Dallas, says he is seeking to represent as many as 200,000 Texas trademark holders in the lawsuit.
But some legal experts say it will be difficult to convince a court to allow the case to proceed as a class-action. "It sounds like a tough hill to climb," says false advertising and trademark law expert Norman Simon, a partner with Kramer Levin Naftalis & Frankel.
Courts only allow class-actions when there are many plaintiffs who have claims that raise common legal and factual issues. But questions about trademark issues tend to vary from case to case, Simon says. For instance, one key question is whether consumers were confused by search ads, but that could be different in every situation.
Eric Goldman, director of the High Tech Law Institute at Santa Clara, says it's unlikely that the court will allow the class-action. "Every trademark is different, the identity of each competitive (or other) advertiser is different, every AdWords ad copy is different, the informational needs of every trademark owner's customers are different," he says in a blog post about the lawsuit.
The issue is critical because the ramifications of a class-action lawsuit could be far more sweeping than the consequences of losing a narrower case. If Firepond alone obtained an injunction against Google, that wouldn't have nearly the same effect as an order that could apply to hundreds of thousands of trademarks. "If a plaintiff's lawyer could win an injunction on behalf of every trademark owner in the state of Texas, that could bring Google to its knees," Goldman writes.
A federal district court judge in Illinois recently declined to allow an unrelated trademark infringement lawsuit against Google to proceed as a class-action. That case, brought by golf club manufacturer Vulcan Golf, stemmed from Google's parked domain program, which populates typosquatting sites with search ads. Vulcan Golf complained that other companies were harnessing its brand name by creating sites like vulcanogolf.com, and then collecting ad revenue when people landed on such sites after incorrectly typing its URL.
Firepond's lawyer, Scott Kline with the firm Andrew Kurth in Dallas, says he thinks a class-action is appropriate in this situation. "It has been historically difficult to gain class-action status in trademark cases. But we believe, in this case, because of the nature of the claims, that this the right avenue," he says.
Regardless of whether the case goes forward as a class-action, Firepond can only prevail if it proves that consumers were confused when they typed "firepond" into the search box and were served ads for a rival.
So far, just one U.S. case dealing with that issue has gone to trial. That case, a lawsuit brought by insurance company Geico, resulted in a victory for Google on the key point: U.S. District Court Judge Leonie Brinkema in Virginia ruled that Geico hadn't proven that people were confused when its name triggered ads for rivals.