• by Laurie Petersen , August 20, 2007

Despite its strong brand awareness and deep pockets to pursue the litigation, American Airlines faces an uphill battle in its suit seeking damages from Google for allowing rivals to buy keyword ads triggered by its own trademarks.

The suit, which was filed Thursday in U.S. District Court in Fort Worth, seeks unspecified damages from Google for allowing visitors who enter trademarked phrases such as its frequent-flyer program name "Aadvantage" or "AA.com" to see rival "sponsored links."

Google has already triumphed in at least two separate lawsuits on this issue. In a case brought by Geico, a federal judge found after trial that there was no proof consumers were confused by such ads--long the hallmark of federal trademark infringement. Google also won a case brought by Rescuecom; that case is now being appealed to the Second Circuit. American Blinds has a similar case pending.

"We are confident that our trademark policy strikes a proper balance between trademark owners' interests and consumer choice, and that our position has been validated by decisions in previous trademark cases," Google said in a statement.

Lead counsel for American Airlines is Terence Ross of Gibson Dunn DC, who has lost previous lawsuits for clients Wells Fargo and 1-800-Contacts that he brought against adware companies.

Professor Eric Goldman, who runs the High Tech Law Institute at Santa Clara University School of Law, says it was risky for American Airlines to file the suit--which he predicts will be hard-fought and expensive if it goes to trial.

On his blog, Goldman says lawsuits over consumer "diversion" often cost more than the lost profits from the allegedly diverted consumers.

"In this case, I wonder how many consumers pick an American Airlines competitor instead of American Airlines solely due to keyword advertising. After all, American Airlines has a loyalty program that inhibits brand switching of its most loyal customers, and very good comparison sites like Orbitz encourage comparison shopping if that's what consumers want. Given those factors, I wonder how much keyword advertising contributes to bona fide 'diversion'," Goldman blogged.

"It's not in Google's nature to retaliate this way," he added, "but I wonder what would happen if Google decided to cut off keyword advertising for American Airlines?"

On Friday, American Airlines issued an official statement saying it supports Google's overall business model and "values the importance of the Internet and the convenience that companies such as Google create for consumers around the globe.

"In working through this business dispute," the statement continued, "American is hopeful that it will continue professional, friendly and fruitful relationships with Google, while finding an appropriate resolution to the trademark issues ... American wants to make it clear that its dispute does not seek to prevent the display of search results that reflect consumers' interests or choices."

The state of Utah has moved to ban allowing competitors to purchase keywords on trademarks, even though the federal courts have given the nod to the practice.

The Electronic Frontier Foundation and others have come out strongly in favor of allowing trademarks to trigger paid search links, arguing that such ads benefit consumers.

On Sunday afternoon, Google searches for "AA.com" produced the American Airlines Web site as well as sponsored links for cheapoair.com and cheapair-fareis.com. A search for "AAdvantage," the airline's frequent-flyer program, yielded one sponsored link for "CompareCards.com."