• Ad Age , Tuesday, August 5, 2008 10:16 AM

Nike has sued New Hampshire-based outdoor-sporting-goods retailer Eastern Mountain Sports, which does not sell any Nike clothing, for bidding on the term "Dri-Fit" in Google's advertising system. Dri-Fit is a trademark of Nike, but when a user clicks on an EMS ad after searching for the term, she is driven back to the retailer's web site, which displays other versions of wicking technology.

As major marketers funnel more money into the $9 billion search-advertising category, many are increasingly sour about Google's policy to allow bidding on competitors' trademarks. The debate is part of a bigger branding battle marketers wage online, where billions of dollars are spent to create brand awareness. When a consumer goes online to search on a specific brand, marketers don't want competitors to be able to park in the paid-search listings.

A coalition of marketers called the Alliance Against Bait & Switch -- which includes InterContinental Hotels Group, Starwood Resorts, Northwest Airlines and 1800 Contacts -- is attempting to stop what they call "scads" -- scam ads that confuse consumers. And while the group's target goes beyond trademark bidding, it does count such tactics as confusing to consumers.

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