Google, American Blinds Get Ready to Rumble over Trademark Keywords

The online advertising industry is moving fast these days. But apparently that doesn’t oblige the legal system to keep pace. Case in point: the lawsuit by American Blind & Wallpaper Factory against Google for alleged trademark infringement, which may finally get to go before a jury this November…almost four years after it was filed.

The suit revolves around Google’s policy of letting AdWords advertisers bid on trademarked terms as the keywords that trigger the pay-per-click ads. Bidders can only use the terms to deliver the ads; they can’t use the actual marks in either the headline or the body of the text ads. American Blind claims that policy amounts to trademark infringement and confuse searchers combing the Google index for its Web site and products; Google maintains the keywords are just a delivery system that consumers never see.

Late last month U.S. District Court judge Jeremy Fogel turned down Google’s motion to dismiss the suit and put the case on the fall docket in the Northern District of California, with jury selection set to start November 9.

The case could have large implications for search marketing at Google. According to its last financial statement, AdWords ads account for more than 98% of its annual revenue, although there’s no way of telling what proportion of those ads are served using trademarked terms.

In his decision to let the case proceed to trial, Judge Fogel recognized the potential impact a verdict could have. “The large number of businesses and users affected by Google’s AdWords program indicates that a significant public interest exists in determining whether the AdWords program violates trademark law,” he wrote in his April ruling.

Both sides responded to Fogel’s decision by talking smack about their ability to win in front of a jury. Google litigation counsel Catherine Lacavera maintained that American Blind will be “unable to prove” the infringement claims in a trial. Meanwhile David Rammelt, a partner at Kelley Drye and head of the legal team representing American Blind, said, “We are gratified that our client will get its day in court, and that Google will finally face a jury for its trafficking in other companies’ intellectual property.”

Eric Goldman, assistant professor at the Santa Clara University School of Law and director of its High Tech Law Institute, says that if the case makes it to trial and comes before a jury, the results are hard to predict. The legal case will probably hinge on the possibility that Google’s policy risks consumer confusion: whether searchers who entered American Blind’s trademarks into the Google engine were then drawn off to other vendors whose pay-per-click ads got delivered as a result of those trademarked keyword bids.

The problem is that when a jury’s involved in a legal decision, emotional impact can win out over a point of law. In this case, Goldman says, each side has a persuasive emotional appeal available to it.

“There are two compelling stories to tell here,” he says. “Story number one is that American Blind says, ‘Google’s stealing from us.’ Story number two is Google telling the jury, ‘We’re helping consumers like you make smart choices in the marketplace.’ What’s a jury going to do with that? I have no idea.”

And Goldman predicts that both sides will play that emotional card. “In terms of the under-the-hood architecture [of search marketing], that’s going to be a touch thing to get the jury to understand. But that high-level story of stealing versus helping consumers is completely intuitive. If you get a jury hooked on the right story, the other factors fall into place.”

That’s one reason Goldman regrets that the case will go to a jury. “From a legal scholar’s standpoint, all you get from a jury trial is an answer,” he says. “A jury verdict is something of a let-down, because it doesn’t set a precedent.” If American Blinds wins and gets a cash award, or even if the jury finds for Google and decides there was no consumer confusion, the result is less authoritative than a written decision from a judge because it’s so tied up in the specific circumstances of the case.

In fact, decisions handed down in other courts since American Blind v. Google was filed may also have outpaced the case’s potential usefulness in making law on the consumer confusion issue. Goldman points to a decision last January in a lawsuit brought by J.G. Wentworth against Settlement Funding LLC. The parties are number one and number two respectively in the business of buying settlement funding—that is, paying out upfront cash to people who have won legal settlements. Wentworth took Settlement Funding to court for buying “J.G. Wentworth” and “JG Wentworth” as AdWords keywords.

Except for the fact that one advertiser was suing another here and not the search engine, he case was quite similar to the American Blind suit, with a defendant bidding on trademarked keywords but not showing those trademarks in the ad copy, and a plaintiff alleging that consumers were being confused by the display of competitors’ ads when they searched Google for those trademarks.

In that case, the District Court for the Eastern District of Pennsylvania ruled for the defendant and went so far as to note that because consumers choose among the search results delivered to them, “potential consumers have no opportunity to confuse defendant’s services, goods, advertisements, links or websites for those of plaintiff.”

“That was a really powerful ruling,” Goldman says. “We’re all wondering now what a jury will do with this question, but this court said, ‘We don’t need to ask them.’”

Goldman says he finds it hard to understand why American Blind would consider it useful to pursue this lawsuit for three and a half years.

“There’s a central question with all these keyword cases, which is, ‘Why are these plaintiffs running to court?’” Goldman says. “It costs a lot of money to get uncertain results and potentially adverse consequences, such as in this case forfeiting some future trademark rights altogether. It seems like a real lose-lose proposition.”

That last reference is to Judge Fogel’s ruling—in the same decision that permitted the case against Google to proceed-- that some of the terms American Blind was suing over did not meet the legal standards for trademarks. Since those disallowed terms include “American Blind” and “American Blinds”, that’s got to hurt.

The case will be argued for several other terms, including “American Blind Factory”, “American Blind & Wallpaper Factory”, and “Decoratetoday”, the URL for a home décor shopping site that the company operates.