San Francisco — Hardly a month later a trademark lawsuit filed in the appeals court against Google’s keyword sales, another suit has surfaced in Texas. Search engine titan Google is slammed with a new lawsuit for allowing companies to use trademarks that does not belonged them to trigger their pay-per-click ads. Firepond, a software company in Texas, on Monday filed a class-action lawsuit in federal court in the eastern district of Texas, against Google alleging its AdWords service profits by selling keywords bearing a company’s trademark to its competitors.
Firepond, a small software selling company, based in Marshall, Texas, has sued Google, alleging that its AdWords system infringes its trade marks. The plaintiff claims 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.
A corresponding lawsuit involving PC support company Rescuecom was brought back to the forefront in April by an appeals court after initially being dismissed in 2006. If the case gathers enough participants, the suit could cost the search giant dearly.
Should companies be allowed to serve ads based on keywords that are trademarks of competitors? (Credit: Firepond)
In papers filed this week in federal court in the eastern district of Texas, Firepond alleges that Google’s sale of its brand name to its competitors amounts to trademark violation because people searching for “Firepond” end up clicking on the sponsored links of other companies, “thereby confusing Internet users and diverting a percentage of such users from [Firepond] and enjoying and benefiting from all the goodwill and (buyer’s momentum) associated with” its trademark, the suit read.
Google declined to comment, except to say that it had not yet been served with the lawsuit.
The subject matter is whether “Coke,” for example, should be allowed to buy keywords such as “Pepsi” and target ads for Coke products on searches for Pepsi? Rescuecom and Firepond argue that their respective keywords are an extension of the trademark they have acquired on their brands, and that Google should not be encouraging competitors to violate that trademark by using it to promote their own products. Firepond makes sales management software.
Google is ready to remove a trademark from one of its ads if it is in the text of the ad (Pepsi sucks! Try Coke!), but “we will not disable keywords in response to a trademark complaint,” the company says in an FAQ about its trademark policies for AdWords. Its reasoning?
“Accordingly, our trademark policy not to monitor the use of trademarks in the U.S., Canada, the UK, and Ireland aims to provide users with choices similar to their keywords. At the same time, we investigate trademark violations in ad text both as a courtesy to the trademark owner and to ensure that ads are clear to users.” A Google representative declined to comment on the Firepond lawsuit itself, saying the company was still reviewing the complaint.
That charge alone would not suffice to make the case special, since many AdWords advertisers have sued Google for similar trademark infringement. However, the uniqueness in this filing is that the plaintiff is seeking class-action status for the suit, which it has brought on behalf of itself and, potentially, other aggrieved AdWords advertisers in the state of Texas.
Eric Goldman, an expert on Internet law and faculty member at Santa Clara University’s School of Law, said the case may be the first attempt to bring a class-action suit against Google’s AdWords program. He said Google was the target of an earlier class-action case, led by Vulcan Gulf, which was denied class-action status.
Firepond is appealing 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 prominent experts on the issue say it will be difficult to convince a court to allow the case to proceed as a class-action. “It sounds like an uphill battle,” says false advertising and trademark law expert Norman Simon, a partner with Kramer Levin Naftalis & Frankel.
“Trademark class-action lawsuits are rare because of the factual inquiry required to resolve each alleged trademark infringement,” Goldman said. “I cannot give an exact percentage, but the odds of class certification are low.”
A federal district court judge in Illinois recently turned-down a similar case to allow an unrelated trademark infringement lawsuit against Google to proceed as a class-action.
AdWords is the engine that has made many a Googler rich. The system caters to anyone to bid on a given keyword and win placement on the top or right side of a search results page based on a combination of factors such as the size of the maximum bid for that keyword as well as the quality of the ad.
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 had not proven that people were confused when its name triggered ads for rivals.
Firepond is not just suing Google but also its online video subsidiary YouTube, AOL, MySpace, Turner Broadcasting and Interactive Corporation because these companies use Google’s search engine and AdWords system on their own sites.
Regardless of whether the case moves 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.
Firepond is asking for damages, punitive damages, profits from the infringing ads, attorneys fees, corrective advertising, etc.