"The fundamental purpose of trademark law, in the bricks-and-mortar world and on the Internet, is to protect consumers from being confused as to the source or affiliation of the products or services that they seek to buy", announced American Airlines in American Airlines, Inc. v. Google, Inc. in August 2007. The airline brought the lawsuit in an effort to curb the search giant's unauthorized use of American Airlines trademarks.
According to American Airlines’ statement of claim (courtesy of Santa Clara University law professor Eric Goldman's Technology & Marketing Law blog), the Google search engine "[helps] third parties ... mislead consumers and misappropriate the American Airlines Marks by using them as 'keyword' triggers for paid advertisements". Third parties may buy ad space related to Google searches containing the words "American Airlines" or other trademarked terms. Their ads appear as "sponsored links", immediately above or alongside Google's "natural" search results. The effect of these camouflaged ads, according to American, is to divert some would-be American Airlines customers to competitors' sites, thereby enabling "certain companies to free ride on American Airlines' brands through use of Google's technology."
American’s claims included direct and contributory trademark infringement, false advertising (since the term “sponsored link” falsely suggests actual permission or licence on the part of the complainant), unfair competition and tortious interference with contract (since Google knew or ought to have known better than to sell American's trademark keywords to its competitors). Google’s position was that selling keywords to competitors was no different than putting up competing billboards side-by-side, or printing a Ford ad opposite a story about Chevrolet vehicles.
Unfortunately for IP watchers, the dispute settled out of court for an undisclosed amount, with each party paying its own costs, less than a year later. As “arguably the single most influential commercial enterprise on the planet”, Google had been the target of similar infringement claims in the past and had settled them in turn; those companies, however, had neither the resources nor the brand recognition of American Airlines, so all eyes were on this case to resolve the issue definitively.
Indeed, while Google’s keyword sales may not seem an egregious infringement to some -- one blogger likened the lawsuit to “[complaining] that your local grocery store is selling both Coke and Pepsi even though it ran a Pepsi ad in the local paper” -- every company with a vulnerable trademark and an online presence has an interest in putting Google in its place. A more accurate analogy than those proposed by Google’s defenders would have the grocery store placing Coke directly in front of Pepsi on the shelf.
Try searching Google for “Air Canada”: the first result is just the kind of “sponsored link” in dispute here. The link, for a third-party airline ticket agent, is subtly highlighted to distinguish it from the “natural” search results. The Air Canada site follows immediately thereafter. Would most novice or casual Google users be able to distinguish between the paid advertisement and the natural result? How many would pass over the highlighted result in favour of the plain text beneath? Does trademark infringement occur after this moment of choice, or immediately upon viewing the results? For the moment, Google and the courts don’t have to consider the answers to such questions.