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A decorating company and Google, the world’s largest Internet search engine, are locked in a lawsuit that could have a huge financial impact on keyword-based advertising on the Web. The decorating company, Michigan-based American Blind and Wallpaper Factory, filed suit recently in U.S. district court in New York alleging trademark violation of its name. American Blind and Wallpaper Factory Inc. v. Google Inc., No. 04-CV-00642 (S.D.N.Y.). The suit claims that when customers search Google for “American” and “blind” or “wallpaper,” the search engine also delivers the names and links to American Blind’s competitors, which pay Google an advertising fee. American Blind’s suit also named as defendants Time Warner Inc. units America Online Inc., Netscape Communications Corp. and CompuServe Interactive Services Inc.; Ask Jeeves Inc.; and EarthLink Inc., because those Internet companies use the Google search engine. The suit comes at a difficult time for the privately held Google, which has been widely rumored to be preparing for an initial public stock offering this year. Google is based in Mountain View. A Google spokesperson said the company was still evaluating the complaint and declined further comment. ‘WIDESPREAD RAMIFICATIONS’ American Blind’s David Rammelt said his client spent 10 years building its brand name and operated a Web site before Google existed, “and now Google wants to profit off that hard work.” Rammelt is a partner in the Chicago office of New York-based Kelley Drye & Warren. The case has “widespread ramifications” in Internet law, and has to concern “any company that uses a descriptive word in its name,” Rammelt added. Trademark attorney Nick Setty, who is not involved in the case, agreed that it is a significant issue for the developing field of advertising law on the Internet. “It is important in staking out the responsibilities for the Googles of the world,” he said. Setty, a partner in the Atlanta office of Jones Day, added that Internet advertising is a growing industry and that, so far, established law in the field is scant. Bart Lazar, a partner at Chicago’s Seyfarth Shaw, agreed. “Major trademark owners around country will be very interested in the outcome of this case. � I have clients, as many attorneys do, that will be directly impacted by this,” Lazar said. In the past, Lazar added, he has written letters on behalf of several clients to Google, complaining of trademark infringements. Lazar said he also sometimes represents EarthLink, a defendant, although he is not involved in this case. Court documents describe Google’s advertising program, AdWords, as a text-based program that allows companies to buy or bid on keywords, such as blinds or wallpaper. When a user does a search for the keyword, the search results list the advertisers and their links in highly visible positions. Such keyword searches have become an important way for Internet search engines to finance their operations and make a profit. Google, which claims to be the world’s largest search engine, has said it has more than 100,000 such advertisers. It also claims its AdWords program delivers “click through” results at a rate five times higher than that of other forms of Internet advertising. American Blind, which calls itself the largest retailer of wallpaper and window treatments in the United States, has annual revenues of more than $100 million. Its complaint alleges six causes of action, including trademark infringement, unfair competition and tortious interference with prospective economic advantage. It seeks a permanent injunction barring Google’s actions, and an unspecified amount of actual and punitive damages. The suit alleges that Google’s program creates customer “diversion and confusion” with the intended result of “allowing American Blind’s competitors to intercept consumers looking for American Blind.” The complaint says American Blind spends tens of millions of dollars per year on advertising its name. American Blind also seeks to dismiss a complaint filed last November by Google in U.S. district court in San Jose, seeking a declaratory judgment of noninfringement. According to that complaint, Google had agreed to remove several terms from its keyword searches in hopes of placating American Blind, but the company was still not satisfied. Google’s complaint argues that the words “American” and “blind” and “wallpaper” are generic and descriptive. It asks the court to declare that Google’s “current policy regarding the sale of keyword-triggered advertising does not constitute trademark infringement.” Setty said it is not yet clear what will happen to the California complaint, or whether Google “won the race to the courthouse,” with home court advantage. The entire case will turn on how strongly the judge perceives the trademark, Setty said. He added that even if the judge finds the trademark violated, the remedy might be against only the competing company that used the keywords in its ads, rather than against Google. “It is a good test case for use of descriptive terms in a fair way,” Setty said. Sue Reisinger wrote this story for The National Law Journal, a Recorder affiliate based in New York.

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