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A decorating company and 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 against Google Inc. in U.S. district court in New York trademark violation of its name. The suit claims that when customers search Google for “American” and either “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., along with Ask Jeeves Inc. and EarthLink Inc., all of which use Google’s search engine as part of their own Internet operations. 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, in California’s Silicon Valley. A Google spokesperson said the company was still evaluating the complaint and declined further comment. David Rammelt, a lawyer for American Blind says 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.” The case has “widespread ramifications” in Internet law and should be of concern to “any company that uses a descriptive word in its name,” adds Rammelt, a partner in the Chicago office of New York City’s Kelley Drye & Warren. Bart Lazar, a partner at Chicago’s Seyfarth Shaw, agrees that the case bears watching. “Major trademark owners around country will be very interested in the outcome of this case,” says Lazar, who is not involved in the dispute. “I have clients, as many attorneys do, that will be directly impacted by this.” Lazar says he has previously written letters to Google on behalf of several clients, complaining of trademark infringements. He also says he has represented Earthlink, one of the defendants in the pending 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 the AdWords program delivers “click through” results at a rate five times higher than that of other forms of Internet advertising. American Blind, which describes itself as 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 in November by Google in U.S. district court in San Jose, California, 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,” “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.” Nick Setty, a partner in the Atlanta office of Jones Day who is not involved in the case, says, referring to the California complaint, that it is not yet clear whether Google “won the race to the courthouse” in a potential effort to gain home court advantage. Instead, the entire case could turn on how strongly the judge perceives the trademark, says Setty. Even if the judge finds trademark violations, the remedy might be against only the competing company that used the keywords in its ads, rather than against Google. Says Setty: “It is a good test case for use of descriptive terms in a fair way.” Sue Reisinger , a freelance writer and lawyer in East Hampton, New York, contributes to various American Lawyer Media publications.

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