American Airlines filed suit against Google in federal court late last week, alleging that the search giant's AdWords program infringes on American's trademarks. Without authorization or approval, Google sold the right to use American Airlines' trademarks and service marks, the complaint, filed in the U.S. District Court for the Northwestern District of Texas, asserted.

According to the suit, Google's search engine is helping third parties "mislead consumers" and "misappropriate" the American Airlines marks by using them as keyword triggers for AdWords campaigns and by displaying the trademarks in the actual ad text, the airline claimed.

The airline pointed to several ways in which Google is violating its trademarks but reserved its greatest ire for Google's policy of selling trademarks as keyword triggers for other companies' ad campaigns. The complaint includes screen shots that show the AdWords system recommending American Airlines trademarks for an ad campaign.

Suit Not Brought Lightly

American is hardly the first company to claim that AdWords is infringing trademarks. But, said Eric Goldman, a professor at Santa Clara University School of Law, this is the first suit brought by a company with such a well-known and broad portfolio of trademarks.

"You have someone who has the money to attack this vigorously," said Goldman. "American understands the power of Internet marketing and they know how important this is to Google." The complaint even states that American "does not bring this suit lightly." Having thought about the situation carefully and deciding to declare war, American "made a choice to pursue this vigorously," Goldman said.

After several years of trademark lawsuits against AdWords, the jury is still out on whether Google operates safely within trademark law or not, Goldman said. "The courts that have confronted this issue have split right down the middle," he said. "That tells you it's a really hard legal question," Goldman said. American was well aware that the "data is split" and decided to bring the suit anyway, Goldman noted.

In a statement, the company emphasized the lawsuit "does not seek to prevent the display of search results that reflect consumers' interests or choices. American is only asking Google to stop selling our trademarks to others who are purchasing them and related terms to confuse and/or divert consumers."

Google responded generically. "We are confident that our trademark policy strikes a proper balance between trademark owners' interests and consumer choice."

Trademarks Hard To Defend

While American is an aggressive Internet marketer with many trademarks, it has a unique problem in that its brand consists of two generic words. "It's fundamentally a difficult mark to protect in the Internet space," Goldman said. Unlike a search for say, "Geico," another company that has sued Google, users searching for "American Airlines" might include European travelers looking for information on all U.S. airlines.

Goldman questioned how many potential customers were genuinely confused by the third-party ads, noting that American's best customers are controlled by loyalty programs, while many others use travel-specific services, such as Orbitz, which do head-to-head price comparisons. The number of users broadly searching with Google to purchase air travel might therefore be fairly small.

What would be the impact on Google if it were to lose a case as big as this? There's really no way of knowing how much of Google's business is based on trademark-triggered keywords, but "they make a whole lot of money" from it, Goldman said. "If you were to slice that revenue off, you would notice."