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On March 11, 2009, in an unpublished per curium decision, the U.S. Court of Appeals for the Fifth Circuit denied Yahoo!’s writ of mandamus, effectively affirming the district court’s refusal to transfer American Airlines’s trademark infringement and misappropriation suit to the Northern District of California.
American’s underlying suit, filed on October 17, 2008 in the U.S. District Court for the Northern District of Texas, argues that Yahoo!’s practice of selling “trademarked terms as keywords triggering sponsored advertisements in its search engine results” leads to trademark infringement, misappropriation, and various tort violations. American alleges that when Yahoo! users type assorted American trademarks into Yahoo!’s search engine, paid advertisements from American’s competitors appear as sponsored results on the webpage.
Essentially, American claims that Yahoo! is diverting business to American’s competitors by allowing those competitors to purchase ads that appear next to American Airline-related search engine results. Search engine keyword advertising permits businesses to purchase the right for their “short test adverts” to be displayed when someone searches for a specific term. American claims that to allow a competitor to bid for its advertisement to be placed next to trademarked terms violates the company’s trademark rights.
What surprised many in the filing of the original suit was that it came on the heels of American’s settlement with Google over a very similar allegation of trademark infringement. Popular technology and marketing law blogger Eric Goldman had this to say concerning the suit: “I just don’t see the business case for any trademark owner to sue a search engine. Maybe Google paid off the lawsuit sufficiently to make the effort financially attractive, but . . . otherwise I just don’t see how American Airlines could possibly be losing enough in ‘diverted consumers’ to justify the litigation expense.”
The question remains how Yahoo!’s latest loss in court will affect the pending suit. Many agree with Goldman that Yahoo! should follow in the footsteps of Google and settle out of court, thereby reducing the risk of defeat and the loss of valuable time and money.
– Jaci Thomson
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