American Airlines sues Yahoo over trademarked search ads

American Airlines has filed a trademark infringement lawsuit against Yahoo claiming it is diverting business to the airline's competitors by allowing them to purchase ads that appear next to American Airlines-related search results.

The lawsuit, filed in federal court in Forth Worth, Texas, late last week, is similar to one that American Airlines filed against Google last year and then settled earlier this year.

The airline contends that allowing other companies to purchase ads that are displayed when someone searches on an American Airlines-trademarked term confuses the public and directs potential American Airlines customers to other companies.

Yahoo spokeswoman Kelley Benander provided this statement via e-mail: "We have confidence in our trademark policies and are prepared to defend them in court."

Yahoo's search marketing policies differ from Google's in that they only allow advertisers to use trademarks for sponsored search listings if they are resellers of the products or services of the trademark holder.

Eric Goldman, an associate professor of law at Santa Clara University School of Law and director of the school's High Tech Law Institute, said he was surprised by the lawsuit and predicted that the two sides will reach a settlement.

He wrote on his blog:

Most SEMs (search engine marketers) I've spoken with think that Yahoo has a much more trademark owner-favorable policy than Google. Thus, I would have thought that Yahoo would be better positioned and willing to address American Airlines' concerns than Google was, and it's surprising to see that Yahoo couldn't resolve the dispute outside of court.

Second, it wasn't clear that American Airlines 'won' its settlement with Google. The settlement was confidential, but after the settlement I could still easily find triggered ads that the lawsuit targeted. So exactly what did Google concede to, and how were those concessions appealing enough to motivate American Airlines to tango again?