American Airlines Guns for Google

American Airlines last week sued Google, accusing the search giant of selling keywords using the airline’s name.

The company sells keywords, such as “American Airlines” or “AA.com,” to advertisers. This practice is, of course, Google’s bread and butter.

AA’s issue is with the sponsored links that pop up in association with AA’s trademarked terms. These sponsored links, which are targeted ads that appear with the search results, include links to AA’s competitors.

Not surprisingly, AA isn’t happy and has claimed in its suit that this practice confuses users and hurts AA by diverting traffic away from its Web site. Google denies it is doing AA any harm.

These cases are often tough to decide, with a lot of ins and outs. On the one hand, trademark law says that Google is not allowed to profit from using a trademark name. On the other, it seems difficult to prove that Google is actually confusing users.

Consider that Google has been down this road before with insurance carrier GEICO, which made many of the same claims as AA. Ultimately, a judge disagreed with GEICO’s claim that Google’s keyword practice was confusing customers. This was a major victory for Google.

However, the judge also said GEICO could collect damages from Google for featuring ads that used GEICO’s name in the text, rather than just using the trademark to trigger the ad. This was a small victory for GEICO.

Given this precedent and the similarity between the AA versus Google and GEICO versus Google suits, I can only surmise that Google will settle with AA in much the same fashion, affirming the courts’ line-straddling on the issue of trademark use in keywords.

But there are other cases in the works against Google. Those that have the time, financial resources and resolve to fight Google on its ad practice will come out of the woodwork with similar claims to nibble from Google’s coffers.

In the near term, this is a pesky annoyance to Google. But over the long haul, Google will likely get sick of handing out cash and change its ad practice so as not to rankle the companies it hypes in its ad network.

It’s tough to change what has worked so well, but when the losses pile up, Google and the other search providers that have similar models will have to rethink their ad strategies.