American Airlines v. Yahoo Venue Transfer Denied

By Eric Goldman

American Airlines, Inc. v. Yahoo!, Inc., 4:08-CV-626-A (N.D. Tex. Jan. 16, 2009)

The procedural battles over American Airlines’ lawsuit against Yahoo for selling trademarked keywords continue. You may recall that American Airlines sued Yahoo in its home court in Fort Worth, Texas. This venue has several advantages, including a hometown judge, higher costs for Yahoo to litigate 1500 miles from its HQ, and a location in the Fifth Circuit, which doesn’t have much jurisprudence on keyword advertising cases but is unlikely to adopt the current defense-favorable approaches of the Second Circuit.

In response, Yahoo initiated a declaratory judgment against American Airlines in its home court of Northern District of California. [note: Yahoo is based in the Silicon Valley but the former Overture operations are principally in Los Angeles, so Yahoo appears to consider both NDCal and CDCal as acceptable.] I was pretty surprised by this venue choice, largely because the Ninth Circuit has the adverse Playboy v. Netscape keyword advertising precedent and the Second Circuit seemed so much more defense-favorable. However, my suspicion is that Yahoo hopes to take advantage of the Ninth Circuit’s favorable nominative use defense.

In its DJ complaint, Yahoo also intimated that American Airlines had contractually agreed to the NDCal venue in AA”s advertising contract with Yahoo. This is an interesting argument because a contractual venue stipulation would almost assuredly trump all other venue considerations, but American Airlines’ beefs with Yahoo relate to AA’s advertising via the Yahoo network only tangentially at best.

Yahoo floated this contract-based venue argument in front of the Fort Worth judge, and that didn’t go so well. In a short but pointed ruling, the judge dismisses the argument emphatically, calling it “completely nonsensical.” OUCH. Oddly, the judge declined to explain his reasoning, but the limited explanation he offers makes me wonder if he misread the actual contract language. (Compare the quoted language with the footnote language–both have the word “exclusive” in them).

In any case, the Fort Worth judge has thrown down the gauntlet to the NDCal judge, saying, in effect, “this case isn’t leaving my courtroom.” This sets up a showdown with the NDCal judge, who will either dismiss the DJ action or pick up the gauntlet and keep the case. What happens at that point is unclear to me; maybe a civil proceduralist can help me understand what happens if neither judge backs down.