Yet Another Ruling That Competitive Keyword Ad Lawsuits Are Stupid–Louisiana Pacific v. James Hardie (Forbes Cross-Post)

By Eric Goldman

Louisiana Pacific Corp. v. James Hardie Building Products, Inc., 2012 U.S. Dist. LEXIS 162980 (N.D. Cal. Nov. 14, 2012). The initial complaint. The amended complaint filed after this ruling.

It’s been surreal watching plaintiff-side trademark lawyers lament that the Rosetta Stone v. Google settlement means we won’t get clearer legal precedent from the case. See, e.g., this paywalled BNA article, Attorneys Lament Lost Chance for Clarity On Lawfulness of Marks’ Sale as Keywords. Those lawyers and I are living in parallel universes. The Rosetta Stone case’s unenlightening denouement simply supplemented the overwhelming evidence that most keyword advertising lawsuits are stupid–and that fact hasn’t changed one bit in the past decade. Plaintiffs’ lawyers might enjoy chowing down on the litigation gravy train, but clients might as well flush wads of cash down the toilet.

The dumbest keyword advertising lawsuits assume that trademark owners “own” potential customers who conduct keyword searches using their trademarks. This fallacy needs to be permanently retired ASAP. As I mentioned in this post, consumer surveys suggest that consumers conduct do those keyword search for a variety of reasons that may have nothing to do with finding the trademark owner (a point I also stressed in my 2005 Deregulating Relevancy article). Treating these searchers as the trademark owner’s property is in no one’s interest–except, of course, the trademark owner hoping to avoid competition.

Fortunately, judges are recognizing that trademark owners don’t own searchers. In today’s case, the trademark owner alleged that the competitive keyword advertiser committed the tort of interference with economic advantage by disrupting their ownership of searchers. The court pithily trashes the claim:

Plaintiff’s argument lacks merit as it is premised on the unfounded assumption that a person forms a business relationship with Plaintiff when he or she enters particular terms in Google’s search engine. There is a possibility that consumers who search for Plaintiff through Google will choose to purchase Plaintiff’s goods or services at some point in the future; however, such consumers do not have an existing business relationship with Plaintiff merely because they perform an internet search.

Hey trademark owners, want to “own” those consumers? Tough, you can’t. However, you can nevertheless win their fickle dollars by consistently delivering good value to consumers. Pouring shovelfuls of cash into meritless litigation doesn’t really advance that goal. Meanwhile, ten years from now, we’re going to look back at the keyword advertising lawsuits being brought today–knowing all that we already know RIGHT NOW–and scoff at the futility and waste.

[Photo credit: Flushing one hundred dollars down the toilet // ShutterStock]