American Airlines Sues Yahoo for Selling Keyword Advertising

By Eric Goldman

American Airlines, Inc. v. Yahoo! Inc., 4:2008cv00626 (N.D. Tex. complaint filed Oct. 17, 2008). The Justia page.

Here’s a lawsuit I never expected. Fresh off their settlement with Google, American Airlines is suing Yahoo for selling keyword advertising triggered by American Airlines-owned trademarks. I didn’t run a redline comparison, but the complaint clearly borrows liberally from the Google complaint, right down to the heavy-hearted declaration that American Airlines doesn’t bring this lawsuit lightly (paragraph 6) and the completely meritless vicarious trademark infringement claim (which erroneously uses the language of vicarious copyright infringement).

I’m surprised by this lawsuit for three reasons. First, most SEMs I’ve spoken with think that Yahoo has a much more trademark owner-favorable trademark 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?

By the way, this afternoon I replicated the searches I ran after the Google settlement. American Airlines, and AADVANTAGE now have no advertisers at all–which is different than in July. Did Google made some systematic changes after the settlement? (Maybe the settlement had a delayed effectiveness, such as to give Google time to build a new tool). Or has American Airlines chased individual advertisers off the search terms? Hmmm.

Third, and most importantly, 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 as I explained with the Google lawsuit, otherwise I just don’t see how American Airlines could possibly be losing enough in “diverted consumers” to justify the litigation expense.

(On that point, paragraph 83(E) of the complaint was particularly laughable, saying that airline purchasers exercise a minimal degree of care when selecting air transportation services online. Really…? I’m sure people are pretty careless about making many-hundred-dollar non-refundable travel plans, just like they pick the wrong pack of gum in the checkout line.)

I’d be surprised if this lawsuit didn’t settle like Google’s did. If it doesn’t, then it could be interesting.