American Airlines sues Yahoo, alleging unauthorized use of trademarks

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Having resolved its beef with Google over alleged trademark infringement, American Airlines last week sued Yahoo over similar practices.

American filed the suit in U.S. District Court in Fort Worth, Texas, alleging that Sunnyvale, Calif.-based Yahoo and its Overture Services search-marketing subsidiary unlawfully marketed and profited from unauthorized use of the airline's trademarks and service marks in Yahoo's paid sponsor results.

"The defendants have knowingly encouraged these infringements and have provided these companies [Yahoo customers] with the technological tools to carry out these efforts," the suit alleges.

The suit states that when consumers enter American's trademarks and service marks -- American Airlines, AAdvantage and American Eagle are among  nine cited -- into the Yahoo search engine, Yahoo sometimes displays ads for and links to companies that may be competitor airlines or "websites that are entirely unrelated to American Airlines."

The suit, filed Oct. 17, seeks an order barring Yahoo from directly or indirectly selling American Airlines trademarks and from publishing ads using keyword terms "identical or confusingly similar" to the airline's trademarks. It also seeks restitution and punitive damages.

The issue has long vexed -- or benefitted, depending on your perspective -- Internet marketers.

In 2005, for example, Marriott International issued Web standards that barred any partner from improperly using Marriott's trademarks in paid-search ads.

Last year, American sued Google over the issue. The two parties settled, and the terms of the agreement were not disclosed.

In its suit against Yahoo, American alleges that Yahoo has the tools to quash trademark abuse because it has done it for European Internet users.

Policy 'manifestly deficient'

"Yahoo's trademark policy is manifestly deficient," the suit alleges, because, among things, Yahoo requires advertisers to ensure they are not violating others' trademarks when buying search terms but doesn't enforce the issue.

Instead, Yahoo "puts the onus on the trademark owner to identify and complain about each infringing use, disclaiming responsibility for the advertisements that it publishes on its own website," the suit charges. Yahoo's policy puts trademark owners in the position of having to outbid other advertisers for the company's own trademarks if they want to gain a top or other prominent position in Yahoo's paid results, the suit claims.

In addition to assertions that Yahoo's practices violate federal and state laws, American alleged that Yahoo's trademark policies interfere with American's contractual relations with the airline's distributors as established in an addendum to the airline's ARC agreement. That ARC agreement, which American claims Yahoo is aware of, specifies that American's distributors agree not to "purchase, use or register any domain names or keywords or search terms that are identical or similar to, or contain (in whole or in part), any of the American [Airlines] Marks."

The suit offers several screenshots of allegedly improper use of its trademarks. One shows a Yahoo search of "American Airlines" displaying sponsor results from AA.com as well as Orbitz.comGlobeTravels.com and Creditcards.com.

Another screenshot shows a Yahoo search of "aa.com" producing sponsor results from Citibank.com, Nextag.com, Calibex.com and Insurance.com.

The suit charges that Yahoo allows such search results "with full knowledge that consumers are likely to be confused and lured away from the websites that they intended to visit, and with the goal of financially benefitting Yahoo to the detriment of American Airlines and other trademark and service mark owners."

As it did in tandem with its suit against Google in August 2007, American stated that its latest litigation was not an attack on Yahoo's overall business: "Rather, the dispute is centered on Yahoo's process of allowing other companies to purchase the right to use American's trademarks for Internet search. In working through this business dispute, American is hopeful that it will continue professional, friendly and fruitful relationships with Yahoo while finding an appropriate resolution to the trademark issues."

Commenting on the American suit, Yahoo spokeswoman Kelley Benander stated: "We have confidence in our trademark policies and are prepared to defend them in court." Benander said that Yahoo would file a response within 30 days.

Yahoo's policies state that advertisers must respect others' trademarks and must either be resellers of the products or services in question or provide a noncompetitive or informational function.

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