Insurer sues Google over search ads

By Laurence Frost
Associated Press

PARIS — AXA, the world's No. 3 insurer, is taking Google Inc. to court next month in the latest trademark challenge to threaten the heart of Google's business model — advertising.

Google is embroiled in litigation on both sides of the Atlantic over claims that its pay-for-placement service, Adwords, lets clients hijack their competitors' trademarks.

But AXA, which posted $86 billion in revenue last year, is the largest company yet to put the matter before a judge.

The growing mass of litigation over trademarks in advertising could weigh on Google's expected multibillion-dollar stock market launch, experts say.

"It's definitely a threat to Google, but it's also a threat to anybody who sells keyword-linked advertising — including Overture and eBay," said Danny Sullivan, editor of the online newsletter Search Engine Watch.

A preliminary hearing on AXA's allegations of "brand counterfeiting" is scheduled May 10 in Paris, a court official said.

Both companies have confirmed that litigation is pending but declined to comment on the case or to say how much AXA was seeking in damages. Under French court procedures, details will not be made public until later hearings.

A source close to the insurer, speaking on condition of anonymity, said the lawsuit was filed after Google sold AXA's registered trademarks as advertising search terms.

Internet users who typed "AXA" or "Direct Assurance" into the search engine got ads for rival insurers alongside ordinary search results, the source said. In a Google search conducted last Thursday in Paris, the word "AXA" produced mostly AXA sites and one British financial planning site.

In the United States, American Blind and Wallpaper Factory Inc., a home decorating outfit, and Pets Warehouse, a New York-based pet supplies retailer, are pursuing separate lawsuits alleging that Google used their trademarks to trigger ads from rivals.

Last October, in the first ruling of its kind, a French court fined Google $90,000 and ordered it to stop linking brands like "Bourse des Vols" — French for "Flights Marketplace" — to competitors of the online travel firm that owned them. Google has appealed.

And in February, another French court ordered Google to pay costs in the first stage of an ongoing lawsuit filed by luxury goods maker Louis Vuitton SA.

The lawsuits have arisen despite Google's stated policy that it will generally remove ads triggered by registered trademarks when notified by their legitimate owners.

Google is about to relax that policy. Earlier this month, it announced plans to allow the sale of any U.S. or Canadian trademark as a search term. Trademarks in the text of ads would remain restricted.

The shift will give Mountain View, Calif.-based Google a more aggressive stance on trademarks than its archrival Yahoo Inc., whose paid search service, Overture, pledges to vet the use of brands as search terms.

Google does not publish financial data, but analysts estimate it makes about $150 million in annual net profit on revenues of $500 million — of which at least 75 percent comes from advertising.

Rose Hagan, Google's senior trademark counsel, said Google believes it can avoid liability by making sure no trademarks appear in the text of rivals' advertisements.

This, she maintains, will be enough to prevent consumers from mistaking the advertised goods or services for those of the brand they typed into the search engine.

But New York attorney Barry Felder, who won a landmark federal appeal court ruling for Playboy Enterprises Inc. against Netscape Communications Corp. and Excite Inc., disagrees.

"What Google seems to be omitting is that they're creating a scenario which is likely to result in confusion," Felder said.

Netscape's portal, powered by Excite's engine, displayed ads for Playboy's rivals when an Internet user searched on trademarks "Playboy" and "Playmate."

Felder said consumer surveys showed users were confused whether Playboy was the ads' sponsor.

The appeals court agreed, ruling in January that the practice could constitute trademark infringement and ordering a full trial.

Netscape, which is owned by America Online Inc., settled out of court the next week for undisclosed damages.