A distributor of window blinds and wallpaper has filed a lawsuit against Google, claiming the search engine's keyword-based advertising violates its trademarks.
American Blind & Wallpaper Factory argued that Google, by selling keyword-based advertising to competing retailers when Google users search on "American Blind" or "American Blinds", is violating the company's trademark.
Google argued that "American" and "Blind" and other words claimed to be trademarks by American Blind are descriptive and should not enjoy trademark protection.
The two companies had been sparring over the trademark dispute for about a year.
American Blind has asked the court for an injunction requiring Google to stop keyword-based advertising on its trademarks. The retailer is also seeking damages, said David Rammelt, American Blind's lawyer.
"Every time they've diverted a potential customer to one of our competitors, we've been harmed," Rammelt said. "American Blind has spent more that 50 years and $70m building its reputation."
American Blind has asked the California judge to throw out the request from Google that its keyword-based advertising model be ruled legal. A hearing is scheduled for 29 March.
Other companies, such as General Motors and National Car Rental System use generic words in their names and could be targeted for keyword-based advertising, Rammelt said.
The American Blind lawsuit could have huge implications for keyword-based advertising and trademarks on the internet.
"Google has decided what trademarks it will honour and what trademarks it will not," Rammelt said. "You have decades and decades of trademark law, and it's trying to grapple with new technology."
Earlier this month, Netscape settled a similar lawsuit brought by Playboy Enterprises. In the five-year-old lawsuit, Playboy sued Netscape for using its trademarks to deliver search engine advertisements. Terms of the settlement were not disclosed.
Grant Gross writes for IDG News Service