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JANUARY 22, 2004
By Alex Salkever Searching for Trouble? [Page 2 of 2] SLEEPING GIANTS. The American Blind keyword case is but one of several wending their way through the courts that could affect the future profitability of the search-engine business. On Jan. 14, Playboy Enterprises (PLA ) got the green light to proceed with a lawsuit against Netscape and American Online for trademark infringement based on sales of pop-up and banner ads keyed to the terms "Playboy" and "Playmate." And in France, Louis Vuitton, the French luxury-goods giant, is suing Google for trademark infringement, alleging that its practice of selling keyword ads against search terms violates its trademark. Two other companies have already won five-figure judgments against Google in France with similar lawsuits. Back in the U.S., some big companies have taken proactive steps to halt keyword advertising they deem to be against their brands' best interests. Dell (DELL ), eBay (EBAY ), and Hewlett-Packard (HPQ ) have all requested that Google not sell keywords against their names, and Google has complied. FRIGHTENING PROSPECT. Most search-engine outfits have policies that allow companies to remove their trademarked names from consideration for keyword sales. But many big companies haven't noticed the issue yet. If and when they do, they could cut into the revenue streams of Google, Yahoo, and others. And should the courts decide in favor of Playboy, Louis Vuitton, and American Blind, it could set off a rush of trademark complaints against search-engine companies. Of this much I'm sure: Google will be forced to look a lot harder at its keywords in the near future. Take a Google search for Hallmark. It now returns three AdWords listings. One of them links to Speedycards.com, one of Hallmark's competitors in the greeting-card business. If every trademarked company made its name off-limits for use as a keyword, it would mean significant potential for disruptions in the online-ad marketplace. Then there's the more frightening prospect, at least for search engines, of dealing with the masses of lesser-known trademarks of smaller to midsize companies. Plus the millions of domain names that could be construed as trademarks. That's why Google wants a clarification of the rules from the California court -- fast. RESTRICTIONS COMING? The stakes for Web advertising are enormous. This sector racked up $1.75 billion in sales during the third quarter of 2003, according to the Internet Advertising Bureau. Much of that came from keyword sales. And the IAB expects even more growth, assuming the courts don't blow a gaping hole in this revenue model. "If search engines cannot sell ads linked to words...then their revenue basis as well as their utility to the Web becomes threatened," writes Danny Sullivan, editor of Web site Search Engine Watch, in an e-mail. Sullivan testified as an expert witness in the Playboy-Netscape case. My hunch is that, under any scenario, the use of trademarked keywords to sell advertising will become more restricted. And that's hardly what shareholders of soaring Internet company stocks -- or prospective buyers of issues in Google.com -- want to hear.
 Salkever is Technology editor for BusinessWeek Online. Follow his Nothing But Net column every week on BusinessWeek Online Edited by Douglas Harbrecht
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