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Lawsuit Over Paid Placements To Define Search Engines

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A new chapter in search engine law was opened last week, when Mark Nutritionals filed lawsuits seeking $440 million in damages for alleged trademark infringement and unfair competition against AltaVista, FindWhat, Kanoodle and Overture.

The four search engines named all have paid placement listings that appear when searches are conducted for the term "body solutions." Body Solutions is also the name of a weight-loss program made by Mark Nutritionals. The company believes the ads are misleading consumers and infringing its trademark on the Body Solutions name.

"Because of the pay for placement practice, the Body Solutions site gets buried in the search engines," said J.D. Pauerstein, of Loeffler, Jonas & Tuggey, one of the two firms representing Mark Nutritionals in the case.

The message seems to be, "Don't bury our site, and you won't get sued over ads." It's a message aptly illustrated by comparing the fate of Google to AltaVista, on this issue.

When the suit was filed, Google had several paid ads on its results page linked to the term "body solutions." However, the Body Solutions web site was also the first site listed in Google's editorial results. AltaVista also had several ads linked to "body solutions," but the Body Solutions site did not appear in the first page of results. Google escaped being named in a suit, while AltaVista did not.

"Certainly it is less troubling conduct when our web site comes up first," Pauerstein said.

Bad Results Equals Legal Liability?

Clearly, any search engine worth its salt should return the Body Solutions web site in the top results, in a search on that term. That's a reasonable expectation many people would have. The product is well-known in the United States, and while there are many other things that could be relevant for "body solutions," this is an obvious top choice you would expect to be included.

But is failure to include the site in the top results trademark infringement, if ads appear? We don't know. The famous Playboy-Excite/Netscape banner ad case provides some guidance but not all the answers.

In that case, Playboy filed suit against Excite and Netscape for running keyword-linked banner ads that appeared for terms such as "playboy" and "playmate." The court rejected the notation that ads were infringing Playboy's trademarks. Playboy is currently appealing the case.

It would have been terrible for the court to have favored Playboy's argument, something I believed so strongly that I eventually became an expert witness in the case on behalf of Excite and Netscape.

Think about it. Had Playboy succeeded, anyone who wanted to sell old back issues of Playboy magazines (and there's apparently quite a market) would have been unable to advertise them on search engines using the term "playboy." Any anti-porn organization opposed to Playboy would have been unable to run ads spreading their views. Playboy would have locked out a variety of legitimate reasons like these where someone might want to have an ad appear when searches for "playboy" were conducted.

Victory in that case also would have put a huge burden on search engines. Any word can be a trademark. "Orange" is the name of a mobile phone company in the UK, while "Apple" is the name of a small computer company some people may have heard of. Can searches for these words not carry ads without the permission of Orange or Apple? Do search engines need to conduct a trademark search any time they sell an ad, then ask the trademark holder to determine if the proposed ad is acceptable? And how do you do this for all the trademarks that are unregistered in the United States but still entitled to trademark protection?

"Findability" Of Trademark Holder May Be Key

In the Mark Nutritionals case, it is keyword-linked text ads, not banner ads, that are at issue. However, the more important difference involves the argument over how easy or hard it is for consumers to find the Body Solutions web site.

In the Playboy case, it was difficult to show that people were somehow being diverted against their will from Excite and Netscape via the banner ads. Numerous links appeared leading to Playboy-owned sites from the search results pages that also carried those ads. Consumers weren't being prevented from getting to Playboy, if that's what they wanted. They had ample opportunity to find it.

In contrast, Body Solutions may have an easier time arguing that its "unfindability" is due to ads. At AltaVista, FindWhat and Kanoodle, on the day the suits were filed, the Body Solutions web site did not appear in the first page of results, while the many ads did. At Overture, the Body Solutions web site was listed, but apparently being ranked 13th behind ad placements wasn't high enough to prevent Overture from getting sued.

Given this, the Body Solutions case is really going to focus on what appears on a search engine's results page. Must something that calls itself a "search engine" provide trademark holders with some degree of visibility, regardless of payment, if they also carry ads for searches involving those trademarks?

To defend themselves, expect that the pure paid placement search engines will trot out the trusty "Yellow Pages" analogy. They'll say that you don't get a free ad in the Yellow Pages, and that's legal, so why would you expect free ads from us?

Of course, none of these players describes themselves as Yellow Pages to consumers. FindWhat and Kanoodle make plenty of references to themselves as search engines on their sites, though the fact that results are bid upon is also mentioned. Overture describes itself as an ad distribution network, and rightfully so, given that most people encounter its listings at other search engines rather than at the Overture site itself. Nevertheless, Overture still maintains a site that seems like a search engine.

How the site appears is important, because you can expect that the Body Solutions side will argue that when consumers go to something that looks like a "search engine," they expect to get answers regardless of payment. They do not expect they are using Yellow Pages. Anything that looks like a search engine, that acts like a search engine yet mainly focuses on delivering ads is misleading those consumers, they'll argue.

"The point is that they tout themselves as search engines but actually, they have become mere advertisers. They should disclose to consumers what is paid advertising and what are true search results," said Susan Smith, a lawyer for Kenyon & Kenyon, the other firm representing Mark Nutritionals.

One Of These Things Is Not Like The Others: AltaVista

AltaVista is different from the others named in the suits. In contrast to them, AltaVista always provides some substantial "editorial-style" results in response to a search. AltaVista has also always has filled the role of being an information resource, rather than aiming to be a pure ad engine.

Body Solutions didn't fail to come up in the top results at AltaVista because of some conspiracy to mislead consumers and drive them to the ads on the results page. Body Solutions didn't come up simply because the quality AltaVista results on this particular search was poor.

AltaVista's not alone in being bad like this. Both Lycos-owned HotBot and AOL-owned Netscape Search failed to list Body Solutions in their editorial results when the suit was filed but did have Overture-distributed ads, just like AltaVista. Neither of them had a lawsuit slapped against them, however.

"We have to pick and choose where our strongest cases are," said Pauerstein, about why HotBot and Netscape weren't named. "The ones we chose are the ones where we think we have the best chance of success."

Of course, it may also be that no one did a comprehensive survey of all the important search engines out there. Pauerstein said that he didn't know if anyone looked at Netscape and HotBot, when deciding which search engines to sue.

Given that AltaVista does have editorial-results and always provides them as part of its main role as a company, expect it to employ a newspaper analogy as part of its defense: "Mark Nutritionals doesn't like the editorial-results at AltaVista, so it seeks to prevent AltaVista from running ads." Convincing a court to uphold that isn't going to be easy.

For example, what would happen if Mark Nutritionals suddenly had major consumer problems? Let's say there was a class action lawsuit filed against it for some reason. Law firms might want to run ads linked to "body solutions" in order to find claimants. Meanwhile, a number of anti-Body Solutions web sites might pop-up, filling the editorial results at AltaVista. In such a case, could Mark Nutritionals wield its trademark club and get the ads ousted, simply because it didn't show up in the top results?

Indeed, such a scenario is one reason why Public Citizen, a Ralph Nader-backed consumer advocacy group, is considering whether there is a role for it to play in the case, to ensure that the interests of consumers and other members of the public are represented or protected.

"We are watching this case because, although the litigation will be between two commercial concerns, each of which has its own interests, we believe that consumers and other members of the public have an interest in having access to information that web publishers are trying to communicate. The abuse of trademark law to prevent citizens from learning about those who want to speak about a company, and not just with its sponsorship, can have a serious impact on the utility of the Internet from the public's perspective," said Paul Levy, a staff attorney for Public Citizen.

Also complicating the case against AltaVista is the fact that its crawler-based results are subject to change. For all we know, Body Solutions may have been in the top results at AltaVista at some point in time and dropped down for various reasons. Something at the Body Solutions site itself could even be preventing it from ranking well at AltaVista.

Pauerstein said he didn't know how long AltaVista had failed to prominently list the Body Solutions web site but that he personally had been watching it for a month and consistently found the site absent from the top results.

Overall, it was a poor decision to include AltaVista among the search engines being sued. It's not really fair, given that AltaVista's business model is so significantly different from the others. It's also going much harder to show fault, I think.

No Love For Ad Engines

As for the ad engines, they certainly don't gain much on the sympathy front. Unlike AltaVista, if they could do it, they'd sell every single listing and have no concerns about whether that serves users best.

The idea that they are making money off of other people's names certainly makes the ad engines sound bad, at least until you begin realizing how other people might have legitimate reasons to link ads to their trademarks.

However, there's no easy way to counter the "we shouldn't have to buy our own name" argument. It just feels wrong that people end up at something that purports itself to be a search engine but which fails to deliver relevant navigation. Whether something that feels wrong is necessarily illegal will remain to be seen.

Of course, we don't know whether Mark Nutritionals made any type of effort to rectify the problem it perceived, before filing the case. For example, it could have asked the search engines named not to run any or all ads. It could have asked Overture to provide it with a "Quick Hit Results" link, which appears above paid listings for promient companies such as Nike.

Pauerstein said he didn't know if any non-legal efforts like these had been tried, but the impression I got was that they hadn't.

"Given our perception that they engaged in unlawful conduct, the company wanted to seek redress," Pauerstein said.

Even if Body Solutions had gone a non-legal route and got satisfaction, it's inevitable that someone would have eventually taken legal action over this issue. The surprise is that it has taken so long. Overture has been running with a paid placement model since launching as GoTo back in early 1998. Four years later, the first lawsuit finally arrives.

Bait & Switch?

The case has also raised the allegation of bait-and-switch, that consumers thought they were getting the Body Solutions web site when they went to the search engines named but instead were delivered to something else.

This is complicated, as always with search engine related cases, in that we don't really know what a consumer wanted. But no one would doubt that a substantial number of people searching for "body solutions" at the search engines named probably wanted to reach the Body Solutions web site.

Given this, did running the ads constitute bait-and-switch? Probably not the mere act of running keyword-linked ads, but the content of some of the ads might come under question.

For example, most of the ads I read at Overture wouldn't have been confusing. For example, here's was the top listing on the day the suit was filed.

Body Solutions or MeTrim Night: Compare!
Dare to compare! Lowest price on Net. Perfecthealth4life, a MeTrim Night distributor, compares two nighttime weightloss supplements: their own MeTrim Night ($28.95) and Body Solutions ($48). www.perfecthealth4life.com (Cost to advertiser: $0.76)

Nothing in this description is designed to make you think you are coming to Body Solutions. Indeed, the description specifically notes that this is a distributor of the MeTrim product. Sure, a consumer might not read the description, but then the fault lies with the consumer, not the advertiser or ad distributor.

The first six results at Overture were all the same, difficult to claim as being misleading. It's the seventh where we get a problem:

Body Solutions compared to Calorad
You've heard the radio commercials, now decide for yourself. Lose weight, feel great, click here!

This ad led to a Calorad site, but you might not realize that. You might have assumed it was leading to the Body Solutions site. If that's what you wanted, then clicked through and then decided to stay with Calorad, Body Solutions can (and will) argue they lost a customer.

"Ive come on here because I wanted to find Body Solutions, and I find this site saying compare Body Solutions to Calorad, but its all about Colorad," said Pauerstein. "What's got you to this point is our name."

In all, 4 of the 11 ads I reviewed on Overture weren't clear. Legally, it might turn out that Overture isn't responsible for these ads, if they are determined to be misleading. It could be that the court would say it is the advertiser who is responsible and should be sued. However, Overture (and the other ad engines) all have ad review processes. It complicates their case that unclear ads like these would run after being approved.

How about the search engines named in the suits? I haven't heard back from Kanoodle, and AltaVista said it couldn't comment on the case. Overture said it is still reviewing the case but expects to be able to comment in the near future.

FindWhat was also named, and they responded:

"We fully respect the intellectual property rights of others, but, as you can imagine, we really can't comment on ongoing litigation, or our legal position on the issues raised," said Phillip Thune, FindWhat's chief operating and financial officer. "The one thing we have noted to various members of the media who have called us is that Mark Nutritionals never tried to contact us before filing a lawsuit against us, and as a result we question their motives. They have certainly generated a lot of publicity for themselves."

I also contacted Google. Though not named in a suit, this case could easily affect it and every other search engine carrying ads.

"We certainly respect trademark laws and believe that advertisers are best positioned to select both targeting and content that is appropriate and permissible under trademark and other laws," said spokesperson Cindy McCaffrey. "Use of trademarks is certainly permissible in some contexts -- including comparative use, fair use, use pursuant to a license, etc."

In other words, it's left to the advertiser at Google to decide if the content of their ad, the terms they link it to and the destination page the ad links to complies with trademark law.

Mark Nutritionals vs. AltaVista, FindWhat, Kanoodle & Overture
http://searchenginewatch.com/sereport/02/02-altavista.doc
http://searchenginewatch.com/sereport/02/02-findwhat.doc
http://searchenginewatch.com/sereport/02/02-kanoodle.doc
http://searchenginewatch.com/sereport/02/02-overture.doc

Copies of the suit are in Word format above. See the filename to know which suit is against which search engine.

Search Links
http://searchenginewatch.com/links/

A link to AltaVista can be found in the Major Search Engines area via the URL above. For the other search engines named in the suits, see the Paid Listings Search Engines area.

Search Engines & Legal Issues
http://searchenginewatch.com/resources/legal.html

See the Advertising section for a rundown of articles on the Playboy-Excite case. Also follow the link to the Meta Tags page for cases involving meta tag lawsuits. Many of the arguments in these will likely come up in the Body Solutions case.

Body Solutions
http://www.bodysolutions.com/

No information about the case is here, but you can learn more about the product.

Public Citizen
http://www.citizen.org

Seek and Ye Shall Find ... or Not
The Recorder, Feb. 1, 2002

Excellent article on the case, with plenty of quotes and observations from experts on the issues.

Weight Loss Company Sues Search Engines
InternetNews.com, Feb. 1, 2002
http://www.internetnews.com/IAR/article/0,,12_966901,00.html

Another summary of the case.

Search engines sued for delivering hits based on payment
San Francisco Chronicle, Jan. 31, 2001
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2002/01/31/BU130121.DTL

And another look at the case, with several quotes from experts. The last paragraph is incorrect in saying that the only other mention of trademark law and search engine keywords came as part of the Nissan case (see below). The Playboy-Excite case I mentioned earlier, as well as several of the meta tag lawsuit cases, all have relevant bearing on the Body Solutions case.

Search Engines in $440 million suit
WebmasterWorld.com, Jan. 30, 2002
http://www.webmasterworld.com/forum6/814.htm

A press release about the suit can be found via the top of this thread, followed by lots of discussion among site owners over the case.

Search Engine Wants Overture Patents Invalidated
DMNews.com, Jan. 29, 2002
http://www.dmnews.com/cgi-bin/artprevbot.cgi?article_id=18734

As if there aren't enough legal fights, FindWhat is challenging a patent Overture has bidding for placement.

FindWhat.com Takes on Rival's Search Patent
InternetNews.com, Jan. 24, 2002
http://www.internetnews.com/IAR/article/0,,12_960971,00.html

Another story on the patent fight.

Nissan Motor v. Nissan Computer: Order Denying Defendant's Motion For Leave

This is the first case involving paid placement listings that I know of. It was between Nissan Motor Company and Nissan Computer Corporation and ruled upon in December 2001. Nissan Computer alleged that when Nissan Motor purchased terms such as "nissan" and "nissan.com," this constituted false advertising.

In the court's decision above, the only "paid listing" example actually cited involves a "Quick Hit Result" listing at Overture which is not paid for but instead supposed to be editorially provided. Nevertheless, this unpaid link was apparently part of the evidence used to argue the legal rights involving paid listings.

Specifically, Nissan Computer, which was located at nissan.com, was upset that a search for "nissan.com" produced a link that at Overture that said "Quick Hit Result: The Official Site for nissan.com." The court failed to uphold Nissan Computer's claim, saying that US trademark law doesn't give domain name holders exclusive rights to their domain name as a term. Indeed, the court further said that the law sees no difference between "nissan" and "nissan.com." So even though Nissan Computer was located at nissan.com, it couldn't block others from advertising on that term.

Oddly, you would have thought Nissan Computer could have successfully argued that the Nissan Motor description was misleading consumers. Sure, Nissan Motor could buy ads linked to the term "nissan.com." But to suggest that it is the "official site for nissan.com?" That would indeed seem misleading, as opposed to saying something like "Click here to reach Nissan Motor." Of course, it bears repeating that in this particular example, it was actually an unpaid link being debated.

In another interesting point, Nissan Motor suggested that there's no reason to protect "nissan.com," because consumers entering that address into a search engine already know how to reach the site they want. Ego, they aren't being denied a valid navigational request if other sites are listed for that term.

"Typing 'nissan.com' into a search engine to obtain the domain name for 'nissan.com' is as pointless, as the plaintiffs correctly point out, 'as telephoning a business and asking for its telephone number'," the court writes.

Pointless for some, but not for all. The reality is that many, many consumers consistently make a mistake between the address bar of their browser and a search engine's search box. There are undisputably many people who depend on search engines to navigate them to a site by entering the domain name into a search box, and it's sad to see this fundamental behavior dismissed.

Nissan Computer Loses Ground in Domain Name Dispute With Nissan Motor
Hayes Law Report, Jan. 14, 2002

The article above provides a summary of the Nissan case.


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