Suit targets heart of Google business model

PARIS -- AXA, the world's number three 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 already 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 for May 10 in Paris, a court official said.

Both companies have confirmed that litigation is pending but declined to comment on the case or say how much AXA was seeking in damages.

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 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.

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' ads.

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.

''The law in the US holds that there is no infringement unless there is a likelihood of confusion," she said.

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.

In the AXA case, French lawyers say efforts to avoid consumer confusion offer no defense.

''As soon as you have a situation where an Internet user enters 'AXA' and is given results including other companies offering equivalent products, that can be deemed a trademark infringement," said Valerie Aumage of the Paris law firm Dubarry Le Douarin Veil.