Understanding the reason for this lawsuit is as simple as typing a few letters on your computer keyboard. Go to Google, the world's most popular search engine, and type in "Edina Realty," the name of a 50-year-old Twin Cities company.
To Edina Realty's frustration, the first result you get is not their corporate homepage. It is a link to the homepage of TheMLSOnline.com, a Minneapolis competitor with its own collection of local home listings and its own agents who can show you those homes.
A closer look shows that first result is a so-called "sponsored link:" TheMLSOnline.com pays Google to appear in that top spot when someone searches for "Edina Realty," even though that keyword is a rival company's federally registered trademark.
Edina Realty's legal counsel, Mark Christopherson, says given how many people now search the Internet for homes, any loss of Web traffic hurts the business financially. "In our view, it's a pretty simple case," he says. "It's akin to simply hanging an Edina Realty sign outside of your brokerage and driving customers to your shop rather than ours because of the strength of our (trade)mark."
This is a multi-billion-dollar legal question. This has the potential to reshape the way search engines run their core business.Marquette Univ. law prof. Eric Goldman
According to the lawsuit, TheMLSOnline.com also purchased the rights to the keywords "Edina Realty" at search engine Yahoo. The search engines are not accused of any wrongdoing in the Edina Realty case, though Yahoo has since changed its policies and TheMLSOnline.com no longer shows up at the top. A Google search for another big local realty company, Coldwell Banker Burnett, shows TheMLSOnline.com owns rights to those keywords as well. Keith Castonguay, CEO of TheMLSOnline.com, declined any comment on the case.
Eric Goldman, a law professor at Marquette University, first spotted the case and wrote about it on his blog last week. He says while similar lawsuits have been filed, this looks like the first one heading to trial. While the Edina Realty case has proceeded under the radar since it was filed in 2004, Goldman says it has implications far beyond the Twin Cities real estate market.
"You could find hundreds of thousands, if not millions, of examples of similar behavior" across many industries, Goldman says. "This is a multi-billion-dollar legal question. This has the potential to reshape the way search engines run their core business."
Search engines like Google and Yahoo make big money from sponsored search results. In Google's case, advertising revenue nearly doubled in 2005 as companies ponied up to be at the top of the search page. Goldman says there's no question the search engines have a financial interest in seeing two companies battle over key words that are also trademarks.
"They say, 'We're going to run this auction where people can have this top listing, and we're going to sell it to the highest bidder,'" Goldman says. "And then they get in this bidding war between competitors trying to squeeze in, and trademark owners trying to be at the top as well for their searchers." Google did not return a request to comment on the case or its paid search policies.
Goldman says while it might seem like a no-brainer for Edina Realty to protect its trademark from a competitor, the legal questions are far from simple. He says the legal logic behind Edina Realty's case hinges on a big assumption: that searchers are actually trying to get to the company's homepage.
"When they search for Edina Realty, they could be searching for the company, they could be interested in real estate in Edina. We have no idea what they're looking for," Goldman says. "So creating legal liability for making these ad purchases really allows the trademark owner to control what content the user might get -- even if it's not the content the user actually wants."
Goldman says Edina Realty's case is no slam-dunk. In fact, just days after the judge in Minnesota allowed the Edina Realty lawsuit to go forward, a judge in New York tossed out a similar case on the grounds that purchasing search keywords does not constitute an actual commercial use of a trademark. Minnesota's Edina Realty case could well decide which legal argument prevails, shaping one big way money is made on the Internet.