Search engines sued over 'pay-for-placement'
By Scarlet Pruitt, IDG News Service\Boston Bureau
(IDG) -- The maker of a popular weight-loss system filed suit against four search engines this week, alleging that their policy of letting advertisers pay to appear in top-ranked search results violated federal and state trademark and fair-competition laws.
Mark Nutritionals Inc., the company that sells the Body Solutions weight loss system, filed suit against AltaVista Co., Kanoodle.com, FindWhat.com and Overture Services Inc. in a San Antonio, Texas court Monday, asking for at least $10 million in compensatory damages and $100 million in punitive damages from each company.
The plaintiff claimed that when "Body Solutions" is typed into the search engines' query field, rival sites using the Body Solutions name appear ahead of the company's official site. Mark Nutritionals is accusing the search engines of allowing advertisers to employ a "bait-and-switch" scheme whereby companies can use the Body Solutions name on their site and then pay to appear as a top query result. Not only does this infringe on Mark Nutritionals' trademark and violate fair competition rules, the company said, but it also confuses consumers.
AltaVista refused to comment on the suit Thursday. No one from the three other search engines were available for comment.
Danny Sullivan, a consultant and journalist who maintains the Search Engine Watch Web site, which gives tips and information on searching the Web, said Thursday that "every major search engine in the U.S." employs pay-for-placement search results and that this complaint is nothing new. However, he believes that Mark Nutritionals may have its best shot at winning the case on the grounds of consumer confusion. The trademark violation argument could be more difficult, he said, given free speech and comparative advertising laws.
A Web site claiming that its weight loss product is better than Body Solutions' product is protected under comparative advertising, for example.
But consumers searching for truth and objectivity have apparently gotten the wrong idea about search engines. Overture, formerly known as GoTo, is not really a search engine at all. The company bills itself as a pay-for-performance search provider which allows companies to bid for search-result placement based on relevant keywords. And a handful of big name search engines incorporate Overture's results, including AltaVista, and those of America Online Inc., Lycos Inc., Yahoo Inc. and Netscape Communications Corp.
Kanoodle and FindWhat are also more akin to advertisers than search engines.
In fact, Sullivan said that AltaVista was the only true search engine among the defendants, and added that he believes that they got singled out just because Mark Nutritionals' Body Solutions did not appear in the site's top-ranked listings.
"AltaVista just got tossed in. It's unfair," said Sullivan. "Of the four (defendants), the case against AltaVista will be the weakest."
It remains to be seen how the plaintiff's consumer confusion and trademark violation claims play out, however.
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