Lawsuit Filed Over Keyword Search Ad

Estee Lauder, the cosmetic and fragrance giant, reportedly is suing Excite Inc. and the Fragrance Counter, alleging trademark infringement over a key- word purchase.

Estee Lauder contends that Excite sold the advertising rights to its trademarked key words–“Estee Lauder” and “Origins”–to a competitor, without consent.

The lawsuit “is the beginning of what could predictably be a landslide of lawsuits generated by a largely unregulated online advertising industry,” said Namestake.com’s Bannerstake in a press release about the case. Indeed, the practice of buying a competitor’s keywords is not uncommon in the online ad game.

When a user types in “Estee Lauder” or “Origins” on Excite, the search engine serves up a banner advertisement for The Fragrance Counter Inc., the company that purchased these key words. As a result, The Fragrance Counter, which has no connection to Estee Lauder, allegedly capitalizes on Estee Lauder’s brand name to draw consumers to its Web site.

We did such a search, and the Fragrance Counter ad did indeed come up. We were able to get to the Estee Lauder main page with just two clicks, however. Interestingly, one can’t buy the company’s products there, and a spokesman confirmed that Estee Lauder has no e-commerce site of its own.

The Wall Street Journal reported that “in what appears to be the first lawsuit of its kind, Estee Lauder is seeking an injunction in federal court in New York against both Excite and Fragrance Counter.

“We have a history of taking action against anyone who threatens the brands and trademarks which are the foundation of this company,” Estee Lauder President Fred H. Langhammer said in a statement. “We have filed this lawsuit to protect both our trademarks and our consumers who may be misled.”

A Fragrance Counter spokesman was quoted by the Journal as saying that the lawsuit, “although novel, is without merit.” Excite would not comment.

Meanwhile, Namestake.com issued a press release saying that its Bannerstake service helps marketers monitor and protect the integrity of their brand names in conjunction with the common practice of keyword purchases on search engines. A free tool, Bannerstake provides users with a display of the banner advertisements associated with a keyword purchased on each of the major search engines.