Yahoo Pressures Expedia as it Defends Against Keyword Infringement Suit
American Airlines is targeting the wrong party in its lawsuit against Yahoo for selling American’s trademarks as search keywords, Yahoo said in a filing with the U.S. District Court in Seattle. It asked the court to compel online travel agency Expedia to respond to the subpoena Yahoo obtained, seeking information on Expedia’s terms with American for selling its flights. It’s Yahoo’s second attempt to get another court to intervene, after the 5th U.S. Circuit Court of Appeals turned down its request to move the case from Texas to California under Yahoo’s forum-selection clause (WID March 17 p6). Because Yahoo operates its own search engine for flights, subpoenaed information could give Yahoo a competitive advantage against Expedia, said a legal expert following the case.
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Yahoo and American continue to duke it out in U.S. District Court in Fort Worth, most recently arguing over how long it should take Yahoo to restore eight months of sponsored-search data from 2007. Also in dispute is how many resources Yahoo should devote to the restoration.
Expedia was responsible for the conduct that troubled American, Yahoo said in the Seattle filing, pointing to a 2006 “addendum” to American’s standard contract with online travel agencies that apparently affected search advertising rules. Yahoo sought information from Expedia on trademark provisions in its contract with American, Expedia’s bidding on keywords and policies for use of trademarks, communications with American concerning Yahoo, “activities and conversion rates” for Internet users who clicked on Expedia ads, how many tickets Expedia booked for American flights, and studies on purchasing behavior in general. Yahoo said Expedia had already turned over information in American’s earlier lawsuit against Google, which was settled on undisclosed terms last year (WID Oct 23 p3).
Expedia gave “general objections” to the subpoena and still refuses to comply after “numerous lengthy conversations” among company lawyers, which is “materially hindering Yahoo’s ability to defend itself” against American, Yahoo said. Because American has accused Yahoo of diverting traffic and potential customers away from official and affiliated American Web sites, information held by Expedia is “critical” to showing “whether Yahoo’s actions have hindered or even helped American increase its sales over the Internet.” Expedia didn’t specify what information sought by Yahoo includes trade secrets, and American, whose contractual language would be revealed, hasn’t objected to the subpoena, Yahoo said. Yahoo’s lawyer “has spent hours on the telephone” with Expedia’s counterpart trying to narrow the scope of sought information, to no avail.
Even if Expedia is contractually prohibited from buying American’s trademarks as search keywords, “it’s not clear to me that … the contract breach would qualify as trademark infringement,” said Eric Goldman, director of the High Tech Law Institute at Santa Clara University. But the information revealed under subpoena could lead American to drop Yahoo from the suit and target Expedia directly, he said. Some of the information sought by Yahoo also could have “significant competitive advantage” to Yahoo, since Yahoo Travel “partially competes” with Expedia and “Yahoo’s knowledge of the profitability of its referred customers could affect Yahoo’s management of the travel category auctions,” Goldman said.
In Fort Worth, Yahoo is trying to reduce the amount of money and staff time it must spend dealing with American’s request for sponsored-search data over the period in question, January through September 2007. Yahoo and American lawyers met in the Seattle area last week with a data- recovery provider chosen by Expedia, Daticon EED, but could agree on little, according to a “joint report” filed with the court.
Even if Yahoo bought roughly $350,000 of hardware that American said was needed to perform the data restoration, it would still take about a day to reconstitute each day’s worth of sponsored-search data under “maximum reasonable efforts,” Yahoo said. That means data wouldn’t be recovered by the January 2010 trial. Yahoo said it’s willing to put off the trial to recover all sought data but wants American to help with the bill. American cited Daticon Senior Consultant Brandon Leatha, who said in a declaration that after meeting with the companies last week, he was convinced Yahoo could finish the job in 75 days. That would require Yahoo “dedicating a team to the project full time” as opposed to the six employees working half time on the restoration, Leatha said, also suggesting Yahoo could save money by leasing equipment or using “specialized discounts.” Yahoo subsequently asked the court to appoint an independent database restoration expert to judge how much effort Yahoo should be required to make.