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Google searches have become the key battleground for courting Internet shoppers, and a Texas lawsuit involving search terms sold by Google demonstrates the potential for Hatfield-and-McCoy battles among dealerships nationwide.
It also raises thorny ethical questions about Internet marketing for dealerships and the vendors that handle their online marketing.
On the rapidly expanding frontier of search marketing, dealership behavior is testing Google policy, trademark law and state regulations -- and the stakes are enormous: Two of every three visitors to a dealership Web site get there directly from a Google search, industry statistics show.
In the Texas lawsuit, Group 1 Automotive, which owns Rockwall Dodge in Rockwall, Texas, is suing a rival dealer who bought the search term "Rockwall Dodge" -- and, as a result, showed up along with the real Rockwall Dodge in a Google search.
Defendant Randall Noe, who owns Randall Noe Chrysler-Dodge-Jeep in nearby Terrell, Texas, disputes the allegations, calling the nation's fourth-largest retailer a "crybaby" that's throwing its weight around. He says he no longer uses the Rockwall Dodge search term.
The lawsuit, filed May 21 in state court in Kaufman, Texas, alleges that Noe Chrysler-Dodge-Jeep infringed on Group 1's trademarks and is deceiving customers by using the name of Rockwall Dodge in Google paid-search ads.
By purchasing Google ad words and phrases that contained the Rockwall Dodge proper name, a Randall Noe store link would appear in the upper, shaded portion of the first Google results page where paid ads appear. At the time the lawsuit was filed, the Randall Noe ads included the Rockwall Dodge name in its header.
A Group 1 executive calls the practice predatory.
"It has been an issue in the industry over the last couple of years," said Pete DeLongchamps, Group 1 vice president of manufacturer relations and public affairs. "It's trying to mislead the consumer to direct him toward Web sites and Web addresses that were not the intention of the consumer."
Legal spats such as the Texas case are rare. In many markets, dealers have "gentlemen's agreements" not to buy each other's names, said the e-commerce director of a Midwest dealership group who asked not to be named.
The practice treads into the gray area of trademark infringement, the source said. At best, it creates bad blood and might result in a bidding war that benefits only Google.
Problems "usually can be resolved with a phone call between Internet directors, or the dealer principals will talk to nip it in the bud," the source said. "But people can get stupid over these things."
Karen Phillips, general counsel of the Texas Automobile Dealers Association, said her state has two provisions that apply to such disputes.
First, the state's advertising rules prohibit a dealer from false, deceptive, unfair and misleading advertising practices. The Texas Business and Commerce Code also prohibits practices that cause confusion and misunderstanding.
"The statutes are broadly enough written to cover our electronic age," she said.
She had no comment on the Group 1 lawsuit and said her group is not involved in the matter.
The National Automobile Dealers Association has taken no position on the issue.
A Google spokesman wrote in an e-mail that the company has published and contractual prohibitions against trademark infringement. On its Web site, Google said "advertisers are responsible for the keywords they choose to generate advertisements and the text that they choose to use in those advertisements."
"Google takes allegations of trademark infringement very seriously and, as a courtesy, we investigate matters raised by trademark owners."
Dealers say the issue remains murky.
DeLongchamps said Group 1 filed its suit, which seeks unspecified damages, only after Randall Noe refused several demands to stop using the Rockwall Dodge trademark. Group 1 has purchased the phrase Rockwall Dodge -- also its common-law trademark -- from Google.
"You can't steal our trademarks and intellectual property," DeLongchamps said. "Enough is enough."
Noe says he wasn't trying to mislead anyone and doesn't believe his dealership has done anything illegal. He said he outsources his search engine marketing to vendors.
Noe rejected the notion that his search advertising resulted in lost sales and profits at Rockwall Dodge. "You lose sales because you don't have a good price or give good service -- not because of who's advertising," Noe said.
Still, after the lawsuit was filed, Noe said that as a goodwill gesture, he asked his vendors to quit using the Rockwall Dodge search term. It wasn't generating much business anyway -- just three or four leads a month, he said.
But Group 1 isn't dropping its complaint. After Noe told Group 1 he would stop using the Rockwall Dodge search term, Group 1 asked for $25,000 and the removal of Randall Noe billboards in Rockwall Dodge's market area in exchange for settling the lawsuit, Noe said. He likened it to "Goliath trying to push the little guy around."
"We basically said, 'We'll see you in court,' '' Noe said.
Group 1 declined to comment on settlement demands.
The Noe lawsuit isn't Group 1's first online search dispute, DeLongchamps said. The retailer has had problems in the past with competing dealerships using search engine marketing in unscrupulous ways, he said.
For instance, some rivals have created Web site addresses that feature elements of Group 1 dealership trade names in order to route traffic away from the Group 1 dealership's Web site, he said.
Said DeLongchamps: "We've been fighting it for years, and we've finally had enough."
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