Google (NASDAQ: GOOG) has been sued by Vulcan Golf, because it provides ads on domains that violate trademarks. Actually Google does not allow domain owners to park their TM domains with Google, but no system is perfect and TM domains get through into the Google parking programs. The complaint is a 121 page document (4.3 MB .PDF file) that focuses on Google’s AdSense for Domains program. This is a program for owners of large domain portfolios, who can park their domains directly with Google’s pay-per-click system. The lawsuit says Google actively controls the content and links displayed on each of the domains in their PPC program, hence, it says, Google is allegedly violating trademarks by displaying ad links on TM domains. The complaint not only mentions Google, but also some domain name companies: Sedo, Oversee (DomainSponsor.com) and Dotster (RevenueDirect.com).

Google, Yahoo and other PPC providers will certainly have to face more of these lawsuits in the future, as advertising is migrating from the traditional media to the Internet and more companies make use of Google’s and Yahoo’s pay-per-click advertising platforms. Not only because of this will it be interesting to watch how this lawsuit will play out, but also because it will have a direct effect on the cybersquatting issue. Owners of trademark-infringing domains will get more problems with finding a provider to monetize their domain portfolio in the near future. The domain industry is in an important consolidation stage right now, and domain litigation is heating up.

Go to Eric Goldman’s blog for an in-depth article on this topic.