The owners of LoveCity.com a company named JP Enterprises, filed the lawsuit in a U.S. district court in Colorado, accusing Yahoo Search Marketing of ‘unfair competition and trademark dilution and infringement’. The lawsuit seeks to recover damages as well as punitive damages.

The lawsuit asserts that Yahoo! in an effort to increase website traffic deliberately inserted keywords and tags that contained trademark variations of “lovecity” and “lovecity.com” into Google’s AdWords paid search advertising system. Now this is just strange, but well documented – So, why is Yahoo driving traffic from Google AdWords, to their own “MFA type” search results? Is Yahoo that hard-up for new visitors and monetizable traffic?

The Lawsuit stated:

The “Defendants’ willful insertion of plaintiff’s trademark into paid advertisements constitutes an effort to artificially inflate their profits by knowingly misleading consumers as to the source of the response to their search…It has caused, and continues to cause, actual confusion, is tarnishing the goodwill and reputation of plaintiff, and is causing lost sales.

If you recall Google has already won a lawsuit filed by Geico alleging Google encouraged unfiar and unlawful use of trademarks for profit – but lost a International Trademark court battle in France against Le Meridien. Looks like the jury is still out as over 8 other cases are pending in France, Germany and the US against the search giant.