American Airlines is suing Yahoo (NSDQ: YHOO) for allowing competitors to bid on trademarked terms like “American Airlines” and “AAdvantage.” The company settled a similar suit against Google in July, and while Google (NSDQ: GOOG) didn’t have to cough up any fees, a search for the branded terms now yields no sponsored links at all.

American complains that users searching for its trademarked terms can get “confused” and click on a competitors’ ads. Since Yahoo gets paid for the clicks, the airline is suing for unspecified damages, legal costs and funds to cover a “corrective” advertising campaign. Google has settled similar cases with companies like Geico and American Blind & Wallpaper Factory, and Yahoo had one with JP Enterprises back in 2006, (via bigmouthmedia). Though both companies avoided paying out settlements in the last few cases, Yahoo’s in cost-cutting mode, so it may try to settle this one quickly to avoid wasting any legal fees.

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