American Airlines, a unit of AMR Corp., dropped a trademark lawsuit against Google Inc. over the search engine's use of the carrier's name to trigger paid Internet advertisements for competitors.

The infringement case was dismissed yesterday by U.S. District Judge John McBride in Fort Worth, Texas, where AMR is based. Both companies agreed to pay their own legal fees in the case, which was filed in August. The settlement terms are confidential, AMR spokesman Tim Smith said. American claimed Google violated its trademark by allowing competing airlines to bid on keyword searches that generate ``sponsored link'' ads on search-results Web pages. The ads take advantage of the American brand's popularity, even if the name isn't used in the ad, the carrier said.