Site that links to me ranks higher for my site's name

due to my link on their site...

[march83]

My site is doing really badly at the minute due to low ranking in Google. How can a site that has a much lower PR that is linking to me using my unique site name as the link rank higher than my own site for that search term

eg
"Site X" links to "Unique site name" then "Site X" with a lower PR ranks higher for that Unique site name.

Would this suggest I have a penalty for things like this to be happening?

I have many other links coming in with my site name in the link.

[ciml]

There are a number of factors involved in Google's ranking, and PR by itself is not normally a major factor in the relative positions of two URLs for a search in Google.

That written, the circumstances that you describe often happen due to a keyphrase penalty. If you're penalised for that phrase and they're not, then they might well outrank you even though you have better links, title, body text etc.

[Macro]

This is being discussed at [webmasterworld.com...]

[ciml]

When Brett wrote "link to one or two high ranking sites under that particular keyword", I don't think he meant it would cause you to rank higher than them in the SERPs.

Adding links such as Search Engine [google.com] or Webmaster [webmasterworld.com] add credibility, but those links don't in themselves make you higher profile than the sites you link to.

[Macro]

I don't think he meant it would cause you to rank higher than them in the SERPs

He may not have meant that but this is what often happens. I've seen PR3 page on a big news site (with a home PR of 8) link to a PR5 site using the PR5 site's trademark and URL and suddenly the PR3 page ranks higher for that trademark term than "trademark.com" which is a PR5.