Yes this is a bug or defect - the search fails gracefully, without an error traceback to troubleshoot.
% is a ‘special character’ that probably should be restricted in an item name.
This will give you insight Search results for 'meta character' - ERPNext Forum
More rigourous input validation and testing would screen for this case.
You may want to ‘scrub’ your data here.
EDIT: This is recent [v11] Why am I getting a Unicode Error in Production Server but not on my test environment for special characters?