Google loses AdWords trade mark case in the US

A US district court has ruled against Google in a trademark action over the sale of the terms “Geico” and “Geico Direct” in AdWords, its keyword advertising service. The judge found that there was infringement where the terms were used in the text of sponsored ads.

Car insurance firm GEICO sued both Google and Yahoo! subsidiary Overture in May 2004 over the sale of its registered trade marks as sponsored search terms in the keyword advertising services of both search engines.

These services work by allowing advertisers to sponsor particular search terms so that, for a fee, whenever that term is searched the advertiser's link will appear next to the search results.

Google’s AdWords underwent a policy change in April 2004. Until then Google had respected requests from companies that asked it to prevent their marks from being available for sponsorship. Now Google only takes action when a trade marked term is used in the text of an ad – i.e. the trade marked term can still trigger the ad.

The policy change has seen a flurry of suits against Google – including the action filed by GEICO.

Overture settled in December, but Google continued the fight, bolstered by a summary judgment from Judge Leonie Brinkema of the Eastern District of Virginia that the search engine’s sale of the sponsored search terms did not breach GEICO’s rights in the trade marks.

However, that ruling, issued in December, left open for trial the question of whether the use of the trade marked terms in the text of sponsored ads breached GEICO's rights.

This question has now been answered.

In a ruling issued on Monday, Judge Brinkema ruled that GEICO had “established a likelihood of confusion” and that there had been a breach of the insurance firm’s trademark rights “solely with regard to those sponsored links that use GEICO's trade marks in their headings or text."

According to GEICO, the court has stayed the trial for 30 days to give the parties an opportunity to settle. If the parties do not settle, the trial will continue on the question of damages and on the issue of who is liable: Google or Google's advertisers.

"GEICO will continue to aggressively enforce its trademark rights against purchasers of its trademarks on search engines and against search engines that sell GEICO's trademarks to advertisers," said Davies Charles Davies, GEICO's General Counsel. "We continue to believe that the sale of GEICO's trademarks to its competitors is wrong and a violation of federal and state law and look forward to litigating that issue in future cases."

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