December 15, 2004 10:40 AM PST

Google wins in trademark suit with Geico

Google scored a big legal win Wednesday when a federal judge ruled that its use of trademarks in keyword advertising is legal.

Judge Leonie Brinkema of the U.S. District Court for the Eastern District of Virginia granted Google's motion to dismiss a trademark-infringement complaint brought by Geico. The insurance company had charged Google with violating its trademarks by using the word "Geico" to trigger rival ads in sponsored search results. Geico claimed the practice diluted its trademarks and caused consumer confusion.

The judge said that "as a matter of law it is not trademark infringement to use trademarks as keywords to trigger advertising," said Michael Page, a partner at Keker & Van Nest, which represented Google.

Brinkema ended the trial Wednesday to issue a formal opinion on the matter. She also asked Google and Geico to settle a dispute over the use of Geico's marks in text of rival ads appearing on the search engine's site.

The ruling is a triumph for Google in that it derives as much as 95 percent of its advertising revenue from keyword-triggered ads, which appear next to Web search results. Trademarks play a central role to the sale of such ads because people often use Web search to find products and services with common, trademarked brand names such as Nike or Geico.

The ruling also could inform similar trademark-infringement cases online, legal experts say. For example, Google is being sued by American Blind and Wallpaper for trademark infringement by its keyword ad program.

"This could be a significant change in trademark law, making it harder for trademark owners to enforce their marks in an online context," said Terry Ross, an attorney at Gibson Dunn.

Until now, the odds appeared in Geico's favor.

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