Judge Leonie Brinkema of the US 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 on 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 favour.
Geico had filed suit in May against Google and Overture Service. In late August, Brinkema denied Google and Overture's motion to dismiss six charges brought by Geico, which claimed that use of its name to trigger search-related ads was trademark infringement, unfair competition and dilution of its marks under the Lanham Act. At the time, the judge granted their motions to dismiss claims of tortious interference and statutory business conspiracy.
On November 19, Judge Brinkema denied Google's motion for summary judgment, according to court documents.
Earlier this month, Geico settled its lawsuit with Overture. Terms of the agreement were not disclosed.
Google called Wednesday's ruling a victory for consumers.
"It confirms that our policy complies with the law, particularly the use of trademarks as keywords," said Google general counsel David Drummond. "This is a clear signal to other litigants that our keyword policy is lawful."
"This could be a significant change in trademark law" - I don't think so! Surely the judge is simply saying that the law says what Google thought it said, and not what Geico - and the lawyer quoted - thought it said.