Google, Geico Settle on Trademark Search Gripe

A long-running legal dispute over Google’s ability to sell sponsored listings that use trademarked terms has ended with an out-of-court settlement with auto insurer Geico.

Geico, the country’s fourth largest provider of consumer auto insurance, simply announced in a terse press release Thursday that its trademark infringement lawsuit against Google had been “resolved to the mutual satisfaction of the parties.” Terms of the settlement were not released and will be kept confidential, the statement said.

The settlement of this case, filed in May 2004 in U.S. District Court in Eastern Virginia, closes down one possible threat to Google’s paid search business model. In bringing the suit, Geico had objected to Google’s practice of placing paid ads for Geico competitors on search results pages when users searched on the company’s trademarked name. Geico objected both to Google’s selling the ads to competitors and to the fact that many of these ads used the Geico name either in their titles or their body text.

A partial decision from the court last December said that Google had the right to sell the sponsored listings on results pages for Geico’s search terms. But a written verdict in the same case, produced by Judge Leonie Brinkema on Aug. 8, suggested that Geico might be able to sue Google or its advertisers for damages arising from consumer confusion over search ads that used the Geico trademark in their title or text. The judge gave the two companies 30 days to resolve the issue, as they apparently have — just in time to avoid a trial on the liability question.

Many industry observers viewed the case as significant because of the potential threat an unfavorable decision could have on Google’s ad revenues, which provide the large bulk of its annual income. Marketers also took a strong interest in the question of running paid ads on competitors’ trademarks — although their perspective depended on whether they were doing the marketing or being marketed against. Google still faces a number of trademark infringement suits, including one brought by American Blind & Wallpaper Factory in January 2004.

Yesterday’s settlement may end hostilities between the two parties, but it doesn’t do much to untangle the thorny legal issues surrounding trademarks in sponsored search listings. In fact, many of the preliminary decisions in the case have been so narrowly focused that both Google and Geico were able to claim victory. The Aug. 8 written decision was the most recent to produce dueling press releases. Geico said the decision meant “search engines and their advertisers should consider their potential liability” before using other companies’ trademarks in their search ads.

But Google pointed to wording in Judge Brinkema’s decision that suggested Geico had failed to prove consumer confusion by rivals’ use of its trademarked name in search ads. Google has a policy of prohibiting advertisers from using another company’s trademark in their ad text if the trademark owner objects, the company said; and while it might “evolve” that policy over time, Google said it was “very pleased with Judge Brinkema’s decision.”

Eric Goldman, assistant professor at Marquette University Law School, wrote in his technology and marketing law blog that the holdings in Geico v. Google don’t resolve the substantial issues of trademark use in paid search marketing. “I think we have plenty more litigation ( and maybe some legislation) in front of us,” he said.