This story has been changed since it first appeared. Please see ourEditor's note below.
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. Conversely, Google has always allowed trade mark holders to request that their trade marks do not appear in the headings or text of sponsored links. But the policy change – allowing a trade marked term to trigger a third party's ad – sparked lawsuits against Google, including the action filed by GEICO.
Overture settled in late November, but Google continued its fight. In December, Judge Leonie Brinkema of the US District Court of the Eastern District of Virginia, announced her decision. This week, she issued a formal opinion explaining in more detail her reasons for that decision, albeit parts of the case are still due to continue to trial unless the parties reach a settlement.
The upshot: Google's sale of GEICO trade marks as keywords was not unlawful. But GEICO established a likelihood of confusion with regard to those sponsored links that use GEICO's trade marks in their headings or text. So the sale of GEICO as a keyword was lawful; but ads that included GEICO's marks in their text, however triggered, were not. If the keyword GEICO triggered an ad without GEICO's marks in its text, there would be no infringement.
GEICO had presented survey evidence of user confusion, based on a study carried out by a university; but Judge Brinkema expressed "serious doubts about the accuracy of the survey results' reflection of actual users' experiences with and reactions to the Sponsored Links."
She wrote that GEICO "has failed to establish a likelihood of confusion stemming from Google's use of GEICO's trademark as a keyword and has not produced sufficient evidence to proceed on the question of whether the Sponsored Links that do not reference GEICO's marks in their headings or text create a sufficient likelihood of confusion to violate either the Lanham Act or Virginia common law."
Had GEICO's survey methodology been better, the result may have been different. And mindful of the importance of the issues before her "to the ongoing evolution of internet business practices and to the application of traditional trademark principles to this new medium," Judge Brinkema was careful to emphasise that her ruling "applies only to the specific facts of this case".
When the survey participants were shown a page bearing sponsored ads for Nike alongside organic listings in response to a search for GEICO, there was no confusion. Judge Brinkema said this "refutes the allegation that the use of the trademark as a keyword, without more, causes a likelihood of confusion."
Notwithstanding the flaws, she acknowledged that GEICO had produced survey evidence "sufficient to establish a likelihood of confusion regarding those Sponsored Links in which the trademark GEICO appears either in the heading or text of the ad."
She continued: "Based on this finding, Google may be liable for trademark infringement for the time period before it began blocking such usage or for such ads that have slipped or continue to slip through Google's system for blocking the appearance of GEICO's mark in Sponsored Links."
Whether Google or its advertisers should be liable for the use of GEICO's trade marks in the headings and text of Google's sponsored links is a question that has still to be answered.
GEICO's General Counsel, Charles Davies, responded to the written opinion, saying, "GEICO will continue to aggressively enforce its trade mark rights against purchasers of its trade marks on search engines and against search engines that sell GEICO's trade marks to advertisers."
He continued: "We continue to believe that the sale of GEICO's trade marks to its competitors is wrong and a violation of federal and state law and look forward to litigating that issue in future cases."
Google's Litigation Counsel, Michael Kwun, described the ruling as "an extraordinary victory for Google." He explained to SearchEngineWatch.com: "Google is extremely pleased with the outcome in this case. The important issue for us in it – which is the use of trademarks as keyword triggers – was decided decisively in our favor."
Editor’s note, 29/08/2005: When this story first appeared on OUT-LAW, it carried the headline Google loses AdWords trade mark case in the US. This was misleading: Google won in part and lost in part. The original text of this story also contained inaccuracies because we were under the impression that the August 2005 ruling was a different ruling to that which was made in December 2004. It wasn’t. Rather, it put into writing that December ruling and provided additional detail. The reason for our error was that at the time we were unable to obtain the written judgment. We misunderstood GEICO's press release and relied on other inaccurate reports. As soon as we realised we may have made a mistake, we purchased a copy of the judgment and fixed our story today, 29/08/2005. We apologise to the parties involved and to readers for this error.