• Google Wins Ruling in Suit Brought by Geico
  • January 14, 2005
  • Law Firm: Reed Smith LLP - Pittsburgh Office
  • The Internet search engine Google has prevailed in part of a trademark case brought against it by insurance giant Geico.

    A federal judge in Alexandria, Va., has ruled that Geico failed to demonstrate Google's practice of allowing competitor advertisements to appear alongside the search results of trademarked names causes consumer confusion.

    Geico, the auto insurance company owned by Warren E. Buffett's Berkshire Hathaway Inc. and based in Chevy Chase, Md., is one of several companies challenging Google's AdWords program. Under this program, advertisers may buy the right to have their ads appear as sponsored links beside the results of searches employing generic and trademarked words. Google receives compensation every time a viewer clicks on a sponsored link.

    In its suit, Geico claims Google is violating its trademark by selling its name to competitors, who benefit from Geico's investment in its brand. Other companies with similar suits against Google include insurance conglomerate AXA Group and American Blind & Wallpaper Factory, Inc.

    Google argued before U.S. District Judge Leonie Brinkema that its practice does not violate trademark law, but encourages competition and provides relevant targeted information to consumers. Company lawyers likened Google's key word policy to a pizza shop owner handing fliers to customers walking toward a rival pizzeria.

    In December, Judge Brinkema granted Google's motion for summary judgment on the issue of whether allowing competitor ads to appear beside search results confuses consumers. "There is no evidence that that activity alone causes confusion," the judge ruled.

    A showing of consumer confusion is an element in demonstrating trademark infringement.

    The ruling was not, however, a complete victory for Google. The judge also ruled the trial could continue on the issue of whether Google could be held liable for advertisers that use Geico's name in the text of their advertisements. Google claims the company seeks to prevent such ads, and eliminates them when trademark holders complain, and that advertisers themselves are liable for any trademark violations in these instances.

    Even the primary issue of whether advertisements linked to competitor names violates trademark law is not settled. Geico has vowed to continue to protect its trademark against use by Internet search engines, and other companies battling Google note judges in other jurisdictions are not bound by Judge Brinkema's ruling.

    Before the case against Google went to trial, Yahoo! affiliate Overture settled a similar case brought against it by Geico. Although the details of the settlement are confidential, Overture stated the settlement does not require the company to change its business practices.

    Why This Matters: Analysts have called Geico's suit and similar cases a significant challenge to the business models of Google and other Internet search engines. They note that prohibiting search engines from selling ad links connected with trademark names would significantly cut down on the universe of words available for sale to advertisers.