In May, 2004, GEICO, one of the largest U.S. auto insurers, brought a trademark infringement lawsuit against Google, Inc. and Overture Services, Inc. in the U.S. District Court for the Eastern District of Virginia. In November, the court denied, in part, the defendants’ motions to dismiss, but let stand GEICO’s trademark infringement and unfair competition claims, including those alleged under the theories of contributory and vicarious liability.
GEICO’s lawsuit alleged that the search engine operators violate federal trademark laws by selling GEICO’s federally registered trademarks as keywords to other insurance companies. In particular, GEICO noted that consumers seeking information about GEICO are diverted to competitors’ sponsored listings, and those listings deceive consumers because they contain no information about GEICO.
On December 15, and after only three days into the trial, Judge Leonie Brinkema granted Google’s motion for summary judgment on the issue of whether it is a violation of federal trademark law to use trademarks as keywords to trigger sponsored advertising. Judge Brinkema stated that "[t]here is no evidence that that activity alone causes confusion." The trial will move forward on the remaining issue of whether ads that actually mention GEICO in the advertising text violate trademark law. Google asserts that its policies prohibit advertisers from using the trademarks of competitors in advertising text, and that any such use is the responsibility of the advertisers and not Google.
In late November, GEICO entered into a confidential settlement with Overture and this agreement reportedly does not require Overture to change any of its business practices.
Google’s vice president and general counsel, David Drummond, has called the summary judgment decision a victory for consumers and a clear signal to other litigants that Google’s keyword policy is lawful. Others view this decision as a narrow one that will not affect the several pending Internet trademark disputes in the U.S. and other countries. The GEICO summary judgment ruling could mark a significant shift in the ability of trademark owners to prevail in litigation concerning Internet keyword sales and advertising. In these types of cases, the trademark owners allege that use of their trademarks in keyword advertising constitutes trademark infringement, causing confusion among consumers. On the other hand, consumer advocacy groups are concerned that the stifling of keyword advertising will result in decreased competition which, in turn, will hurt consumers in the form of higher prices. These cases will continue to be watched with interest as they are sure to have a profound effect upon the future rights of trademark owners and search engine companies.
This article does not constitute legal or other professional advice or services by JORDEN BURT LLP and/or its attorneys.
JORDEN BURT LLP is a law firm with a unique focus on financial services and a national reputation in high stakes litigation, financial regulation and product counseling.
