GEICO v. Google Over Adlinks

by Lee Gesmer on August 19, 2005

Trademarks. Google sells other companies’ trademarks as “keywords” on its Internet search engine. Whenever someone types in one of these keywords, such as GEICO, not only will Google’s search results show links to GEICO’s web site, but Google also will show advertising for other insurance companies under a banner called “Sponsored Links.” For example, when writing this blog, we searched “GEICO” on Google’s site and were shown paid links to two of GEICO’s competitors, USInsuranceonline.com and InsureMe.com.

Understandably, GEICO protested this practice of using its trademarks to direct consumers to its competitors. Given that 80% of Google’s revenues derive from this “AdWord” program (in turn causing Google to become a Wall Street darling, up three-fold in a year), Google refused to cease and desist, at which point GEICO sued for trademark infringement and unfair competition.

After a bench trial (translation: no jury) in federal court in the Eastern District of Virginia in December 2004, the Judge ruled “from the bench” (translation: she delivered her decision orally in court) that GEICO had failed to establish that the use of its trademarks only to direct Google searchers to competitors created consumer confusion (the talisman of a trademark violation). However, she ruled that Google had violated the law when a competitor used GEICO’s name in the heading or the text of the ads. Judges can be very slow, and the Judge’s written opinion was released only last week, over eight months after the trial. For all practical purposes, however, the written decision adds little to what the Judge said in December. In time-honored fashion, both GEICO and Google declared her ruling a victory.

Unfortunately, while the trademark community (yes, there is such a thing) was hoping for clarification as to the reasoning behind the judge’s oral ruling, it may still be mostly in the dark after reading the opinion.

While the opinion excoriates the design and methodology underlying the survey evidence GEICO presented at trial to show confusion (survey evidence is standard stuff in trademark cases – its how a party shows that the public has been “confused,” or not) the Judge relies on the same flawed survey in finding a likelihood of confusion between GEICO’s marks and the Google Sponsored Links in which GEICO’s marks appear in the headings or text. What’s disappointing is the decision’s failure to provide a thoughtful legal analysis of the issue that can be a guide to other online advertisers.

The parties have 30 days to settle this dispute before the trial resumes to determine whether Google or its advertisers are liable for the infringement and the damages, if any, to which GEICO may be entitled. Google faces a big gamble in continuing with the trial – if the Court finds Google liable and awards damages to GEICO, the litigation floodgates will open as other trademark owners sue Google for infringement of their marks. This volume of litigation would put Google’s entire business plan at risk. Common sense suggests that the parties will settle this dispute, with each (need I say it?) claiming victory.

  • Read the opinion here.
  • An extensive legal analysis of the decision appears on Professor Eric Goldman’s blog, here.

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