RESCUECOM Lawsuit Against Google on CNET

A federal court on Thursday dismissed a lawsuit against Google over its practice of allowing companies to buy search-related ads that are displayed when people type in the name of a competitor.

In early 2005, computer repair company Rescuecom sued Google in U.S. District Court for the Northern District of New York, alleging that Google was violating trademark by selling ads to Rescuecom's competitors that show up next to search results when someone types in "Rescuecom."

Rescuecom argued that Google was violating trademark by attempting to "free-ride" on the goodwill associated with Rescuecom's name, preventing Internet searchers from reaching Rescuecom's Web site, altering the search results and using the trademark internally. The court rejected those arguments, saying the facts do not establish trademark use as a matter of law.

"We welcome Chief Judge Mordue's decision to dismiss the case, which again confirms our long-held belief that our trademark policy is lawful," said Michael Kwun, Google senior litigation counsel.

Rescuecom may appeal the ruling, said David Milman, founder and chief executive of the company. "A dangerous precedent has been set that allows a behemoth to pit smaller competitors against one another, while it rakes in the additional revenue," he said. "The immense power enjoyed by Google will be compounded by this ugly tactic as advertisers clamor to reach critical online audiences. Rescuecom will not be the last company hurt by this scheme."

The case "could be a watershed" in that it finds that selling keyword advertising is not a trademark use in commerce, said Eric Goldman, who teaches Internet and intellectual property law at Santa Clara University School of Law. "It's the first ruling expressly saying that search engines aren't liable for selling keyword advertising," he wrote in his blog.

Google hasn't been so lucky in French courts ruling on this matter. Google lost a trademark lawsuit filed by designer Louis Vuitton in June, and a similar lawsuit last year filed by Le Meridien Hotels and Resorts.

Similar lawsuits have been filed against Google by the parent company of Check 'n Go and American Blind and Wallpaper Factory. Google settled a similar case a year ago brought by auto insurance provider Geico.