WebProNews

A recent ruling in US District Court calls for the search engine and the insurance company to try and settle their AdWords battle.

Before April 2004, companies could ask Google not to sell their trademarks to competitors on AdWords. Google changed that policy to allow competitors to buy trademarks, as long as those trademarks don't show up in the text of the ad, according to The Register.

Direct insurer Geico, a component of Berkshire Hathaway sued Google and Yahoo's Overture over that policy, with Overture agreeing to a settlement in December. Google had won a summary judgment in December over Geico's claims that the act of selling its trademark to advertisers was illegal.

Another part of the suit could potentially go forward, leading US District Judge Leonie Brinkema on August 8 to stay the proceedings for 30 days. The two parties were directed to try and reach a settlement during that time frame.

That second part of the case alleges Google violated the Lanham Act, according to a Geico press release, in allowing competitor ads to be displayed with Geico's name appearing in the heading or the text.

Google AdWords policy does not give advertisers permission to write ads with competitor trademarks in the text. But if the two parties cannot settle their suit, it will be up to the court to decide whether Google, its advertisers, or both may be liable for damages caused by that practice.

The business of selling keywords, including trademarked terms, to advertisers forms the core revenue source for businesses like AdWords and Overture. Any judgment that restricts the practice could have a chilling effect on their business models.

While the early summary judgment in the Geico case seems to have removed that issue from this particular claim, other pending cases against Google will probably revisit the issue.

David Utter is a staff writer for WebProNews covering technology and business. Email him here.