Posted on: Tuesday, December 14, 2004

GEICO takes on Google over ads

By Sam Hananel
Associated Press Writer

ALEXANDRIA, Va. — A federal judge heard arguments yesterday in a trademark dispute that could threaten millions in advertising revenue for search engine Google Inc.

Attorneys for auto insurance giant GEICO told U.S. District Judge Leonie Brinkema that Google should not be allowed to sell ads to rival insurance companies that are triggered whenever GEICO's name is typed into the Google search box.

GEICO claims that Google's AdWords program, which displays the rival ads under a "Sponsored Links" heading next to a user's search results, causes confusion for consumers and illegally exploits GEICO's investment of hundreds of millions of dollars in its brand.

"When a consumer enters 'GEICO' ... and goes to the sponsored link believing there's a connection, that is where the confusion arises," said GEICO attorney Charles Ossola.

But Google attorney Michael Page said the ad policy is no different than a supermarket giving out coupons for one product in the checkout line when a customer buys the same product from a different company. "There is nothing wrong with that under the trademark laws," Page said.

GEICO filed the lawsuit against Mountain View, Calif.-based Google in May, seeking $8.65 million in lost profits and a court order preventing Google from using its name in the advertising program. Under the program, for example, a competing insurance company could bid to have its ad appear every time Google users search for the word "GEICO." When a user clicks on an ad, the advertiser pays Google a predetermined fee.

Google is facing similar lawsuits from other companies, including American Blind and Wallpaper Factory Inc., and AXA, the world's No. 3 insurer. Last year, Google asked a court to rule on whether its pay-for-placement ad policy is legal.

The GEICO lawsuit, filed in May, came just weeks after Google said it hoped to raise $2.7 billion with an initial public stock offering. The vast majority of Google's ad revenue comes from search-related advertising. In federal filings, the company said it would face financial risks if it was forced to limit sales of keyword ads to generic words.

GEICO's lawsuit had also named Web site firm Overture Services, a Yahoo! subsidiary, but the two companies reached an undisclosed settlement in November.

The bench trial is expected to last three days. Brinkema could issue a decision or take the matter under advisement.