An Old Trademark Suit is Settled in Google’s Favor

One of the first lawsuits to accuse Google of inflicting trademark abuse in its keyword bidding system has finally been settled out of court. The outcome was a wash for the window coverings retailer that filed the complaint.

In the more than three years since American Blind and Wallpaper Company filed its complaint, the firm has incurred what must be hefty legal costs in hopes of blocking Google from allowing competitors to bid on keywords containing its trademarks or to use those trademarks in their ad copy. Yet the settlement agreement, signed August 31, requires Google pay no money to American Blind and Wallpaper, nor must it change its behavior in regard to the company’s trademarks.

Further, in addition to being forced to cover its own legal costs, American Blind had two of its trademarks invalidated by a judge during the litigation process with Google according to Eric Goldman, an attorney with expertise in Internet law. Goldman also posted a copy of the settlement agreement on his blog.

While out-of-court settlements can’t establish legal precedent, they may offer a deterrent when their terms are common knowledge, he said.

“If I were a plaintiff and I were considering suing a search engine, I’d have to think about the fact that American Blind had spent an enormous amount [on legal fees],” Goldman said.

Goldman, who has spoken harshly of search engine-related trademark infringement suits in the past, said most such legal endeavors “are indefensible as a rational business decision. Looking at the cost and benefits of litigations, I find it hard to believe the plaintiffs consider it worth their time to sue.”

Google’s current policy allows bidding on keywords containing another company’s trademarks, but outlaws their use in the ad copy itself. Under the settlement, American Blind reserves its right to sue the search engine again in the future should Google reverse that policy to knowingly allow its keywords in an ad’s text.

American Blind originally filed its complaint against Google and its distribution partners in 2004, but the companies’ legal confrontation goes back to 2002, when lawyers representing American Blind sent their first letter of complaint to the search giant. That spurred Google to seek what’s called “declaratory relief” in 2003, asking a judge to make a general ruling on whether its keyword practices infringe on some companies’ trademarks. Such a ruling was never made, and under the settlement agreement reached last week, that request was dismissed as moot.

Google has faced many several high- and low-profile challenges to its competitive keyword bidding practices on the grounds of trademark infringement, but to date no clear precedents have been established — at least in the U.S. Geico filed a trademark suit in 2004, the same year American Blind took Google to court, which it quietly settled just over a year later. Just last month, Google was hit with yet another trademark suit in the U.S., this one from American Airlines, remarkable only for the recognition factor of the plaintiff’s brand and for the civility of its tone.

“In working through this business dispute, American is hopeful that it will continue professional, friendly and fruitful relationships with Google, while finding an appropriate resolution to the trademark issues,” the company said in a statement.

French suits against the company have met with greater success. Luis Vuitton and Viaticum both obtained judgments against Google in that country. French-owned AXA also filed a suit in 2004.

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