• by Wendy Davis , Staff Writer @wendyndavis, October 31, 2012

Google and Rosetta Stone have settled a long-running dispute about trademark infringement on AdWords, the companies said today in court papers.

They didn't disclose any settlement terms in their court papers. But they reportedly said in a joint statement that they will "meaningfully collaborate to combat online ads for counterfeit goods and prevent the misuse and abuse of trademarks on the Internet."

The settlement resolves a lawsuit dating to 2009, when Rosetta Stone alleged that the search giant's AdWords policies allowed competitors to take advantage of Rosetta Stone's trademarked name. Rosetta Stone also said its trademark was being used by counterfeiters, who duped consumers into purchasing fake software.

Two years ago, U.S. District Court Judge Gerald Bruce Lee in Alexandria, Va., dismissed the case before trial. He ruled that Google's practice of allowing Rosetta Stone's trademarks to trigger ads for other marketers wasn't likely to confuse consumers.

But this April, the 4th Circuit Court of Appeals revived the lawsuit. That court found that Rosetta Stone had presented enough evidence to justify a trial about whether consumers were confused by AdWords ads.

Among other evidence, Rosetta Stone presented depositions of five consumers who said they were tricked into purchasing counterfeits after conducting Google searches for Rosetta Stone.

The 4th Circuit also said that Google's own in-house surveys also showed some confusion when trademarked terms were included in the body of pay-per-click ads.

Google has allowed trademarked terms to trigger keyword ads since 2004. Starting in 2009, the company also began allowing trademarked terms to appear within the ad copy.

While Google has faced numerous lawsuits over the practice, no court has never definitively ruled on whether the AdWords policies infringe trademark. Almost all have either been dropped before trial, or settled, as happened with Rosetta Stone.

The most notable exception involved insurance company Geico, which took its case against Google to trial in 2004. Geico lost on the key issue, when U.S. District Court Judge Leonie Brinkema in Alexandria, Va. ruled that the company didn't show that consumers were confused when they were served with ads for other companies after typing "Geico" into the query box.