• BusinessWeek/Online Media Daily, Wednesday, April 15, 2009 12:15 PM

As BusinessWeek's Michael Orey notes, "it can be downright infuriating" when your brand is used to generate business for a rival. But that's exactly what happens on Google, where advertisers can attract customers by bidding on competing brand names. However, Rescuecom, an opponent of the practice, won a legal victory against Google, as reported in Online Media Daily. It could result in new limits on how Internet companies use brand names to sell search ads.

Rescuecom's complaint was that letting rivals show ads against keyword searches for its brand name infringed on its trademark. On April 3, the U.S. Circuit Court of Appeals for the Second Circuit reinstated a suit filed by the company. In every country in which it operates, Google blocks the use of trademarked terms in the actual text of a display ad if the owner complains. However, in the U.S., Canada, Britain and Ireland, the search giant allows rivals to bid on each other's trademarked names or terms. As Rose Hagan, Google's senior trademark attorney, explains, the law outside the U.S. tends to be friendlier towards trademark owners. Nevertheless, Orey poins out that the legality of the practice remains unsettled on both sides of the Atlantic.

This doesn't mean that the Rescuecom case has already changed things. The ruling merely allows the case to go forward in U.S. District Court for the Northern District of New York, where Rescuecom must still prove that consumers are confused when they type in a trademarked term and are drawn to the site of a rival.

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