• by Wendy Davis  @wendyndavis, July 27, 2009

Texas realtor First Call Properties and its owners have withdrawn a lawsuit against Craigslist over ads that allegedly infringed the realty company's trademark.

"Plaintiffs no longer wish to prosecute their claims against Defendant, Craigslist," the realty company said in a July 15 motion asking that the case be dismissed. The legal papers did not offer any reason for the move.

Last week, U.S. District Court Judge Janis Graham Jack in the southern district of Texas granted First Call's motion and dismissed the case against the free listings site. The dismissal was "without prejudice," which means that First Call could theoretically file it again.

Meanwhile, First Call is continuing to pursue its case against rival realtor AAA Apartment Locating. First Call originally sued AAA and Craigslist for trademark infringement in May.

First Call objected to AAA ads on Craigslist's Corpus Christi site that allegedly used the phrases "first call," "call first," and "call us first." First Call alleged that those ads were placed in a deliberate attempt to confuse consumers. The company also said that Craigslist knew that AAA was using the First Call trademark and failed to stop the ads from appearing.

The case appeared to mark the first time Craigslist had been sued for trademark infringement based on user-created content. But Google and other search engines have faced similar cases for allegedly allowing advertisers to use trademarked terms to trigger search ads or appear in the ad copy.

First Call also alleged that AAA ads were defamatory, but Craigslist appeared to have an obvious defense to those charges because Section 230 of the Communications Decency Act says sites can't be sued for libel based on content created by users.