• by Wendy Davis  @wendyndavis, June 11, 2010

Google has lost its bid to dismiss a portion of a lawsuit accusing it of violating a federal cybersquatting statute by allegedly placing ads on "typoquatting" sites.

In a decision issued Wednesday, U.S. District Court Judge Blanche M. Manning in the northern district of Illinois denied Google's motion for summary judgment in the case, which dates back to 2007. Instead, Manning ruled that Google's AdSense for Domains program involved "licensing" some sites from Dotster that had domain names similar to registered trademarks, and then serving ads on those sites. Because the Anticybersquatting Consumer Protection Act imposes liability on anyone who licenses and uses sites with domain names similar to trademarks, Manning found that Google was not entitled to dismissal before trial.

Google argued that it has already ended its contract with Dotster, but Manning ruled that the plaintiffs still were entitled to attempt to prove that they are entitled to damages from prior activity.

The lawsuit, filed by golf club manufacturer Vulcan Golf, alleged that Google and other defendants were engaged in a "shockingly deceptive Internet-based modern day racketeering scheme."

Vulcan Golf argued in court papers that Google and other companies involved in creating and registering the "typosquatting" sites -- with names like wwwVulcanGolf.com (without a period between www and Vulcan) -- unfairly harness the Vulcan Golf trademark and violate the anti-cybersquatting law. Vulcan Golf's theory is that these sites are visited by people who are trying to reach Vulcan Golf, but mistype the domain name into their address bars.

Google did not respond to inquiries for this article. It's not clear whether the company intends to continue to fight the case or to pursue a settlement, but Manning directed Google and the plaintiffs to hold a settlement conference.

"The court again strongly urges the parties to attempt to resolve this matter," she said in her ruling.

Harvard Business School professor and attorney Ben Edelman, who represents Vulcan Golf, said he "remain[s] alarmed by the amount of typosquatting, and the resulting costs to advertisers."

Several months ago, he published a paper concluding that 938,000 typosquatting domains target the top 3,264 Web sites. He analyzed more than 285,000 of those sites and concluded that 80% of them were supported by pay-per-click ads.