• by Wendy Davis  @wendyndavis, December 12, 2004

Geico's patent infringement lawsuit against search giant Google is expected to begin this morning before Judge Leonie M. Brinkema in federal district court in Virginia. The result in the closely watched trial could force Google to change its keyword bidding practices--believed to account for a significant portion of Google's revenue.

In the lawsuit, insurance company Geico accused Google and paid listings provider Overture complained about the practice of allowing other insurance companies to pay to appear as "sponsored listings" on the search results pages returned to consumers when they type "Geico" into the query box. Geico claims that this system violates its trademark. Yahoo!'s Overture settled the lawsuit late last month; the terms of the settlement were not disclosed.

Google maintains that its keyword bidding policies merely allow rivals to compete. In written papers, Google argued that allowing a Geico competitor to advertise to consumers searching for Geico was no different than Ford taking out ads opposite Toyota reviews in Car and Driver magazine.

"Stripped of its high-tech trappings, Geico alleges only that Google permits its advertisers to compete head-to-head with Geico, by targeting their advertisements at potential Geico customers," argued Google in a motion to dismiss the case before trial.

Earlier this year, Brinkema denied Google's motion to dismiss without a trial, writing: "When defendants sell the rights to link advertising to plaintiff's trademarks, defendants are using the trademarks in commerce in a way that may imply that defendants have permission from the trademark holder to do so."

The key issue at trial likely will be whether consumers mistakenly believe that Geico has somehow endorsed the sponsored listings that appear on the results pages. The non-jury trial is expected to last three to four days, following which Brinkema might take the matter under advisement before rendering a decision.

Last week, the U.S. Supreme Court unanimously decided another intellectual property case against the trademark holder. While the case, KP Permanent Make-Up vs. Lasting Impression, involved a company using a descriptive term trademarked by another, as opposed to a name or proper noun, the ruling appeared to signal that the Supreme Court was not inclined to expand the rights of trademark holders.

In Permanent Make-Up, the Supreme Court held that one company's use of the term "microcolor"--trademarked by a rival company--can be a fair use, even if it throws off consumers. "Some possibility of consumer confusion must be compatible with fair use," wrote Justice David Souter.