• by Wendy Davis  @wendyndavis, April 3, 2008

Google is slated to argue to a federal appeals court today that its AdWords platform doesn't violate trademark law.

In a brief filed with the Second Circuit, Google argues that allowing marketers to display ads to users who are searching for the companies' rivals is permissible. "So long as a company does not use a mark in a way that falsely identifies the source of goods or services, the Lanham Act has no problem with targeting advertising at people who are on their way to buy from one's competitors," the company argues.

Google argues that allowing one company to purchase ad space when consumers type a rival's name into the query box is no different from, for instance, Kia buying an ad in Car & Driver opposite a page with a Hyundai review.

But Rescuecom, a computer repair company that sued Google for trademark infringement in 2004, argues that Google's analogy is misplaced. "A consumer browsing through a magazine or a market's shelves expects products or advertisements near each other to potentially be competitive," Rescuecom argues. "However, when an Internet user submits a search query ... to an Internet search engine, the user expects the search results to be relevant to the query, and to be placed in order of relevance."

Federal district court judge Norman Mordue in Syracuse, N.Y. ruled in Google's favor in 2006, holding that allowing a trademarked term to trigger an ad doesn't violate the owner's rights to the term. "There is no allegation that defendant places plaintiff's trademark on any goods, containers, displays or advertisements, or that its internal use is visible to the public," Mordue wrote in an opinion dismissing Rescuecom's complaints.

The case has drawn much interest among online companies and industry observers. The digital civil rights group Electronic Frontier Foundation filed a friend-of-the-court brief on Google's behalf, as did the consumer advocacy group Public Citizen.

A coalition of 18 law professors led by Eric Goldman, at Santa Clara University School of Law, and Stacey Dogan at Northeastern University School of Law, also filed a brief urging the court to rule in Google's favor. Yahoo, eBay and AOL also attempted to weigh in on Google's behalf, but the Second Circuit declined to accept that brief without giving a reason. Goldman on his blog wrote that courts sometimes reject friend-of-the-court briefs from outside companies because otherwise one of the judges would have to recuse himself due to a conflict of interest.