Federal Court Waxes Theoretical During Google Search Case

Federal appeals judges Thursday struggled with whether Google's practice of allowing companies to bid to appear when Web users searched for a rival's name potentially violates trademark law.

In arguments that went on nearly twice as long as the allotted 20 minutes, the three-judge panel in the 2nd Circuit sharply questioned lawyers for Google and Rescuecom Corp., a Syracuse, N.Y.-based computer services company that sued the search engine for trademark infringement. Rescuecom asserted that Google infringed on the company's trademark by allowing rivals to appear as sponsored results when users searched for Rescuecom.

A trial judge dismissed the case without a trial in 2006, ruling that allowing trademarks to trigger ads isn't the type of use in commerce that companies can sue for.

But one judge, Pierre N. Leval, indicated Thursday that he was inclined to agree with Rescuecom--at least when ads triggered by trademarks run at the very top of the page, in the horizontal box above the unpaid results. "I don't see why it shouldn't be said that this is a use in commerce," Leval told Google's lawyer, Michael H. Page.

However, another judge--Guido Calabresi--expressed doubts about whether the policy implicates trademark rights. Comparing the placement of a paid-click ad on Google to displaying the pain reliever Aleve next to Advil in a brick-and-mortar store, he said, "I'm not sure that selling the right to be next door is the use of a trademark."

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. Mordue dismissed the case without a trial.

Rescuecom's lawyer, Edmund J. Gegan, argued Thursday that Google's search results page shouldn't be compared to the aisles of a retail store. "We are not alleging it's wrong to sell the right to be placed next door to something," he said. But, he added, Rescuecom searches should not yield results for competitors. "When you search on 'Rescuecom,' you're only supposed to get results for 'Rescuecom'--not for computer services," he said.

Even if the appeals court reverses the trial judge, Google won't necessarily lose the lawsuit. Instead, the company will have to defend itself at a trial--and Google has already won one similar case after a trial. In that instance, a lawsuit brought by insurance giant Geico, a federal district court judge ruled there was no evidence consumers were confused when they typed "Geico" into the query box and Geico rivals appeared in the sponsored results links. (Google later settled with Geico about a separate issue involving marketers that used the word "Geico" in the text of their ads--a practice Google doesn't allow.)

At times Thursday, the discussion in court became unusually theoretical. Leval questioned Google's lawyer Page about a store of the future, in which customers type what they're looking for into a computer terminal, which then shoots out a product. What if customers typed in "Advil," but the terminal shot out "Aleve?" Would that be a use of a trademarked term in commerce, Leval wanted to know.

Calabresi also asked for Page's opinion on a store putting an Advil sign over a shelf, but selling both Advil and Aleve underneath it.

Page several times reiterated Google's point that it isn't using the Rescuecom trademark because the only party typing the word into the search box is a Web user.

Separately from the Rescuecom case, Google also faces a trademark infringement lawsuit by American Airlines. In that case, a federal judge in October denied Google's motion to dismiss and ruled that the case could proceed to trial.

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