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Google avoids AdWords jury trial as opponent backs down

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A US retailer has dropped (pdf) a suit against Google which challenged the trademark policy of its keyword advertising system, AdWords. American Blinds & Wallpaper Factory (ABWF) has withdrawn its long-running action against Google.

ABWF had claimed the fact that Google sold the right to advertise beside search results related to its name constituted trademark infringement. Google disputed this and a court ruling could have settled the contentious issue.

The case will not now go to a full jury trial, which was due in November after four years of litigation. Google has not changed its policies or paid ABWF any money, and each side will pay its own costs, according to company statements.

The retreat will be seen as a victory for Google and its profitable AdWords system, which has been challenged by several trademark holders to date.

Google sells advertising based on the exact search term entered by a user of its search engine. It provides the search engine results and, beside those, adverts. Advertisers pay to have their ad displayed when specific terms are typed into the search engine.

ABWF argued that it was wrong for other companies' ads to appear when a user searched for its name. It said that activity infringed its trademarks.

David Rammelt of US law firm Kelley Drye represented ABWF in the action. He told OUT-LAW Radio last May that Google violated its rights.

"Google had been for some period of time both allowing the sale of our trademarks as keywords to competitors, as well as promoting that sale," said Rammelt. "Google has felt it is free to […] trample over those intellectual property rights and you’re seeing it in not just the trademark context but you’re seeing it in the copyright context, you are seeing it in the patent context."

Google said that the decision of ABWF to drop its case vindicated its claims.

"From the start, we've said that American Blind & Wallpaper Factory's claims were baseless, and that Google's trademark policies are perfectly reasonable and lawful," a Google spokesperson told OUT-LAW. "Now, with a trial approaching, ABWF decided to withdraw all of its claims. We are very pleased with this outcome and to note that Google has not paid and will not be paying any settlement fee, our trademark policies remain unchanged, and we've made no special exceptions for American Blind."

The agreement (pdf) between the two parties confirmed that Google would not be changing its policies in relation to AdWords, and that it has not made any form of payment to it to drop the suit.

"ABWF expressly acknowledges that Google has not made and has not agreed to make any payment to ABWF of any kind whatsoever," it said.

The agreement also indicated that Google was free to retain its policy and that ABWF would not sue it again over its practices. "So long as Google does not make a material change in its AdWords trademark policy that adversely affects ABWF, ABWF covenants not to sue Google, any direct or indirect subsidiary of Google," it said.

The case would have been the first keyword-related case to proceed to a jury trial. The most significant ruling to date was a victory for Google. In a decision of December 2004, when a Virginia court ruled that the sale of insurance firm GEICO's trademarks as keywords was not unlawful because there was insufficient evidence of consumer confusion.

Last month, American Airlines became the latest trademark owner to sue Google over AdWords. It also seeks a jury trial.

Copyright © 2007, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

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