Geico Corp. yesterday urged a federal judge in Alexandria to issue an injunction prohibiting Internet giant Google Inc. from selling ads based on searches using the Washington insurance giant's name, arguing the practice infringes on its trademark.
The case represents the first major U.S. legal test of Google's primary business model for making money off its free search service. Geico is seeking millions of dollars in damages, and Google has said previously that its profit could be materially hurt should legal challenges such as Geico's succeed.
Google simply acts as a publisher and allows companies to offer comparative advertising, its attorneys argue.
(Paul Sakuma -- AP)
Google derives a large portion of its revenue by selling ad space to businesses large and small that bid on search terms people might use when they hunt the Internet for information about products, services and other items online.
The search engine serves up a list of Web sites that contain the user's query, along with advertising related to the original request. That practice, Geico complains, allows someone searching for "Geico," or "Geico Direct," to not only be directed to Geico's Web site but be exposed to advertising and Internet links from Geico's competitors, who successfully bid to have their ads displayed alongside search results involving the insurance company's name.
Google claims it is doing nothing more than acting as a publisher and allowing companies to offer comparative advertising. But Geico said the Internet search engine is diluting the value of Geico's trademark and should be prohibited from doing so.
"Computer users are looking for Geico and an insurance quote and instead they end up with a company that is not affiliated with Geico," said Charles D. Ossola, an attorney with Arnold & Porter representing Geico. "Geico wants a ruling that Google's sale of its trademark creates a likelihood of confusion."
Google faces a number of similar lawsuits from an array of corporations in the United States and in Europe. If the high-flying search engine giant ultimately loses these cases, the company could be forced to abandon the practice or be required to pay royalties to Geico and the other trademark holders.
Google already has suffered setbacks in Europe, where laws and policies governing advertising are more restrictive than those in the United States. For example, Google has altered its practices in France after being sued over trademark issues by Louis Vuitton and has received unfavorable rulings on the same issue in Germany.
Before the start of the trial yesterday, Geico reached an out-of-court settlement with the Yahoo search engine for undisclosed terms. Yahoo Inc. does not allow companies to bid on search terms involving the trademark names of their rivals.
Michael Page, an attorney representing Google, said there is a long history of allowing comparative advertising in the United States so that consumers will have more information to make informed choices when buying products. He cited Coca-Cola and Pepsi and other products as examples of corporations using each other's names in ads and said that Geico's claims were unfounded.
"Geico wants you to decide the Internet is different," Page told U.S. District Judge Leonie M. Brinkema, who is presiding over the case. "That is based on an incorrect assumption that when people type 'Geico' into Google's search engine, the only thing they want is Geico's Web site. That is wrong."
Page also said consumers are not confused because the ads served up with the search results are set apart and appear to the right of the listings.
"Google is the publisher," Page said. "The advertiser writes the text. Geico's argument might support a claim against an advertiser, but not against Google."
Geico officials testifying at the trial said the company has spent more than $1 billion in the past five years promoting its brand name and is now being forced to either bid for a name it already owns, or run the risk of having computer users type in "Geico" and then buy car insurance from a competitor. Geico marketing vice president John W. McCutcheon said most people get a quote for car insurance from a single company and then buy insurance from that company. As a result, he said, other firms that compete with Geico are improperly winning business at Geico's expense.
Legal experts say that with the Internet emerging as a new medium for advertising, there is little case law to serve as precedent for the Geico case and others like it. The trial is expected to last several days, and then Brinkema is expected to take a period of weeks before issuing a ruling. Whatever the outcome, the losing party would have the right to appeal her decision.