The 2nd Circuit Federal Court of Appeals ruled against Google in a trademark lawsuit stemming from AdWords ads, saying that allowing a trademark term to trigger a search ad is a “use in commerce”, within the meaning of federal trademark laws.
Google was sued by computer repair shop, Rescuecom, for allowing rivals to appear as sponsored listings when consumers typed “rescuecom” into the query box. A district court judge dismissed the case before trial on the theory that allowing a word to trigger an ad didn’t violate trademark law because it wasn’t a use in commerce.
Judge Pierre Leval, who wrote the appellate opinion, disagreed with that conclusion.
Leval sent the case back to the federal district court for a trial, on whether search ads potentially confused consumers.
So far, Google and Yahoo have successfully defended themselves in other lawsuits on similar issues.
Google may appeal the ruling and the matter still has to go back to the trial court for disposition on the issues.
However if the decision holds search engines could be on the hook for trademark infringement for selling ads under trademarked terms.