Judge weighs dismissal of Google trademark case

By Eric Auchard

SAN JOSE, California (Reuters) - A U.S. judge is considering whether to dismiss a lawsuit against Google Inc. (GOOG.O) that argues it abuses trademarks by allowing rivals of a company to buy ads that appear when consumers search the Web for information on that company.

Judge Jeremy Vogel of the U.S. District Court for the Northern District of California said on Friday he would make a decision by the end of March on the suit, which was filed in 2003 by American Blind & Wallpaper Factory Inc., the top U.S. reseller of window blinds.

Web search leader Google has prevailed in two prior trademark suits filed against its pay-per-click ads. Auto insurer GEICO lost a Virginia district court ruling and computer repair site Rescuecom lost a similar federal case against Google, but is appealing.

"The thing I am struggling with is that I am not dealing with a clean slate," Judge Vogel said during Friday's hearing.

Federal case law is ambiguous, Vogel noted. The U.S. Second District found in a 2005 decision in 1 800 Contacts v WhenU that the plaintiff had no trademark claim when WhenU's pop-up ad system delivered ads from rivals of the contact lens store.

But a ruling in the U.S. Ninth District in the case of Playboy v Netscape had found in favor of trademark holders.

"I am not sure that Google sufficiently delineated the issues with Playboy," Vogel said. "Tentatively, there are trial-able issues in that."

Michael Page, Google's outside counsel, argued that when a drugstore features its own brand of headache remedy alongside a name brand, the retailer is not claiming it is the same, and that a company putting up a billboard near a rival business is not a trademark violation.

"We don't allow advertisers to claim they are American Blinds," Page said. "We allow them to show ads based on their competitors."

David Rammelt of law firm Kelley Drye, representing American Blinds, countered that the Google defense attorney's analogies are not appropriate for the Internet age.

"This is an interactive process (when) a consumer types in (American Blinds) they are searching for us ... then they are presented with our competitors products," Rammelt said.

"What is happening, in fact, is the diversion of customers, at least, that is what it seems like," he said.

Taking aim at a key issue in the case, Page said Google has no duty to address every possible confusion a consumer might have. "We have no obligation to dispel all of the confusion in the world."

Rammelt disagreed, telling Reuters outside of court that: "What Google has asked for in this case is a sweeping declaration that its trademark policy is legal. I think the judge recognized that there are many issues, in fact, that are more appropriate for a jury to decide on whether Google has deliberately profited off of the trademarks of other people."

The next hearing on pre-trial motions in the American Blinds lawsuit is scheduled for April 6.