A US district court has ruled against Google in a trade mark action over the sale of the terms “Geico” and “Geico Direct” in AdWords, its keyword advertising service. The judge found that there was infringement where the terms were used in the text of sponsored ads.

Car insurance firm GEICO sued both Google and Yahoo! subsidiary Overture in May 2004 over the sale of its registered trade marks as sponsored search terms in the keyword advertising services of both search engines.

These services work by allowing advertisers to sponsor particular search terms so that, for a fee, whenever that term is searched the advertiser's link will appear next to the search results.

Google’s AdWords underwent a policy change in April 2004. Until then Google had respected requests from companies that asked it to prevent their marks from being available for sponsorship. Now Google only takes action when a trade marked term is used in the text of an ad – i.e. the trade marked term can still trigger the ad.

The policy change has seen a flurry of suits against Google – including the action filed by GEICO.

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