April 03, 2009, 8:32 PM — A trademark lawsuit against Google that a lower court had dismissed in 2006 has been given new life.
Rescuecom, a Syracuse, New York, computer services franchising business, sued Google in 2004, alleging that Google has seriously hurt its business by serving up competitors' ads when users search for "Rescuecom" in Google's search engine.
The suit alleges that Google and Rescuecom competitors buying the ads profit without authorization from the Rescuecom trademark, and that the practice can also confuse potential customers and franchisees, resulting in lost business.
In its defense, Google argued that the selling "Rescuecom" as a keyword to competitors that triggers their ads along with search results isn't a trademark infringement under the Lanham Act. Among other things, Google argued in its motion to dismiss that neither Google nor its advertisers use Rescuecom's name to identify the source of their products.
The U.S. District Court for the Northern District of New York dismissed the case in 2006. But, after a Rescuecom appeal, a three-judge panel of the U.S. Court of Appeals for the Second Circuit sent the case back (pdf) to the lower court on Friday.
"While we express no view as to whether Rescuecom can prove a Lanham Act violation, an actionable claim is adequately alleged in its pleadings. Accordingly, we vacate the judgment dismissing the action and remand for further proceedings," the appeals' court judges wrote in their decision.
Google said it continues to believe the lawsuit is without merit and that it will continue to defend itself. "We are disappointed with this early-stage decision, but we remain confident that our trademark policy strikes the proper balance between trademark owners' interests and consumer choice," Catherine Lacavera, Google senior litigation counsel, said in a statement.
Meanwhile, Rescuecom expressed satisfaction at the court's decision. "We're very happy with the Second Circuit's decision. It discredits Google's argument that it should be permitted to auction off tradenames," said Rescuecom CEO David Milman in an interview.
"Rescuecom is seeking to protect its rights and we would like Google to stop this practice and creating confusion with the Rescuecom branding," he added.
Google's policy on this matter states in part: "Our AdWords Terms and Conditions with advertisers prohibit intellectual property infringement by advertisers. They make it clear that advertisers are responsible for the keywords they choose to generate advertisements and the text that they choose to use in those advertisements."
Competitors continue to buy "Rescuecom" as a keyword to trigger their ads, as evidenced by a query run on Friday by IDG News Service.