Wednesday, September 7, 2005

SAN FRANCISCO (AP) — Google Inc. settled the last part of a lawsuit accusing the online search engine’s advertising network of illegally exploiting Geico Inc.’s brand, avoiding a trial on an issue that threatened to bog down one of the Internet’s biggest moneymaking machines.

The District-based auto insurer announced the settlement yesterday without providing any details of the agreement. A Google spokesman didn’t immediately return calls seeking comment. Geico’s statement described the settlement terms as confidential.

Google had already scored a major victory in the trademark infringement case, filed in May 2004 in a Virginia federal court.

In a ruling late last year, U.S. District Judge Leonie Brinkema rejected Geico’s request to block Google from letting rival insurance companies to pay for the right to have their ads displayed after Geico’s name is included in a search request.

But in a written ruling last month, Judge Brinkema left the door open for Geico to collect damages from Google for featuring ads from rivals that used Geico’s name in the heading above the Web links, as well as the subtext.

Judge Brinkema gave Google and Geico 30 days to settle that part of the dispute or face a trial on the issue. The deadline for reaching a settlement was to expire yesterday.

Geico is owned by Berkshire Hathaway Inc., the company controlled by billionaire Warren Buffett.

The Geico suit is just one of several trademark battles shadowing Google’s method for selling the text-based ads that provide the financial fuel for the company’s popular search engine.

Google sells the right to have ads linked to specific search terms. Advertisers usually bid on general terms, such as “hotel” or “DVD,” but Google also auctions off company trademarks, such as Geico. That practice has infuriated many trademark holders because it gives rivals a chance to lure away prospective customers.

Had Judge Brinkema sided with Geico, it could have crimped Google profits, which are generated almost entirely from the ads. The ads, which generate commissions whenever they are clicked on, powered Google to a $712 million profit on revenue of $2.6 billion during the first half of this year.

Google’s advertising challenges still faces trademark threats in lawsuits filed by another insurer, AXA Group, and American Blind and Wallpaper of Plymouth, Mich.

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