A U.S. district court has ruled against Google in a trademark suit over the sale of the terms Geico and Geico Direct in Google's AdWords service. In April 2004 Google had changed a previous AdWords policy that stopped the sale of other companies’ words and phrase, and this policy was quickly attacked legally by Geico.

The ruling follows an earlier judgement in December that had favored Google. The most recent ruling, however, found that Geico had “established a likelihood of confusion” and that there had been a breach of the insurance firm’s trade mark rights “solely with regard to those sponsored links that use GEICO's trade marks in their headings or text."

The matter is not completely over, as the two parties now have 30 days to settle their differences, or failing that, go to trial.

"Geico will continue to aggressively enforce its trade mark rights against purchasers of its trade marks on search engines and against search engines that sell Geico's trade marks to advertisers," said Davies Charles Davies, Geico's general counsel, in response to the latest ruling. "We continue to believe that the sale of GEICO's trade marks to its competitors is wrong and a violation of federal and state law and look forward to litigating that issue in future cases."

Google was apparently buoyed by the earlier ruling, as the following reaction from Google's legal counsel, Michael Kwun sent to an industry blog attested:

"(I) thought it might be helpful to clarify a few things. The recent ruling by the judge in this case was essentially a written version of the judge's oral ruling of December 15, 2004. Her ruling was an extraordinary victory for Google. In the critical part of the decision, the judge ruled unequivocally in Google's favor.

Google is extremely pleased with the outcome in this case. The important issue for us in it - which is the use of trademarks as keyword triggers - was decided decisively in our favor."