By Eric Auchard
Google Inc. and auto insurer GEICO have resolved a trademark
infringement challenge filed by GEICO against Google over its online
advertising practices, the auto insurer said on Wednesday.
GEICO, the No. 4 U.S. auto insurer and a unit of investor Warren
Buffet's Berkshire Hathaway Inc., said a suit filed in the
U.S. District Court for the Eastern District of Virginia was "resolved
to the mutual satisfaction of the parties."
The lawsuit, originally filed in May 2004, had sought to hold Google
responsible for trademark infringement for displaying advertising paid
for by rival insurers when computer users searched for the word
"GEICO" on the Google system.
The complaint could have effectively derailed a basic way Google sells
online advertising, by linking keyword searches to ads. This is the
source of virtually all of Google's revenues. Rival Yahoo Inc.
relies on a similar keyword technique for roughly
half of its advertising revenue.
"Terms of the settlement, although not disclosed, would suggest some
sort of payment was made, but that a trial has been avoided," Martin
Pyykkonen, an analyst with brokerage Hoefer & Arnett. "This mitigates
the risk of further trademark lawsuits," he said.
He rates Google stock a "buy" and says it can hit $350 over time, a
gain of 20 percent from current levels.
Late last year, a U.S. judge ruled there was insufficient evidence to
bar Google from using the technique.
Terms of the settlement are confidential, GEICO said. No further
comment on the settlement will be provided, it said. Google spokesman
Mike Mayzel confirmed the two companies had resolved the dispute, but
also decline to provide details.
The resolution of the dispute puts off, at least for now, the threat
of a major battle pitting the intellectual property rights of a
trademark like GEICO against the free speech rights of Google to
create new forms of advertising, Pyykkonen said.
GEICO, or Government Employees Insurance Co., is the fourth-largest
private passenger auto insurer in the United States, covering more
than 6 million policyholders.
Google users who search for the word "GEICO" on the main search
results page are returned a set of results that include sponsored
links alongside the main Web search results. Three lesser rivals are
featured next to a link to GEICO currently.
Google shares were up 35 cents in after-hours trading at $288.80
following the GEICO announcement. The stock had closed $2.20 higher in
regular session trading on Nasdaq at $288.45. Berkshire Hathaway
shares were unchanged in after-hours trading from their New York Stock
Exchange close at $84,100.
Copyright 2005 Reuters Limited.
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Eric Auchard (reuters@telecom-digest.org)