Trademark Lawsuit Against Google’s AdWords Hits Appeals Court

Google (NSDQ: GOOG) has worn down most of its legal opponents over the years, but one of them isn’t going away so easily.

Over the years, Google has been sued more than a dozen times by trademark owners over Google’s policy of allowing rivals to the trademark owners to buy their keywords and then use those words to advertise against them. To take a hypothetical example: Pepsi could buy the keyword “Coke” in AdWords, and then anyone who searched for “Coke” would see an ad that said: “Buy Pepsi.” In these cases, the plaintiffs have argued that Google infringed their trademark.

While Google has settled a few of those cases, none has compelled the company to stop selling ads based on trademarked keywords-and Google has not lost any of the trademark cases in court. In fact-despite the likelihood of additional litigation-Google has expanded its policy of selling trademarked keywords to Europe, arguing that it produces competitive ads that better serve consumers.

Now, language-learning software company Rosetta Stone, one of the companies that sued Google for trademark infringement and lost, has appealed the case to the U.S. Court of Appeals for the 4th Circuit. The company filed suit against Google back in 2007 and lost in August.

No appellate court has yet issued a major ruling on a lawsuit regarding trademarked keywords, in part because Google has beaten-or simply worn out-so many opponents over the years. AdWords is Google’s flagship product, and a huge money maker for the company.

In its appeal, Rosetta Stone argues that the Virginia federal district court that found in Google’s favor got it wrong on numerous counts. The company says that the lower court should have been swayed by its evidence that searchers were confused by AdWords, and alleges that some of the advertisers paying for sponsored links keyed to its trademarks sold counterfeit Rosetta Stone products. Google has yet to file its response brief, which is due Nov. 26.

A number of large brands have indicated they will file two separate briefs supporting Rosetta Stone, including Viacom (NYSE: VIA), Ford Motor Company, Carfax, Blue Destiny Records, The Media Institute, ConvaTec, Guru Denim, Monster Cable, PetMed Express and 1-800 Contacts. While none of those companies has sued Google over trademark issues, the filing of the briefs supporting Rosetta Stone indicates they have objections to Google’s trademark policies.