Dismissing a motion to dismiss the case, Judge Leonie Brinkema of the U.S. District Court for the Eastern District of Virginia cleared the way for a trademark infringement lawsuit against Google and Overture to move forward. The suit, brought by GEICO, has charged that Google and Overture violated GEICO's trademark by allowing other companies to purchase advertising that would appear when searchers typed GEICO's company name into the respective engines.

The suit also claims that Overture and Google contributed to trademark infringement, false representation, and trademark dilution as described by a federal statute called the Lanham Act. Overture and Google claimed that they could not be sued for trademark infringement because GEICO's name was used only in computer algorithms in their own systems. The argument seeks to place blame for trademark infringement on the companies purchasing the ads, rather than Google and Overture's acceptance of them.

The ruling did go on to toss out two other charges that had been filed by GEICO. One was for "statutory business conspiracy" and was filed on the grounds that the search engines and their advertisers had worked together to cause the trademark violation. Judge Brinkema stated in her ruling that the charges were not well enough supported to merit a lawsuit. The second, for "tortious interference" was found to be too broad a charge and was also tossed out.

While Overture and Google remain mum on the ruling, GEICO issued a public statement that says, in part: "The Judge rejected the argument advanced by Google and Overture that they should not be subject to liability for allowing their advertisers to bid on the GEICO marks and, in the words of the Judge, 'pay defendants to be linked to the trademarks.' We look forward to the opportunity to prove at trial that this unauthorized use of GEICO's well-known trademarks is unlawful and should be stopped."

Pay-Per-Click advertisements are sponsored links that are triggered when a searcher types a certain word or phrase into a search engine. Advertisers bid on how much they are willing to pay a search engine each time a user clicks on their listing, Google and Overture then use those bids to help determine which ads they will display.

Sponsored listings serve as a key source of revenue for Google and Overture's parent company, Yahoo! With the search advertising industry growing at an impressive rate, and dozens or second-tier pay-per-click players observing the outcome of the trial, the future policies of search related advertising will certainly be affected. The trial is expected is begin either later this year or early in 2005.