Federal district court judge Leonie Brinkema yesterday ruled against Google regarding the use of "Geico" and "Geico Direct" in creative used for its AdWords service, finding that there was trademark infringement when those terms were used in the text of sponsored ads, reports the Register (U.K.). The judge's decision came after she had earlier ruled that Geico failed to prove that allowing other insurance companies' ads to appear in sponsored search results for the term "Geico" constituted trademark infringement on the part of Google.

In yesterday's decision, Brinkema ruled that Geico had "established a likelihood of confusion" resulting from the use of the trademarks and therefore (according to the Lanham Act) there had been a violation of its trademark rights, but "solely with regard to those sponsored links that use Geico's trademarks in their headings or text."

The court has stayed the trial for 30 days to allow the parties an opportunity to settle. If they don't, the trial will continue to determine damages and the issue of who is liable - Google or advertisers.

Geico sued both Google and Overture (Yahoo) in May 2004 over the sale of its registered trademarks as sponsored search terms in keyword advertising. Yahoo settled, but Google decided to continue litigation.

Google's AdWords policy changed in April 2004, when it stopped granting requests from companies that asked it to ensure that their marks were not used as keywords. Now Google steps in only when a trademarked term is used in the text of an ad. The policy change resulted in a string of lawsuits against Google.