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

While a few of these cases have been settled by Google, none has compelled the company to stop selling ads based on trademarked keywords. And more importantly 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.

As a consequence, there was a recent allegation that Google has violated the rights of luxury goods maker Louis Vuitton and two other firms through its AdWords service. However, the European Court of Justice ruled on Tuesday that "Google has not infringed trademark law by allowing advertisers to purchase keywords corresponding to their competitors' trademarks."

Paid ads are the backbone of the Internet business model. While Google, the world's largest search engine, does not detail sales from its paid ads, it makes 97 percent of its annual revenue of nearly $24 billion from advertising.

Name brand owners are concerned that Google's AdWords service, in which advertisers bid to use keywords that are the companies' proprietary brand names, undermines their trademark’s distinction.

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 2010. 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.

A number of large brand names have indicated they will file two separate briefs supporting Rosetta Stone, including Viacom, 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 that they too have objections to Google’s trademark policies.

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