A U.S. District Court judge ruled today that GEICO, in its case against Google, "established a likelihood of confusion, and therefore a violation of the Lanham Act, solely with regard to those Sponsored Links that use GEICO's trademarks in their headings or text." The court stayed the trial for 30 days to give the parties an opportunity to settle. If the parties do not settle, the trial will continue as to the amount of damages and on the issue of who is liable: Google, or the advertisers on Google.

Judge Brinkema in her written decision held that the use of GEICO's trademarks in paid advertisements violates the law. "The written decision leaves open the issue of whether the sale and use of trademarks by search engines and advertisers to trigger ads that do not contain other parties' trademarks violates the law," said Charles Davies, GEICO's General Counsel. "In light of this decision, search engines and their advertisers should consider their potential liability if they intend to use other companies' trademarks in paid search advertising."