On Monday, the 2nd U.S. Circuit Court of Appeals ruled that the internet giant, Google, has to face a trademark infringement lawsuit for selling keywords that trigger ads.

A three judge panel reversed the decision from a lower court in the case Rescuecom v. Google, 06-4881. Computer-repair company Rescuecom claimed that users could be confused by links to competitors’ ads that appear alongside Google search results for the company’s trademarked name.

Google succeeded at getting the lower court to throw the case out, “arguing that its use of Rescuecom’s trademark was internal and not a “use in commerce,” which constitutes trademark infringement. The dismissal was hailed as a big victory for Google and other search engines, for which keyword advertising is a lucrative business.”

The appeals court ruled Friday that “Google’s recommendation and sale of Rescuecom’s mark to its advertising customers are not internal uses,” sending the case back to the trial court.

“We are all looking for definitive answers about the permissibility of keyword advertising — it’s a multibillion-dollar-a-year industry,” said Eric Goldman, a professor at Santa Clara University School of Law”

IP lawyers have been anticipating the decision on this case because of mixed rulings on keyword cases.

“Every single district court outside of the 2nd Circuit found that the purchasing of a competitor’s keyword to trigger ads at least met the threshold question of stating a claim,” said Ian Ballon, an Internet lawyer at Greenberg Traurig. “This is a significant effort at harmonizing the law.”

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