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(rt) Business Week reports that Google lost its appeal in a Versailles (France) court: they were ordered to pay Euro 75,000 (appr. USD 100,600) in damages to two French travel companies, Luteciel and Viaticum, whose trademarks they infringed.

So what happened? Google users searching for the companies’ registered trademarks (e. g. “Bourse des Vols” or “Flights Mart”) were offered ads for the plaintiffs’ competitors such as easyJet, the price breaker airline.

A lower court had ordered Google in October 2003 to stop showing rival “sponsored links” for searches targeting the companies’ trademarks. The same court later fined them when they failed to comply in time. It was this original ruling that Google appealed against.

Of course, for a corporation as well funded as Google the fine constitutes mere peanuts. However, the case raises a number of other issues which may turn out to be far more serious in the long term.

Google’s ongoing AutoLinks practice aside (which may yet provoke a host of similar suits expectably not restricted to France), this AdWords focused case could well set more than just an annoying precedent.

True, French courts don’t rule the world any more than American courts do (though both may sometimes act as though they did), but a decision of this quality will certainly have its repercussions across the European Union at least and possibly in a lot of other jurisdictions. In France alone there are a further 15 law suits Google will have to wrestle with soon, more cases are adjunct in the U. S. For another high profile French case see:

Gone are the days when US corporations could scoff in mirth at the “toothless tiger” across the pond: look at what happened to Boing, at the EU’s successful enforcement of their local VAT regulations for all companies selling stuff to Europe over the Internet – not to mention the legal nightmare Microsoft is currently experiencing with Brussels. With a market of no less than 300 million of the world’s most affluent consumers, the pipers may be paid well, but their paymasters are increasingly insisting on calling the tune, too.

What’s even more interesting is the fact that Google’s displaying third party ads in combo with trademarked search terms was expressly ruled “trademark counterfeiting” by the court.

If this exemplary case should set in motion an avalanche of litigation, Google’s AdWords revenue is in for a major bashing soon.

Find the Business Week article here:
→ “Google loses French trademark appeal”

And this is the International Herald Tribune’s Doreen Carvajal outlining the fundamental flaws in Google’s business model:
→ “Google ensnared in a war of words”

But it’s not France alone and neither is it Google, not by a long shot: read this Wall Street Journal piece about a class action caliber (plaintiffs indeed seeking to have it certified as such) Circuit Court suit filed by a group of advertisers against Google, Yahoo!, Ask Jeeves, Looksmart, Lycos, Findwhat, AOL, Walt Disney and others in one fell swoop, claiming that defendants had conspired in online-advertising fraud by knowingly overcharging their clients for fraudulent clicks. Seems like quite a mouthful, but then again there’s serious money involved here:
→ ”Internet Firms Face Legal Test On Advertising Fees”

And regardless how this suit and others may turn out in the end – the PR disaster is happening already with advertisers gradually developing second thoughts about whether it’s such a bright idea to sink their promo budgets into that fundamentally unsafe if not downright risky, suicidal “fast track” venture termed Pay-per-Click.

Which, in the long run, could spell massive future profits for search marketers focused on organic rather than PPC search engine optimization …

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