The Chink in Google's Armor

A little-publicized court ruling in France may have exposed a serious chink in Google's armor. CNet is reporting that Google lost a trademark infringement suit brought by Louis Vuitton Malletier. In a related, troubling development on January 24, Google also lost a similar case to Le Meridien Hotels and Resorts.



The ruling in the Vuitton case was for about $250,000 in damages. A Vuitton spokesman issued a statement describing the company's position on Google's "leasing" of their trademarks:

It was absolutely unthinkable that a company like Google be authorized, in the scope of its advertising business, to sell the Louis Vuitton trademark to third parties, specifically to Web sites selling counterfeits...

He has a point. The unfortunate news for Google is that (a) the trend in international court rulings is clearly against the company and (b) LV and LM represent just the tip of the iceberg. And the problem is not simply that of an international nuisance. Here in the U.S., Google is facing a wave of similar threats beginning with that filed by American Blind and Wallpaper Factory.



The Google AdWords program accounts for 98% of its revenue. Of that, 35% is generated from international sources.



Google's market cap is around $56 billion, exceeding that of General Motors and Alcoa combined. Investors in GOOG, already riding an extraordinary, gravity-defying premium (140 times trailing earnings) for their shares, have another reason to be cautious.