Rosetta Stone (makers of the language software) have been given the go ahead by the appeals courts to move their lawsuit against Google to the next stage of the litigation process – a trial.

Rosetta Stone is asserting that Google is serving up Ads triggered by Rosetta Stone’s trademarks. So, when a user types in “Rosetta Stone”, they are seeing ads for other products, thus confusing the consumer.

I have long advocated to not bid directly on the keyword marks of your competitors. It typically does not generate good conversion results in the B2B area in particularly. It’s also a poor business practice that usually results in the other business countering by bidding on your terms. The end result is a bidding war (and the only entity that wins is Google).

However, this case has further implications on broad match and session match. It’s quite possible that Google will have to block session matching whereby it would normally use your search behavior to serve you ads regardless of what your query is… For instance, if I make three searches about cell phones, and then refine my search to smartphones, I still may see ads triggered by the original “cell phone” key phrase. And broad match may kick in if I type “Nokia smart phone” whereby AdWords matches me to a “Samsung smart phone” ad triggered by the “smart phone” portion of my phrase.

If Google will be required to block all marks except to their owner, there’s a lot of work that will be required. Google will need to build a system to verify ownership of marks to enable advertisers to bid on their own marks; and also build a system that blocks ads from appearing on registered marks in any form (broad, session or otherwise).

One thing is for sure, this case will continue to take its time moving through the legal system. Here are some more details reported by MediaPost.