A Colorado judge yesterday dismissed with prejudice a lawsuit against Yahoo, in which Yahoo was sued for allegedly using a company's trademarked terms in Google AdWords.

The company that brought the suit, JP Enterprises, owns the trademark for dating site lovecity.com and filed suit earlier this year against Yahoo, Spark Networks and Insight Direct, alleging that each company used Google AdWords to misdirect users away from lovecity.com.

According to the lawsuit, when a user searched for "lovecity" or "lovecity.com" on Google, the Web sites of the defendants appeared in paid advertising on the first results page returned. (a search for those same terms now reveals a Polish dating site, a porn site and a site offering a work from home program.)

The case was dismissed with prejudice, which suggests that Yahoo and JP Enterprises came to some kind of settlement. Neither Yahoo's nor JP Enterprises' attorneys responded to requests for comment.

So I asked EFF attorney Corynne McSherry about this ruling. She said the court's task with this lawsuit was to judge whether the defendants' keyword buys used trademarks in commerce, which is illegal and can confuse the lay user.

McSherry said the courts have issued conflicting rulings on the issue this year. In October, a Minnesota court ruled in favor of TheMLSonline.com, a home search Web site, which had been sued by Edina Realty for trademark infringement in keyword advertising. But 10 days later, a New York court ruled in a separate case that trademark use in keyword advertising was not legal. McSherry suggested that what's needed to settle the issue, at least temporarily, is an appellate court ruling.

Google itself has been sued this year in foreign countries for allowing infringing trademark use in AdWords. In France, Google was sued successfully by Louis Vuitton, which argued that competitors buying another's trademark as a keyword are abusing that trademark and Google, as the publisher of the information, is liable for that infringment.