SAN FRANCISCO (Reuters) - The plaintiff in a long-running trademark infringement lawsuit against Google Inc agreed on Friday to drop its case targeting the Web search advertising leader's core business, according to court filings.

American Blind & Wallpaper Factory Inc., a reseller of window blinds, had charged that Google abuses trademarks by allowing rivals of the company to buy ads that appear when consumers search the Web for information on that business.

The suit, filed in 2003, was scheduled to go to trial in the U.S. District Court for Northern California in November.

The settlement is one of a string of U.S. lawsuits where Google has successfully defended its practice of allowing advertisers to bid for keyword search words, even for trademarked terms. It has lost similar cases in Europe.

"After almost four years of litigation, the American Blinds lawsuit ended today with a stunning victory for Google," wrote Eric Goldman, an assistant professor at Santa Clara University School of Law, in commentary on his widely read legal blog.

In a settlement agreement signed by officials of both companies and dated Friday, August 31, American Blind & Wallpaper Factory Inc and Google Inc agreed to dismiss the federal litigation, with prejudice.

Neither party accepted liability or wrongdoing and the parties will pay their own legal costs. American Blinds stipulated that Google was paying nothing and making no change in policy in order for American Blind to settle the case.

American Blinds agreed not to sue Google "so long as Google does not make a material change in its AdWords trademark policy that adversely affects (American Blinds & Wallpaper Factory." It also agreed not to assist other parties in suing Google.

"Google has not made and has not agreed to make any payment to (American Blinds & Wallpaper) of any kind whatsoever, whether in cash, credit or otherwise, and that Google has not agreed to change its trademark policies or any exception to how it applies its trademark policies," the agreement said.

Google declared victory.

"From the start, we've said that American Blind & Wallpaper Factory's claims were baseless, and that Google's trademark policies are perfectly reasonable and lawful," Michael Kwun, Google's managing counsel for litigation said in a statement.

(Reporting by Eric Auchard in San Francisco)
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