Google has faced criticism for its decision to open up bidding on trademarked names on its pay-per-click advertising service and is involved in legal dispute with several firms, including the owners of fashion brand Louis Vuitton.

The complaint levelled by LVMH is that other advertisers are able to exploit trademarked Louis Vuitton trademarked terms when they are offering imitation or unrelated competitor products.

However, Advocate General Poiares Maduro, who is adviser to the European Court of Justice believes that “Google has not infringed trade mark rights by allowing advertisers to buy keywords corresponding to registered trade marks.”

Under the threat of possible legal action, many companies have chosen not to bid on trademarked brands, even though Google has chosen to allow the practice.

“Just because Google’s AdWords policy allows this kind of advertising, it doesn’t make it legal,” comments Interflora’s official blog.

Interflora is currently sueing Marks and Spencer for breach of trademark law after the retailer started to bid on the advertising keyword “interflora” rather than generic flower-related terms. The company settled its case with Flowers Direct Online in March 2009 on the proviso that they stop bidding on the term.

Although Google’s open policy on trademarks looks set to be extremely lucrative for the online search advertisers, the fate of customers taking advantage of the service remains unclear.

In a stance which will give Louis Vuitton’s competitors hope, Maduro explains there is a distinction between using the trademarked keywords to advertise products and using them on a search engine to navigate to them.

“When selecting keywords, there is thus no product or service sold to the general public. Such a use cannot therefore be considered as being a use made in relation to goods or services covered by the trade marks,” said Maduro.

Promised to be faster, more accurate and more comprehensive than previous incarnations of Google’s index (or those of its competitors), Caffeine has been given an initial sandbox release to let power users try the update before its full roll-out.

Although Google is hailing the Caffeine update as a pretty radical improvement, it says that as the user interface will be staying the same, most regular users will not notice the difference.

“Right now, we only want feedback on the differences between Google’s current search results and our new system,” said Google engineers on a company blog posting.

Despite rumours that the update is a response to Microsoft’s recently launched Bing search engine, Google insist the new architecture has been in the pipeline for some time and is the result of an extended development period.

“I love competition in search and want lots of it, but this change has been in the works for months,” commented Matt Cutts, Google’s Head of Webspam.

Google is well-known for its fast-paced development and busy release schedule; the main search algorithms are being constantly refined and adapted. Recently, major changes such as how the engine treats PageRank have gone unnoticed by the search community for months.

The Caffeine update is indicative of how highly Google rates the important of new web content; it has already made efforts to introduce more Twitter updates into its search results and Caffeine should see more “real-time” stories being quickly indexed.

“Caffeine now picks up news stories and puts fresher content higher up the search results,” explained Alex Watson of Custom PC magazine.

- At the time of writing the Caffeine sandbox is offline for database maintenance.

Google Chrome OS, which is scheduled for release by late 2010, will be direct competition for Microsoft’s new operating system, Windows 7.

The move is being seen in the technology industry as an aggressive challenge to Microsoft’s long-standing dominance of the OS market.

“This announcement is huge,” commented Rob Enderle from industry analysts Enderle Group. “[This] is the first real attempt by anyone to go after Microsoft”

Google’s Chrome OS, which follows the Chrome internet browser released in late 2008 (now accounting for approximately 2% of the worldwide browser market), will be based on the open source Linux kernel. This means it will be essentially free, with possible payment for add-ons like enterprise support.

Google claim that the key aspects of Chrome OS will be “speed, simplicity and security” and that the browser will do away with unnecessary features.

“We’re designing the OS to be fast and lightweight, to start up and get you on to the web in a few seconds,” said the company’s official blog post.

Web integration appears key to Google’s masterplan, with the ultimate aim being that users will run their applications online and dispense with the need to store software on computer hard drives; replacing MS Outlook with the web-based gMail service and MS Office (inc. Word, Excel etc) with Google Docs.

As Microsoft’s core business is built on its Windows OS and applications, this may well sound like their worst nightmare and a massive threat to its market share. Although other solutions have tried to muscle in lately, such as Apple and the free Linux OS, none have had the potent combination of Google’s strong branding and a free offering.

However, Microsoft do have a strong position in the market which could prove hard to dent; their Internet Explorer software is still the most popular browser despite countless security exploits and other assorted complaints.

In addition, Windows 7, which is also billed as a much faster and more lightweight OS in comparison to the widely panned Vista, will have a full year to illustrate to everyone that they don’t need a new OS and that sticking with Microsoft is the better option.

If all else fails, there remains the possibility that Microsoft will be able to take their case to their old friends the European Competition Commision and fight Google’s continuing expansion on a legal front.