Louis Vuitton sued Google last year over the use of its trade marks as search terms in the AdWords service, which allows advertisers to sponsor particular search terms so that, whenever that term is searched for, the advertiser's link will appear next to the search results.
Google was also charged with unfair competition and misleading advertising.
On Friday the High Court in Paris ruled in favour of the luxury goods maker, and awarded damages and an injunction against Google.
"It was absolutely unthinkable that a company like Google be authorised, in the scope of its advertising business, to sell the Louis Vuitton trade mark to third parties, specifically to web sites selling counterfeits," a company representative told CNET News.com in an e-mail statement.
"We're studying the ruling," Google France spokeswoman Myriam Boublil told the Associated Press. "No decision's been taken yet on an appeal."
According to the Associated Press, the ruling affects all Google sites, and not simply the company's French subsidiary. Its effect is therefore more widespread than that incurred by Google under another French ruling, made last month by a regional court.
In that case Google France was ordered to withdraw all sponsored search terms that breached trade marks owned by hotel chain Le Meridien Hotels and Resorts. Google France was also fined €2,000 and ordered to pay a fine of €150 a day until it complied with the ruling.
Both suits are the latest in a string of actions filed against Google in Europe and the US.
They follow another French ruling in October 2003, ordering the search engine to pay damages of €70,000 for allowing advertisers to sponsor the terms "bourse des vols" (flight market) and "bourse des voyages" (travel market), which were registered trade marks of the travel agencies Luteciel and Viaticum.
Google has had more success in defending AdWords in the US.
In December the search engine partially won a trade mark dispute brought by car insurance firm GEICO, when the US District Court judge found that there was no evidence that using trade marks as sponsored search terms caused confusion in the mind of internet users.