No, Google Goggles does nothing like this. Google Goggles (and Google search-by-image) is, from the experiments I've done, instance-based image retrieval. That is, it can match objects with exactly the same shape (given a picture of the Eiffel Tower, it will return other images of the Eiffel Tower). However, given a drawing, even a good one, the contour shapes won't match quite well enough, and the algorithm will return garbage. The same can be said for 'deformable objects' like dogs and people.
In fact, I'm quite sure that nothing like this exists. I'm not sure about the actual search engine part of all this, but I did see a talk last fall by one of the researchers who worked on ShadowDraw
, which I'm reasonably sure is going to be a component of the final system. The real problem that *they* had to solve was the simple fact that the average person is a horrible, HORRIBLE artist. Ask them to draw a rabbit and for 90% of people, it will come out as a blob that might be an animal, but that's about all you can tell. The algorithms they talked about that actually make the system work as well as it does were actually quite impressive--extremely fast contour indexing, contour combination, converting real photos into convincing sketches--it all sounds easy, but I dare you to actually try implementing it.
Now--and let's see what happens to my karma for saying this--I actually kinda think they deserve a patent for this. Not for coming up with the idea of drawing-based search; that idea is obvious. However, making a system that works as well as ShadowDraw is quite an achievement, and more importantly, Microsoft Research would never have released the algorithm to the public unless it could be patent-protected. Patents in this case aren't about protecting Microsoft's innovation; it's about motivating Microsoft to publish for the sake of other innovators.