[stextbox id="alert"]This is a summary and analysis of the recent (August 2, 2010) decision in Rosetta Stone Ltd. v. Google Inc., 2010 WL 3063152 (E.D. Va.). The case has been added to Jane Coleman‘s highly-praised online treatise Secondary Trademark Infringement; availability of the full 2010 update will be announced shortly. Below is an adaptation of the integration of Rosetta Stone into the treatise text.[/stextbox]
When courts consider search engine company liability for trademark infringement, whether direct or indirect, they typically focus on the sale of “trademarked” keywords, or search terms, to third parties for use in advertising and directing internet traffic to websites that compete with the trademark owner, as recently demonstrated in Rescuecom v. Google. If such use were itself infringing, contributory liability could arise out of the search engine company’s role in selling the infringing keywords to third parties.
THE Rosetta Stone
There’s another way, however, in which contributory liability under Inwood could extend to a search engine company—or at least, so it has been argued: If the company knowingly continued to supply its services to an infringing third party. This was the basis for liability urged unsuccessfully by Tiffany in its suit against eBay. In the recent decision in Rosetta Stone Ltd. v. Google Inc., the court drew extensive comparisons between the two cases in reaching its decision.
In Rosetta Stone, the plaintiff language-learning company argued both theories of liability against the search engine Google, and the court declined to find contributory liability under either approach. It granted summary judgment to Google, though in doing so the court limited its ruling to “advertisers selling counterfeit Rosetta Stone products,” leaving the precedential value of the opinion unclear.
The dispute in Rosetta Stone arose out of Google’s “AdWords Propram,” an “auction-style advertising program that displays advertisements to users of Google’s search engine in the form of Sponsored Links.” With the AdWords Program, advertisers can use Google to cause a Sponsored Link to their website to appear whenever a user searches on Google for certain keywords. Prospective advertisers can select keywords they choose themselves or from a list provided by Google. Lists of keywords provided by Google are “filtered” by Google to remove “trademarked” terms for which Google has received a complaint.
At the time of the litigation, Google’s AdWords policy expressly allowed a given keyword to be used both as a trigger to a Sponsored Link advertisement and as part of the advertisement itself. More fundamentally, Google’s policy permitted not only the brand owner and its authorized licensees, but also other advertisers to include another’s trademark-protected term in their advertisement text under certain, non-infringing conditions. To address fraud and counterfeiting associated with its AdWords Program, Google had created a “Trust and Safety Team.” The Trust and Safety Team responded to “notices of counterfeit advertisements on Google’s website and [took] down any advertisements confirmed to violate its AdWords Program.”
Notwithstanding Google’s internal policing, Rosetta Stone asserted that some advertisers were able to beat the system and create Sponsored Links that “deceive[d] and misdirect[ted] Google’s users to websites that [sold] counterfeit Rosetta Stone products or suggest[ed] to consumers a connection to Rosetta Stone that [did] not exist.” It therefore sued Google, alleging, in addition to direct infringement, both contributory and vicarious trademark infringement.
In support of the contributory liability claim, Rosetta Stone argued the two theories of infringement outlined above, tracking the two-prong test under Inwood. Thus, as to intentional inducement, Rosetta Stone contended that Google’s practice of including brand names as suggested keywords “directly induce[d] advertisers to infringe on Rosetta Stone’s marks.”
Secondly, Rosetta Stone argued that “by allowing counterfeiters to open AdWords accounts and bid on Rosetta Stone Marks, despite receiving notice of their counterfeit status, Google [was] supplying a service to those it [knew] or ha[d] reason to know [were] engaging in trademark infringement.” To demonstrate Google’s knowledge of ongoing infringement, Rosetta Stone pointed to an admission by Google in its Registration Statement filed with the Securities and Exchange Commission acknowledging that as a result of its policy allowing the purchase of trademark-protected keywords, it could be subject to more trademark infringement lawsuits. It pointed furthermore to “approximately 200 instances of Sponsored Links advertising counterfeit Rosetta Stone products[,]” and asserted that even after being notified about the counterfeit websites involved, “Google continued to allow Sponsored Links for other websites by these same advertisers to use the Rosetta Stone Marks as keyword triggers and in the text of their Sponsored Link advertisements.”
While recognizing, per Tiffany v. eBay, that further the application of Inwood liability beyond manufacturers and distributors can extend to service providers who “exercise sufficient control over the infringing product,” the court nonetheless rejected both of Rosetta Stone’s theories of recovery against Google. Read More…