Intellectual Property Attorney

Rosetta Stone And Google Reach A Settlement: Liability For Keyword Advertising Remains “Unsettled”

After three long years of litigation, Rosetta Stone has withdrawn its trademark infringement claim against Google. Rosetta Stone had alleged that Google infringes on Rosetta Stone’s trademarks by selling the ability to link to those trademarks during an online word search to Rosetta Stone’s competitors through Google’s keyword advertising program. By settling the lawsuit, Google once again avoids a trial on the merits in a keyword advertising case.

When an internet user types a search term into a search engine, such as Google or Bing, the search engine website displays a list of websites relevant to that search term. The relevancy of the search results is wholly determined by the search engine’s internal algorithm. To support this free service, some search engines also sell the right to have a company’s advertising linked to certain search terms or “keywords” (for example, Google’s AdWords program). When a user conducts a search that contains a particular keyword, the search engine site displays ads, consisting of a limited amount of text and a link to the advertiser’s website, within a designated section located alongside or directly above the objective search results. Google’s Sponsored Links is a prime example. The revenues generated from the increase in traffic can easily outstrip the costs of purchasing the keywords, provided an advertiser chooses the right keywords.

Advertisers can bid on and purchase the right to have their advertising linked to virtually any keyword, including registered trademarks. In addition, some search engines will actually suggest keywords, including those consisting of a competitor’s trademark, to an interested advertiser. Google offers this service through its Keyword Suggestion Tool. By purchasing the right to have their advertisement linked to a competitor’s trademark as a keyword, the advertiser ensures that its sponsored link is displayed whenever a user conducts a search using the competitor’s mark. Understandably, the advertiser’s competitors may not like the fact that their marks are being used to trigger the display of a competitor’s ad and sponsored link, particularly when the competitor’s ad and link are displayed in a more prominent place on the search results page than their own link is displayed.

Some search engines have policies in place to allow trademark owners to block competitors from buying keywords incorporating the owners’ trademark. However, Google’s current policy is to block only the use of another’s trademark in the text of an advertisement (except in certain cases not relevant to this discussion). Google continues to permit advertisers to purchase the right to have their ads linked to a competitor’s trademark as the keyword that triggers those ads.

Not surprisingly, this practice of selling trademarks as keywords has resulted in a significant amount of litigation over the past eight years. Google’s typical argument has been that neither the suggestion nor sale of a trademark term as a keyword for triggering sponsored links constitutes trademark “use” for purposes of a trademark infringement or dilution claim under the Lanham Act. However, this argument has yet to find support in the courts. See, e.g., Government Employees Insurance Co. v. Google, Inc., 330 F.Supp.2d 700 (E.D. Va. 2004) (holding that selling and profiting from the trademarks themselves is sufficient trademark “use” to withstand a motion to dismiss);
American Blind & Wallpaper Factory, Inc. v. Google, Inc., No. 03-cv-05340 (N.D. Cal. Apr. 18, 2007) (denying Google’s motion for summary judgment and holding that Google’s sale of trademark terms constitutes “use” for purposes of the Lanham Act);
American Airlines Inc. v. Google, Inc., 07-cv-487 (N.D. Texas 2007) (denying Google’s motion to dismiss);
Rescuecom Corp. v. Google, Inc., 562 F.3d 123 (2d Cir. 2009)(vacating the District Court’s grant of Google’s motion to dismiss and holding that the recommendation and sale of Rescuecom’s trademark constitutes “use in commerce”). As a result, Google has, thus far, settled every such case that has been brought against it.

Similarly, the settlement in the Rosetta Stone case comes less than seven months after yet another decision adverse to Google. In this case, Google did not dispute that its offering Rosetta Stone’s trademarks to its competitors constituted unauthorized use in commerce. Rather, Google argued that such use was not likely to confuse customers. The District Court agreed, granting Google’s motion for summary judgment. However, on April 9, 2012, the Fourth Circuit reversed the District Court’s decision and remanded the case for further proceedings on Rosetta Stone’s infringement and dilution claims. The recent settlement obviated those proceedings. The case is Rosetta Stone Ltd. v. Google, Inc., 676 F.3d 144 (4th Cir. 2012).

Meanwhile, two keyword advertising cases remain pending against Google, namely, CYBERsitter LLC v. Google, Inc., No. 12-cv-5293 (C.D. Cal. complaint filed June 18, 2012) and
Home Decor Center v. Google, Inc., No. 12-cv-05706 (C.D. Cal. notice of removal filed July 2, 2012). We will continue to watch these cases and will report on their progress.

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