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Rosetta Stone’s Keyword Advertising Claims Against Google Given New Life

In a much anticipated decision, the Fourth Circuit has revived Rosetta Stone’s trademark infringement claims against Google.  Rosetta Stone Ltd. v. Google Inc., No. 10-2007 (4th Cir. Apr. 9, 2012)  The claims are based on Google’s AdWords program, commonly referred to as “keyword advertising.”  The AdWords program allows advertisers to bid on certain “keywords.”  When a user searches for those keywords, links to the advertisers’ websites appear in the non-organic or “Ads” section of the search results.

Rosetta Stone asserted trademark infringement claims alleging Google’s AdWords program enabled and encouraged counterfeiters to purchase the “ROSETTA STONE” mark as a keyword.  Rosetta Stone claims it advised Google of more than 200 instances of keyword advertising for websites offering counterfeit Rosetta Stone products.  Further, Google allegedly allowed such sites to continue to use “ROSETTA STONE” as a keyword despite being notified of the counterfeiting.

The trial court awarded Google a complete victory, reasoning that, “[N]o reasonable trier of fact could find that Google’s practice of auctioning Rosetta Stone’s trademarks as keyword triggers to third party advertisers creates a likelihood of confusion as to the source and origin of Rosetta Stone’s products[.]”

The Fourth Circuit disagreed and revived Rosetta Stone’s infringement claims.  While the opinion failed to break new legal ground, it is noteworthy for the Court’s reliance on and characterization of certain facts universal to Google’s AdWords program.  Specifically, the Court determined that Rosetta Stone had created a genuine issue of material fact on the issue of “likelihood of confusion” based in large measure on: 1) Google’s changes to its formal trademark policy; and 2) Google’s internal studies acknowledging such changes created a risk of consumer confusion.

By way of background, prior to 2004 Google’s policy precluded both the use of trademarks in the text of an advertisement and the use of trademarks as keywords upon request of the trademark owner.  Google loosened its policy in 2004 to allow the use of third-party trademarks as keywords even over the objection of the trademark owner.  Google continued to block the use of trademarks in the actual advertisement text at the request of a trademark owner.  Google’s reason for allowing trademarks as keywords over the trademark owner’s objection was financial. Specifically, Google’s research showed that “[a]bout 7% [of its] total revenue [was] driven by [trademark]ed keywords.” Read the rest of this entry

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