Fourth Circuit Remands Rosetta Stone Ltd. v. Google Inc. 2010 Ruling

By Virginia Dudley

On April 9, 2012, the U.S. Court of Appeals for the Fourth Circuit revived the trademark infringement case Rosetta Stone Ltd. v. Google Inc., 730 F. Supp. 2d 531 (E.D. Va. 2010). The Fourth Circuit overturned the summary judgment granted in favor of Google by the U.S. District Court for the Eastern District of Virginia.

The Rosetta Stone case stemmed from Google’s sale of marks as AdWords. Adwords are Google’s online advertizing tool that allows a sponsor to “purchase” keywords that prompt the appearance of the sponsor’s advertisement when the keyword is entered as a search item. Rosetta Stone, a language-learning software company, was established in 1992 and began advertizing in connection with Google’s website in 2002.

Rosetta Stone initially accused Google of trademark infringement as a result of the website’s use of their mark in AdWords. In terms of this appeal, the Fourth Circuit re-addressed the possible elements of confusion, application of the functionality doctrine, dilution claims, and Google’s knowledge of infringement formerly discussed in favor of Google by the district court.

In August 2010, the district court rejected Rosetta Stone’s claim of an element of confusion caused by Google’s use of their mark by considering 3 out of 9 “likelihood-of-confusion” factors: (1) Google’s intent, (2) actual confusion, and (3) sophistication of the consuming public. The district court dismissed confusion claims against Google by ruling that Google did not intend to create confusion and that high consumer sophistication could be determined based on the nature and price of the product alone.

Conversely, the Fourth Circuit called for greater proper analysis of possible evidence of confusion and found a genuine issue of fact in terms of the previously discussed three factors of confusion. In particular, the Fourth Circuit reasoned that Google’s shifting trademark policies from the year 2004 on, as well as Rosetta Stone’s evidence of 123 complaints from those who had purchased knockoff software believing it to be legitimate, could reveal that Google had an intent to confuse. Also, the presence of confusion was further suggested by the difficulty Google’s own witnesses experienced in distinguishing between authentic and counterfeited Rosetta Stone advertisements on the search engine’s site.

Secondly, the district court held that the use of Rosetta Stone marks as keywords was protected by the functionality doctrine. The court found that Google’s use of Rosetta Stone’s trademarks as keywords was functional in that the keywords have “an essential indexing function because they enable Google to readily identify in its databases relevant information in response to a web user’s query.”[1] Trademark law’s functionality doctrine states, “a product feature is functional if it is essential to the use or purpose of the article or if it affects the cost or quality of the article.” The district court claimed that Google’s AdWords were also protected under the Lanham Act, which states that a party cannot receive exclusive rights over solely functional features. 15 U.S.C. § 1114(a).

This past April, the Fourth Circuit stated that the district court did not consider whether the mark was functional in the way Rosetta Stone used the mark. Instead, the appellate court affirmed that the District Court focused solely on how Rosetta Stone’s mark made Google’s product more useful. The Fourth Circuit asserted that the functionality doctrine had been incorrectly applied to the case. In general, the Fourth Circuit emphasized that the words “Rosetta Stone” are not necessary to the function of the language-learning software, thus establishing the mark’s non-functional nature.

As for dilution claims against Google, the district court denied the presence of dilution in Google’s use of the mark. The district court also applied the fair use argument, which is present in the federal statute dealing with dilution 15 U.S.C. §1125 (c) (3) (a). The district court confirmed that Google did not use Rosetta Stone’s mark to identify its services. Moreover, the possibility of dilution of the mark was also disregarded by the district court as a result of the increase in public awareness of Rosetta Stone’s mark following its appearance in Google’s AdWords.

The Fourth Circuit, on the other hand, found evidence of dilution and stated that the notion of good faith arises in regards to the fair use inquiry mentioned by the district court.

Lastly, the Fourth Circuit addressed the extent of Google’s knowledge of infringement. In 2010, the district court referenced the Second Circuit ruling in Tiffany v. eBay 600 F.3d 93 (2d Cir. 2010)to claim that generalized knowledge of infringement makes Google less liable. The district court also ruled that Google would not be liable unless Rosetta Stone could provide concrete evidence that the search engine was aware that an act of infringement was occurring.

However, the Fourth Circuit held that the district court’s decision was gathered in an inappropriate and untimely manner. As with many of the other aspects addressed in this case, the appellate court supported Rosetta Stone and called for further analysis on Google’s knowledge of infringement in its use of the words “Rosetta Stone.”

Such recall of a former trademark infringement case also occurred on April 5, 2012 when the U.S. Court of Appeals for the Second Circuit heard Viacom International Inc. v. YouTube Inc., No. 10-3270 (2d Cir. April 5, 2012). Similar to Rosetta Stone Ltd. v. Google Inc., the Appellate Court pushed for greater analysis of trademark infringement claims against Google because they found the trial court to have been too swift in their decision making.

In sum, in focusing on the factors of confusion, mark functionality, dilution, and Google’s knowledge, the Fourth Circuit remanded the summary judgment granted by the U.S. District Court for the Eastern District of Virginia in favor of Google. [1]

[1] Rosetta Stone Ltd. v. Google Inc. Court of Appeals, Fourth Circuit 2012. available at http://scholar.google.com/scholar_case?case=11203645518793090722&q=rosetta+stone+v.+google&hl=en&as_sdt=2,9&as_vis=1

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