730 F.Supp.2d 531 (E.D.Va. 2010), 1:09cv736 (GBL/TCB), Rosetta Stone Ltd. v. Google, Inc.

Docket Nº:1:09cv736 (GBL/TCB).
Citation:730 F.Supp.2d 531
Opinion Judge:GERALD BRUCE LEE, District Judge.
Party Name:ROSETTA STONE LTD., Plaintiff, v. GOOGLE INC., Defendant.
Attorney:Warren Thomas Allen, II, Skadden Arps Slate Meagher & Flom LLP, Washington, DC, for Plaintiff. Jonathan David Frieden, Stephen Andrew Cobb, Odin Feldman & Pittleman PC, Fairfax, VA, for Defendant.
Case Date:August 03, 2010
Court:United States District Courts, 4th Circuit, Eastern District of Virginia
 
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730 F.Supp.2d 531 (E.D.Va. 2010)

ROSETTA STONE LTD., Plaintiff,

v.

GOOGLE INC., Defendant.

No. 1:09cv736 (GBL/TCB).

United States District Court, E.D. Virginia, Alexandria Division.

August 3, 2010

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Warren Thomas Allen, II, Skadden Arps Slate Meagher & Flom LLP, Washington, DC, for Plaintiff.

Jonathan David Frieden, Stephen Andrew Cobb, Odin Feldman & Pittleman PC, Fairfax, VA, for Defendant.

MEMORANDUM OPINION

GERALD BRUCE LEE, District Judge.

THIS MATTER is before the Court on Plaintiff's Motion for Partial Summary Judgment as to Liability (Dkt. No. 103) and Defendant's Motion for Summary Judgment (Dkt. No. 112). This case concerns Plaintiff Rosetta Stone Ltd.'s (" Rosetta Stone" ) allegations that Defendant Google Inc. (" Google" ) is actively assisting third party advertisers to mislead consumers and misappropriate Rosetta Stone's trademarks by using the trademarks (1) as keyword triggers for paid advertisements and (2) within the title and text of paid advertisements on Google's website. There are five issues before the Court. The first issue is whether Google's practice of auctioning Rosetta Stone's trademarks to third party advertisers for use in their Sponsored Link titles and advertisement text creates a likelihood of confusion to warrant granting summary judgment in favor of Rosetta Stone as to Counts I (trademark/service mark infringement under the Lanham Act), V (trademark infringement under Virginia Law), and VI (unfair competition under Virginia law). Notwithstanding a finding of likelihood of confusion, the second issue is whether Google's use of Rosetta Stone's trademarks as keyword triggers under its advertising program is functional and, therefore, a non-infringing use. The third issue is whether Google intentionally induces third party advertisers to bid on Rosetta Stone's trademarks or knowingly continues to permit advertisers selling counterfeit Rosetta Stone products to use the trademarks in their Sponsored Link titles and advertisement text, despite Rosetta Stone's reports of infringement, to warrant granting summary judgment in favor of Rosetta Stone as to Count II (contributory trademark/service mark infringement under the Lanham Act). The fourth issue is whether Google exercises joint ownership and control over third party advertisers' Sponsored Link titles and advertisement text on its website to warrant granting summary judgment in favor of Rosetta Stone as to Count III (vicarious trademark

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/service mark infringement under the Lanham Act). The final issue is whether Rosetta Stone sufficiently demonstrates economic loss resulting from a decline in its brand name, which is attributable to Google's practice of auctioning Rosetta Stone's trademarks for profit to third party advertisers, to warrant granting summary judgment in favor of Rosetta Stone as to Count IV (trademark/service mark dilution under the Lanham Act).

The Court grants summary judgment in favor of Google on Counts I, V and VI because no reasonable trier of fact could find that Google's practice of auctioning Rosetta Stone's trademarks as keyword triggers to third party advertisers for use in their Sponsored Link titles and text creates a likelihood of confusion as to the source or origin of Rosetta Stone's goods. Furthermore, because Google uses Rosetta Stone's trademark to identify relevant information to users searching on those trademarks, the use is a functional and non-infringing one. The Court grants summary judgment in favor of Google on Count II because no reasonable trier of fact could find that Google intentionally induces or knowingly continues to permit advertisers selling counterfeit Rosetta Stone products to use the trademarks in their Sponsored Link titles and advertisement text. The Court also grants summary judgment in favor of Google on Count III because no reasonable trier of fact could find that Google exercises joint ownership and control over third party advertisers' Sponsored Links titles and text. Neither Google's employees nor its Query Suggestion Tool directs or influences third party advertisers to bid on Rosetta Stone's trademarks when they subscribe to Google's advertising program. Finally, the Court grants summary judgment in favor of Google on Count IV because there is no genuine dispute of material fact that Rosetta Stone's brand awareness has only increased since Google changed its trademark policy to permit the use of trademarked terms as keyword triggers and as words within Sponsored Link titles and advertisement text.

I. BACKGROUND

A. Plaintiff Rosetta Stone Ltd. and the Rosetta Stone Marks

Rosetta Stone is a Virginia-based corporation founded in 1992 that provides technology-based language learning products and services. (Pl.'s Mem. Supp. Partial Summ. J. 1-2.) As the foremost language education company in the United States, Rosetta Stone's language learning products are available in over thirty languages and are used by schools, corporations, government entities and millions of individuals in over 150 countries. (Adams Decl. ¶ ¶ 10-11.) To preserve its trademark rights, Rosetta Stone obtained federal trademark registration for some of its marks, including: ROSETTA STONE, ROSETTA STONE LANGUAGE LEARNING SUCCESS, ROSETTASTONE.COM, and ROSETTA WORLD (the " Rosetta Stone Marks" ). (Eichmann Decl. ¶ 2; May Decl. ¶ ¶ 2-7, Exs. 1-6.) These Marks have become distinctive and uniquely associated with Rosetta Stone. (Pl.'s Mem. Supp. Summ. J. 3-4.)

In order to build the fame, reputation, and goodwill of its Marks, Rosetta Stone advertises through a variety of media, including television, radio, newspapers, magazines, direct mail, and telephone directories. (Eichmann Decl. ¶ ¶ 3-6, Exs. 1-3.) It conducts a substantial amount of its business over the Internet using many web-based services, including those offered by Google, and makes a sizeable investment in the development of its online business. (Eichmann Decl. ¶ 6, Exs. 1-3.) Along with promoting its products and services

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via its own website ( www. rosettastone. com ), Rosetta Stone advertises on the websites of third parties. It authorizes resellers such as Amazon.com, Barnes & Noble, and Borders, to sell authentic Rosetta Stone products. (Caruso Decl. Ex. 72 at 147:9-148:18, Ex. 58 at 96:12-98:10.) Specifically, it entered into agreements with Amazon.com and eBay that allow them to use the Rosetta Stone Marks in connection with advertising. (Caruso Decl. Exs. 40-44.)

B. Defendant Google Inc. and Google's Search Engine

Located in Mountain View, California, Google is an Internet company that owns and operates one of the world's most utilized internet search engines, www. google. com. (Spaziano Decl. Ex. 1 (Ans. ¶ 3).) The Internet is a global network of millions of interconnected computers and the World Wide Web is an application running on the Internet that allows for the display of text, images, and sound. (First Am. Compl. ¶ 13.) Much of the information on the World Wide Web is stored in the form of web pages that can be assessed through a computer connected to the Internet (available through commercial Internet service providers or " ISPs" ) and viewed using a computer program called a " browser," such as Microsoft Internet Explorer. A web page is identified by its own unique Uniform Resource Locator (" URL" ) or " web address" ( e.g., http:// www. rosettastone. com ), which ordinarily includes the website's " domain name" ( e.g., www. rosettastone. com ). (First Am. Compl. ¶ 13.)

Web users searching for a specific company product, service or piece of information, but who do not know the exact domain name or website address where it may be found, may use Google's search engine to locate it. (First Am. Compl. ¶ 25.) A search engine is a computer program that allows web users to search the World Wide Web for websites containing particular content. (First Am. Compl. ¶ 3.) A search engine checks the terms entered into it against its databases and applies a formula or algorithm to produce a search results page that lists the websites that may relate to the user's search terms and their corresponding links. (First Am. Compl. ¶ 25.) To use Google's search engine, a web user need only type in a few words and hit the " enter" key (or click the " Google Search" button) to receive a list of hyperlinks (" links" ) to web pages that Google identifies as relevant to the search requested. (First Am. Compl. ¶ 4.) The search results generated by Google's search engine are determined by a " natural" or " organic" system that lists results in order of objective relevance to the search terms input into the search engine, with the most relevant websites appearing near the top of the web page. (First Am. Compl. ¶ 26.)

Google's search engine is available not only on its own website but also through other popular websites such as America Online, Netscape, EarthLink, CompuServe, Shopping.com, AT & T WorldNet, and Ask.com. (First Am. Compl. ¶ 34.) In addition, Google invites consumers to affix a " Google Toolbar" at the top of their Internet browsers that allows these users to conduct Google searches even when they are not currently visiting www. google. com. (First Am. Compl. ¶ 34.) As such, Google's content network reaches 80% of global internet users, and over 70% of U.S. Internet searches use Google's search engine. (First Am. Compl. ¶ 35.)

When a web user hits the " enter" key, Google not only provides web users with organic search results, it also displays paid advertisements above or alongside the organic search results. (Caruso Decl. Ex. 59

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at 202:1-9 & 205:20-206:25, Ex. 76 at 175:22-177:16, Ex. 64 at 112:16-113:1.) These paid...

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