Rosetta Stone Ltd. v. Google Inc.
| Decision Date | 02 August 2010 |
| Docket Number | Case No. 1:09cv736 (GBL/TCB) |
| Citation | 732 F.Supp.2d 628,97 U.S.P.Q.2d 1824 |
| Parties | ROSETTA STONE LTD., Plaintiff, v. GOOGLE INC., Defendant. |
| Court | U.S. District Court — Eastern District of Virginia |
Warren Thomas Allen, II, Skadden Arps Slate Meagher & Flom LLP, Washington, DC, for Plaintiff.
Jonathan David Frieden, Stephen Andrew Cobb, Odin Feldman & Pittleman P.C., Fairfax, VA, for Defendant.
THIS MATTER is before the Court on Defendant Google Inc.'s Motion to Dismiss. (Dkt. No. 94.) This case concerns Plaintiff Rosetta Stone Ltd.'s ("Rosetta Stone") allegations that Defendant Google Inc. ("Google") actively assists 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 text or title of paid advertisements on Google's website. The issue before the Court is whether Rosetta Stone alleges sufficient facts to support a claim for unjust enrichment under Virginia law. The Court grants Google's Motion to Dismiss because (1) the facts set forth in Rosetta Stone's First Amended Complaint fail to plausibly suggest a claim for unjust enrichment under Virginia law and (2) the unjust enrichment claim is barred by the Communications Decency Act ("CDA").
Based in Arlington, Virginia, Plaintiff Rosetta Stone Ltd. ("Rosetta Stone") is in the business of providing technology-based language-learning products and services. (First Am. Compl. ¶¶ 7 & 14.) To preserve its trademark rights, Rosetta Stone has secured federal trademark registration for many of its trademarks and service marks, including: ROSETTA STONE, ROSETTA STONE LANGUAGE & LEARNING SUCCESS, ROSETTASTONE.COM, and ROSETTA WORLD (the "Rosetta Stone Marks"). (First Am. Compl. ¶¶ 15 & 16.)
Defendant Google Inc. ("Google") is an internet company based in Mountain View, California which owns and operates a search engine-a computer program that allows users to search the World Wide Web for particular information. (First Am. Compl. ¶¶ 3 & 8.) Google's search engine is available on its own website as well as other websites that use its search engine. (First Am. Compl. ¶ 3.)
In 2002, Rosetta Stone began participating in one of Google's advertising programs called AdWords Select Advertising Program ("AdWords Program") as an advertiser. (First Am. Compl. ¶ 36.) Advertisers under the AdWords Program pay to have their advertisements ("Sponsored Links") displayed when a web user enters certain words or phrases ("keywords") in Google's search engine. (First Am. Compl. ¶¶ 36 & 37.) Advertisers can select keywords that will trigger the Sponsored Links directing users to the advertisers' chosen website. (First Am. Compl. ¶ 36.) These Sponsored Links appear above or alongside the search page and in a color, typeface, and font size similar to the search results generated from a webuser's query. In addition to triggering Sponsored Links, the keywords may also be published as part of the advertisement itself. (First Am. Compl. ¶¶ 38 & 39.) Consequently, advertisers are able to place their advertising in front of consumers who have identified themselves as interested in certain products or services. (First Am. Compl. ¶ 27.)
For many years, Google prohibited advertisers from purchasing specific trademarks as keyword triggers for Sponsored Link advertisements. (First Am. Compl. ¶ 44.) However, Google revised this policy and began allowing advertisers to purchase specific trademarks as keyword triggers for the Sponsored Links. (First Am. Compl. ¶ 44.) Based on Google's new policy, Rosetta Stone brings this action alleging Google's unauthorized use of the Rosetta Stone Marks. Rosetta Stone alleges that by giving other paid advertisers under Google's advertising programs, including AdWords, the right to use the Rosetta Stone Marks, or words, phrases, or terms similar to those Marks as keyword triggers that cause Sponsored Links to be displayed, Google's search engine is helping other advertisers misdirect web users to websites of companies that (i) compete with Rosetta Stone, (ii) sell language education programs from Rosetta Stone's competitors, (iii) sell counterfeit Rosetta Stone products, or (iv) are entirely unrelated to language education. (First Am. Comp. ¶ 5.)
In its First Amended Complaint, Rosetta Stone specifically alleges seven Counts for relief: I (trademark/service mark infringement under the Lanham Act); II (contributory trademark/service mark infringement under the Lanham Act); III (vicarious trademark/service mark infringement under the Lanham Act); IV (trademark/service mark dilution under the Lanham Act); V (trademark infringement under Virginia Law); VI (unfair competition under Virginia law); and VII (unjust enrichment under Virginia Law). Google now moves to dismiss Count VII of the First Amended Complaint.
A Federal Rule of Civil Procedure 12(b)(6) motion should be granted unless an adequately stated claim is "supported by showing any set of facts consistent with the allegations in the complaint." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 561, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (internal citations omitted); see Fed. R. Civ. P. 12(b)(6). "A pleading that offers labels and conclusions or a formulaic recitation of the elements of a cause of action will not do." Ashcroft v. Iqbal, --- U.S. ----, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009); Twombly, 550 U.S. at 555, 127 S.Ct. 1955. A complaint is also insufficient if it relies upon "naked assertions devoid of further factual enhancement." Iqbal, 129 S.Ct. at 1949 (internal citations omitted).
In order to survive a Rule 12(b)(6) motion to dismiss a complaint must set forth "a claim for relief that is plausible on its face." Id.; Twombly, 550 U.S. at 570, 127 S.Ct. 1955. A claim is facially plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 129 S.Ct. at 1949; Twombly, 550 U.S. at 556, 127 S.Ct. 1955.
In considering a Rule 12(b)(6) motion, the Court must construe the complaint in the light most favorable to the plaintiff, read the complaint as a whole, and take the facts asserted therein as true. Mylan Lab., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir.1993). In addition to the complaint, the court may also examine "documents incorporated into the complaint by reference, and matters of which a court may take judicial notice."Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007). "Conclusory allegations regarding the legal effect of the facts alleged" need not be accepted. Labram v. Havel, 43 F.3d 918, 921 (4th Cir.1995). Because the central purpose of the complaint is to provide the defendant "fair notice of what the plaintiff's claim is and the grounds upon which it rests," the plaintiff's legal allegations must be supported by some factual basis sufficient to allow the defendant to prepare a fair response. Twombly, 550 U.S. at 556 n. 3, 127 S.Ct. 1955.
The Defendant's Motion to Dismiss Count VII is granted because the First Amended Complaint fails to set forth facts to plausibly suggest a claim for unjust enrichment under Virginia law. A claim for unjust enrichment is quasi-contractual in nature and requires a plaintiff to show: (1) it conferred a benefit on the defendant; (2) the defendant knew of the conferring benefit; and (3) the defendant accepted or retained the benefit under circumstances which render it inequitable for the defendant to do so without paying for its value. Herald Schmidt v. Household Finance Corp., 276 Va. 108, 661 S.E.2d 834, 838 (2008) (citation omitted) (affirming circuit court's decision to sustain defendant corporation's demurrer of plaintiff's unjust enrichment claim for failure to state a claim).
As to the first element, Rosetta Stone sufficiently alleges that it conferred a benefit to Google through Google's use of the Rosetta Stone Marks. Specifically, the First Amended Complaint states:
Google uses and sells Rosetta Stone's trademarks as keywords that trigger third-party, paid advertisements on Google search-results web pages without authorization from Rosetta Stone. Through its AdWords program, Google sold, and continues to sell, Rosetta Stone's trademarks to, among others, Rosetta Stone's competitors, resellers and affiliates, and companies illegally selling pirated and counterfeit Rosetta Stone products. Through such unauthorized sales of Rosetta Stone's trademarks, Google has received and continues to receive millions of dollars in revenue annually.
Through the auction of Rosetta Stone's trademarks Google unjustly derived a benefit from Rosetta Stone in the form of higher payments from Rosetta Stone, increased advertising revenue from third parties and other economic benefits....
Rosetta Stone requested that Google not auction its trademarks to third parties, including resellers and affiliates, but Google has refused to alter its trademark policy or practices. Rosetta Stone thus has conferred involuntarily a benefit on Google, which is knowingly using the goodwill established in the Rosetta Stone trademarks to derive additional advertising revenues.
However, Rosetta Stone alleges no facts which show that Google knew of the alleged benefit such that it would pay Rosetta Stone for use of the Rosetta Stone Marks as keywords. Even where a defendant benefited from the plaintiff's services, the plaintiff cannot recover for an unjust enrichment claim unless he can show sufficient additional facts which imply that the defendant promised to pay the plaintiff for the benefit received. See Nedrich v. Jones, 245 Va. 465, 429 S.E.2d 201, 207 (1993) (citing Mullins v. Mingo Lime & Lumber Co., 176...
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