April 16, 2012
Fourth Circuit Court of Appeals Reverses Summary Judgment for Google in Rosetta Stone’s AdWordsLawsuit
For Trademark lawyers and brand owners, Google’s AdWords program has engendered no small amount of debate. Many companies have tried, unsuccessfully, to hold Google liable for keyword advertising triggered when a brand-owner’s competitor buys keyword advertisements under the AdWords program by purchasing the brand-owner’s trademarks as keywords. Rosetta Stone’s lawsuit is no different.
However, what is different this time is that Google will have to defend at trial its program of selling companies’ well-known trademarks to the highest bidder. In the widely watched ruling, the Court reinstated most of Rosetta Stone’s claims relating to infringement and dilution.
On the claim of direct trademark infringement, the Court found that there was evidence in the record to create a question of fact as to whether “a reasonable trier of fact could find that Google intended to cause confusion in that it acted with the knowledge that confusion was very likely to result.” Google’s own internal studies suggested that it was likely confusion would result from the use of third-party trademarks.
On the claim of contributory infringement, the appeals court stated that the district court had improperly shifted the burden from Google to Rosetta Stone on the issue of whether Google allowed known infringers and counterfeiters to bid on Rosetta Stone’s trademarks as keywords
On the claim of trademark dilution, the appellate court reversed the district courts approval of Google’s “fair use” defense finding that the district court had not addressed Google’s good faith, and wrongly placed the burden of proof on Rosetta Stone, when the it was Google that was the party asserting fair use as a defense.
Lastly, the appeals court addressed the functionality doctrine which is the use of a product design considered necessary by the nature of the product itself. Such aspects of the product design are not protectable and others are free to use it. The court of appeals stated “[t]he functionality doctrine simply does not apply in these circumstances,” since Rosetta Stone’s trademarks were not a “functional” feature of its software.
You can read the opinion here.