Direct Infringement

Abstract

Fourth Circuit issued a highly anticipated ruling on the legality of the use of others' trademarks in Google's keyword ad/sponsored links program, AdWords. The case is The court reversed most of a 2010 ruling by the U.S. District Court for the Eastern District of Virginia, vacating an order granting summary judgment in Google's favor on all claims and reinstating language software maker Rosetta Stone's direct and contributory trademark infringement claims and dilution claim.[1] The case is important because it indicates that there are circumstances in which search engines may conceivably be held liable for facilitating trademark infringement committed by others through their keyword advertising programs and, importantly, that the search engines' own use (sale) of others' trademarks as keywords may render them liable for direct infringement. This could renew interest in search engines as potential targets for enforcement actions. The decision also implicitly acknowledges that keyword advertising programs are being used by some advertisers for deceptive purposes, including trademark infringement and counterfeiting. Finally, the decision corrects several errors of law committed by the lower court. Overall, it is a favorable decision for trademark owners. Rosetta Stone sued Google in 2009, claiming that the search giant committed direct and contributory trademark infringement and trademark dilution, and was unjustly enriched, by allowing purveyors of counterfeit Rosetta Stone software to purchase Rosetta Stone's trademarks as keyword search terms. This resulted in " sponsored links " ads being displayed alongside Google's organic search results. Links in the ads led unsuspecting consumers to websites which sold the counterfeit software. Although the district court had granted summary judgment on all counts, the Fourth Circuit found that a reasonable fact finder could determine that the use of Rosetta Stone's mark by Google and its advertisers is likely to cause confusion (trademark infringement) or dilution (a diminishing of the distinctiveness of a famous mark). The Fourth Circuit cited Rosetta Stone's survey and anecdotal evidence of actual confusion, including the deposition testimony of five customers who attempted to buy a "Rosetta Stone" software package from a site linked to a sponsored keyword ad but ended up receiving counterfeit software instead. The district court had found the testimony unavailing because the number of affected consumers was de minimus, and because they knew they were not purchasing the software directly from Rosetta Stone.