Rosetta Stone LTD v. Google Inc.

Filing 123

Declaration of Cheryl A. Galvin re 131 Memorandum in Support (portions filed under seal) by Google Inc.. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 7)(Frieden, Jonathan) Modified text on 3/29/2010 (clar, ). Modified text on 3/30/2010 re Received under seal copy in black binder on 3/29/10 (UNDER SEAL) (klau, ).

EXHIBIT 1

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IN THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF VIRGINIA
Alexandria Division
ROSETTA STONE LTD,
Plaintiff,
VS.
GOOGLE, INC.,
Defendant.

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Civil No. 09-736
September 18, 2009

REPORTER'S TRANSCRIPT
MOTIONS HEARING

BEFORE:

THE HONORABLE GERALD BRUCE LEE
UNITED STATES DISTRICT JUDGE

APPEARANCES:
FOR THE PLAINTIFF: GIBSON DUNN & CRUTCHER, LLP
BY: TERENCE P. ROSS, ESQ.
FOR THE DEFENDANT: ODIN FELDMAN & PITTLEMAN, PC
BY: JONATHAN DAVID FRIEDEN, ESQ.
QUINN EMANUEL URQUHART OLIVER & HEDGES
BY: MARGRET MARY CARUSO, ESQ.
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OFFICIAL COURT REPORTER: RENECIA A. SMITH-WILSON,RMR,CRR
U.S. District Court
401 Courthouse Square, 5th Floor
Alexandria, VA 22314

RENECIA A. SMITH-WILSON, RMR, CRR

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INDEX
ARGUMENT BY THE DEFENDANT

3,

ARGUMENT BY THE PLAINTIFF

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RULING BY THE COURT

21

25

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RENECIA A. SMITH-WILSON, RMR, CRR

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(Thereupon, the following was heard in open
court at 12:32 p.m.)
THE CLERK:

1:09 civil 736, Rosetta Stone,

LTD versus Google, Incorporated.
MR. ROSS:

Good morning, Your Honor.

Terrance Ross for the plaintiff, Rosetta Stone, Limited.

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THE COURT:

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MR. FRIEDEN:

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10
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It's my pleasure to introduce Margret Caruso
who is admitted pro hac vice in this action.
THE COURT:

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MS. CARUSO:

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THE COURT:

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MS. CARUSO:

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Good morning, Your Honor.

John Frieden for the defendant, Google.

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Good morning, Mr. Ross.

Good afternoon.
Good afternoon.
I'm ready.
Good afternoon, Your Honor.

Margret Caruso for the defendant, Google, Inc.
We're here on Google's motion to dismiss

18

Rosetta Stone's complaint.

19

motion is the party forum selection clause.

20

The primary basis for the

This forum selection clause is very plain

21

language, and it requires that all claims relating to

22

Google's programs, defined as Google's advertising

23

programs, "be litigated exclusively in the federal or

24

state courts of Santa Clara County, California, USA".

25

Unlike the earlier forum selection clause,

RENECIA A. SMITH-WILSON, RMR, CRR

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there is no mention here in the clause between exclusively

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and the federal state courts.

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It applies to all claims relating to Google programs.

4

It's simply right there.

And the plaintiff, Rosetta Stone, has not

5

contested that its complaint relates to Google's

6

advertising programs.

7

What they've tried to do, instead, is a --

8

those words or the Google programs don't have meaning.

9

They don't add anything at all to the forum selection

10

clause.

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agreement of the parties.

12

The forum selection clause simply applies to the

That, of course, as contrary to basic

13

principles of contract interpretation which all words of

14

the contract have meaning and they're not superfluous

15

words, that all the words have to be accredited here.

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the explanation that Rosetta Stone offers does not give

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any meaning to those words.

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THE COURT:

And

So does a conspiracy claim

19

against Google, is that encompassed in the forum selection

20

clause if it involves third party?

21

MS. CARUSO:

Yes, Your Honor, it is because

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the only defendant here is Google.

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based entirely on Google's advertising programs.

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25

And that claim is

All the allegations in the complaint are
directed to actions that are taken in connection with

RENECIA A. SMITH-WILSON, RMR, CRR

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third parties advertising through Google AdWords program.

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THE COURT:

The plaintiff's claim here

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involves trademark infringement.

4

because the trademark infringement asserted has to do with

5

Google's website that that would encompass the forum

6

selection clause?

7

MS. CARUSO:

Is it your view that

Yes, Your Honor, but more

8

particularly every allegation of trademark infringement is

9

based on the Google AdWords program and the operation of

10

Google AdWords program.

11

So because that is -- it's not because the

12

AdWords program is a covered Google program under this

13

clause, yes, it relates to this clause and is covered by

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it.

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THE COURT:

Well, help me with the -- your

16

view of the clause is really straightforward.

17

that -- any lawsuit that a client of Google wants to bring

18

has to be brought in California under the forum selection

19

clause; is that right?

20

MS. CARUSO:

Anything

Any claim that relates to the

21

Google advertising programs that's brought by a customer

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of the Google advertising programs, yes.

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24
25

THE COURT:

And you already said trademark

infringement is encompassed in that.
MS. CARUSO:

Yes, as alleged in Rosetta

RENECIA A. SMITH-WILSON, RMR, CRR

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Stone's complaint.
THE COURT:

Okay.

Well, if you would

address the issue of the false endorsement claim.
MS. CARUSO:

Yes, Your Honor.

This claim as

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under the Lanham Act, and as Rosetta Stone admits in the

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false endorsement claim what matters is whether or not

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there's a perception that the plaintiff endorses the

8

defendant -- the defendant's products.

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And, uniformly, you look at those cases and

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any other false endorsement cases, they're all about

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whether the plaintiff is endorsing the defendant.

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And, Rosetta Stone has not alleged that.

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They've alleged that there is -- the public is under the

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misimpression that Rosetta Stone endorses third parties,

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not the defendant.

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And that's a critical distinction for the

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language of the Lanham Act and all of the cases construing

18

it in false endorsement claims.

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20
21

THE COURT:

Does the Lanham Act require that

the parties be competitors?
MS. CARUSO:

No, Your Honor, not for

22

purposes of a false -- false endorsement claim.

23

in our opening brief, we were not sure exactly what the

24

contours of their allegations were so we addressed all the

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various theories that section of the Lanham Act.

RENECIA A. SMITH-WILSON, RMR, CRR

That --

And

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false advertising claims require competitors, but most --

2

any other claim filing under that section of the Lanham

3

Act does not.

4

THE COURT:

Okay.

And, would the conspiracy

5

claim be barred by the Communications Decency Act because

6

Google is an information content provider?

7

MS. CARUSO:

We believe that Google is not

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an information content provider under the CDA.

9

Google is solely a provider of an interactive computer

10
11

Instead,

service.
Google has been held in numerous cases to be

12

a provider of interactive computer services, and there

13

aren't any cases that hold the kind of activities alleged

14

in Rosetta Stone's complaint constitute activities that

15

give rise to an information content provider.

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THE COURT:

17

MS. CARUSO:

Okay.
If Your Honor would like, I can

18

go through some of the cases that they cited and highlight

19

how different those facts are from the ones we have here.

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THE COURT:

Well, I'm not sure that that's

necessary, and I have received your reply brief.
I've focused on the questions that I want to
ask you at the outset.
Let me hear from Mr. Ross and I'll give you
a chance to respond.

RENECIA A. SMITH-WILSON, RMR, CRR

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MS. CARUSO:

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THE COURT:

Thank you, Your Honor.
I'm sorry.

I should ask you if

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there's something else you felt you wanted to say that you

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weren't given a chance to say right now.

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MS. CARUSO:

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remaining at the end.

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THE COURT:

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MR. ROSS:

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10

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Okay, all right.
Your Honor, I think this is a

fairly straightforward contract interpretation issue as
presented to the Court here.

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12

If there's anything else

THE COURT:

I've been told that many times

today.
MR. ROSS:

Yes.

I couldn't believe when I

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heard the first case.

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That's an incredible coincidence.

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It was a forum selection clause.

THE COURT:

What are the chances that would

happen twice in the same docket.
MR. ROSS:

I understand.

I've practice 20 years and I've

only had a couple of these and now two on the same docket.
Your Honor, the very first rule of contract

21

interpretation, all that's required day one in contracts

22

is that every part, every provision, every clause of the

23

contract has to be given meaning.

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25

You don't read any out.

And the fundamental argument that Google is
making here is you have to ignore the preamble.

RENECIA A. SMITH-WILSON, RMR, CRR

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Now, there's actually a way to do that.

2

I've drafted clauses like that.

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end of the contract and you say all the captions in the

4

foregoing sections and the whereas clauses are not to be

5

used in interpreting contract.

6

You put it towards the

There is no such provision here.

And that's

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a noticeable absence.

8

Court has to interpret this contract to give meaning to

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that second sentence which Ms. Caruso so studiously

10

And without such a provision, this

ignores.

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And that second sentence says, "these terms"

12

and the forum selection clause is one of "these terms

13

govern customer's participation in Google advertising

14

programs".

15

Stone.

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Customer's participation, meaning Rosetta

And so the forum selection clause must be

17

interpreted in light of that second sentence of the

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preamble.

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to mean that claims arising out of the contract or

20

relating to Rosetta Stone's participation in the Google

21

program must be pro --

The forum selection clause must be understood

22

THE COURT:

23

MR. ROSS:

24

THE COURT:

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MR. ROSS:

Where are you reading from?
Your Honor -Is that tab one of your -Do you have the Google

RENECIA A. SMITH-WILSON, RMR, CRR

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advertising contract in front of you?

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3

THE COURT:

I have tab one, the terms and

conditions of AdWords select advertising program.

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MR. ROSS:

If you look at the very opening

5

brief of Google's, Your Honor, there's an affidavit at the

6

back of that brief --

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THE COURT:

8

MR. ROSS:

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THE COURT:

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here.

Okay.

Exhibit A.
I have it.

Hold on.

I have it

I see it.

I see it.

MR. ROSS:

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12

Oh, I see it.

So you see there on that very

second sentence --

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THE COURT:

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MR. ROSS:

Right.
Because fundamentally, what is

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the contract about?

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interpretation is we look to interpret provisions of the

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contract as a whole.

18

The second primary rule of contract

What is this contract about?

Well, the

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second sentence tells us it's about advertising by Rosetta

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on the Google's network.

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section of this contract, it is all about what Rosetta

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Stone does to advertise with Google.

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But if you read every other

It's nothing about third party.

It imposes

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a bunch of requirements on Rosetta Stone for advertising

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with Google.

And so when we get to this forum selection

RENECIA A. SMITH-WILSON, RMR, CRR

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clause at the very end, applying the two fundamental rules

2

of contract interpretation, how -- we got to make sure we

3

give every clause meaning and we look at a contract as a

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whole.

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that have to be sent to Santa Clara County are claims that

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deal with breach of contract, breach of this contract, or

7

that relate to Rosetta Stone's participation, i.e.,

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advertising on Google.

We have no choice but to conclude that the claims

9

Now, Ms. Caruso said well, that would give

10

no meaning to this word, the second part of the forum

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selection clause claims or claims arising out of the

12

program.

13

That's not true.
There could be lot of claims that don't

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involve a breach of contract by Rosetta Stone that would

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have to go out to California.

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I'll give you an example, Your Honor.

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There's nothing in the contract that says you, Rosetta

18

Stone, don't put any viruses on our Google network when

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you advertise with us.

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So if we did, if Rosetta Stone put a virus

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on the Google's network, it could not bring a breach of

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contract claim that would have to go out to California.

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But it could bring a tort claim against us, and that would

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have to go out to California.

25

So the clause she's planning on does have

RENECIA A. SMITH-WILSON, RMR, CRR

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meaning when you use our interpretation which of course is

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limited to Rosetta Stone's participation in this

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advertising.

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And of course, Your Honor, this is drafted

5

by Google, and the uniform rule in all the circuit courts

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is that if a forum selection clause, if there's any doubt

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or uncertainty as to what it should mean or how it should

8

apply, then it's not enforced.

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circuits.

10
11
12

Uniform rule of all the

So that's our argument with respect to forum
selection clause unless you have other questions.
THE COURT:

Well, the claims that are

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brought here don't necessarily turn on the contractual

14

relationship between Google and Rosetta Stone.

15

infringement claims can be brought in any event against

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Google or any others that infringe the trademark.

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MR. ROSS:

Trademark

That's correct, Your Honor.

And

18

you obviously have in mind the case that's not before the

19

Fourth Circuit because we haven't dealt with this, but

20

other circuits said the only time you use these forum

21

selection clause but not on breach of contract cases is

22

when they somehow revolve around this contract or they

23

somehow require interpretation of contract, for example,

24

Manetti case in the Ninth Circuit.

25

Your Honor is absolutely right.

RENECIA A. SMITH-WILSON, RMR, CRR

We -- these

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claims have absolutely nothing to do with our advertising

2

on their system or this contract.

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THE COURT:

You're right.

Well, as it relates to this

4

lawsuit here, the claim of Rosetta Stone is all about what

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appears on the Google ads and the Google website, isn't

6

it?

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MR. ROSS:

8

THE COURT:

9

That's true.

And we --

Doesn't that relate to Google's

advertising program?

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MR. ROSS:

No, Your Honor, because the

11

contract here is dealing exclusively with Rosetta Stone's

12

advertising on that network.

13

We aren't complaining in the underlying

14

lawsuit that we did anything wrong or that we committed

15

trademark violation.

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that, and therefore, it has nothing to do with this

17

contract.

18

We're saying some third party did

In our lawsuit, this contract will never be

19

entered into evidence, talked about, testified to by us or

20

by Google because it's completely irrelevant to those

21

third party trademark suits.

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Stone's advertising of the network.

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THE COURT:

It's limited to Rosetta

But, when you say third party

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trademark suits, what you're really complaining of is the

25

display of an ad for a so-called sponsored link that might

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refer to another corporation or a competitor of Rosetta

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Stone; is that right?

3

MR. ROSS:

Yes, Your Honor.

There are ads

4

that Rosetta Stone has nothing to do with them.

5

being brought -- they are ads by some third party

6

completely unrelated to Rosetta Stone or our contract with

7

Google.

8
9

THE COURT:
before the Court.

They are

Those third parties are not

So, for example, if there is some

10

company called, you know, Language, Inc, that you think is

11

using Rosetta Stone's mark in the similar fashion because

12

they have authorized Google to present an ad for Language,

13

Inc on their website, you have not brought them into this

14

suit, have you?

15

MR. ROSS:

You're absolutely right.

We have

16

not and we are not required to under the Lanham Act.

17

could have brought if we wanted to a direct claim for -- a

18

claim for direct trademark infringement against them.

19

But, why?

20

into something else.

21

We

They would just change their name and morph

The only way to stop this sort of conduct is

22

to bring it against the party that's facilitating and

23

making it possible and that's Google.

24

clearly allows that.

25

moved to dismiss our trademark claims.

No dispute here.

And the Lanham Act
They have not

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THE COURT:

Let's turn to the conspiracy

2

claim and the issue of whether Google is an interactive

3

computer service provider rather than an information

4

content provider under the CDA.

5

MR. ROSS:

Your Honor, there's absolutely no

6

doubt that they're an interactive computer system.

That's

7

only one of the three prongs that they have to fulfill.

8

We're arguing the other two prongs which is

9

that they are an information content provider and this is

10

not Speech Online.

11

Let me deal with Speech Online first.

What's happening -- what their claim

12

fundamentally is -- there are permutations of it.

13

Rosetta Stone, have people out there who are called

14

resellers.

15

authorized to sell our product.

16

put ads on the Google network.

17

You can't use our trademark in that context.

18

We have contracts with them.

But we,

They're

They're not authorized to
The contract says that.

Google is going to them and saying, hey,

19

come put an ad on our network, notwithstanding that

20

contract.

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22
23

THE COURT:

So, induce them to breach their

contract with Rosetta Stone?
MR. ROSS:

They're conspiring, yes.

24

that has nothing to do about online speech.

25

completely offline activity.

RENECIA A. SMITH-WILSON, RMR, CRR

And

That's a

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And the CDA, the immunity for the CDA which

2

is originally passed for AOLs of the world service

3

providers, is all about online speech.

4

this offline conduct.

5

about, and therefore it's not encompassed.

6

It's not about

And that's what that claim is

Now the second argument we make is that they

7

are also considered for purposes of the CDA information

8

content provider.

9

12(b)(6) motion, if you look at paragraph 57 of our

And specifically because it's a

10

complaint we expressly said that they create content.

11

that's the definition of an information content provider

12

under the CDA.

13

THE COURT:

And

They create content by

14

displaying -- creating the writing or the graphics that

15

appears on the sponsored links on their website.

16

MR. ROSS:

Yes, sir.

And they say that

17

they're more like editors of a newspaper.

18

neutral.

19

discretion.

They're

They're just providing some, you know, editorial
And that's not true.

20

If you wanted to advertise on Google, you

21

would have to have the words sponsored link on your ad.

22

Even if you thought that was misleading and want to say

23

this is a paid advertisement, they make you put the word

24

sponsored link.

25

THE COURT:

That leads to another question.

RENECIA A. SMITH-WILSON, RMR, CRR

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What does sponsored link means to you?

2

confusion about what a sponsored link is?

3

MR. ROSS:

Is there consumer

That's part of the case, yes,

4

Your Honor.

So part of the confusion they're responsible

5

for and therefore they're creating content and therefore

6

they don't get the immunity of the CDA.

7

Does that make -- does that make sense to

8

you, Your Honor, because I can elaborate some more.

9

Here's --

10

THE COURT:

I think that I understand what

11

you're saying.

You're saying that to the extent that

12

Google creates the ad that is displayed on their website,

13

even if the information is supplied by the client, they

14

are a content provider.

15

MR. ROSS:

Yes, Your Honor.

Now, there are

16

a couple of cases that they cite in their brief, correctly

17

cite that say if somehow you're doing that in a neutral

18

manner, you know, that the final decision -- here is the

19

way it's expressed -- the final decision is with the

20

advertising customer.

21

You suggest to them, oh, why don't you

22

brighten this ad up.

23

suggestion.

24
25

You'd get more business.

But it's a

They have the final decision.
Then you don't become an information content

provider.

What I'm saying to you is that's not the case.

RENECIA A. SMITH-WILSON, RMR, CRR

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It's not a suggestion.

2

sponsored link.

3

or the side.

4

yellow now, yellow background coloring.

5

things they make you do.

6

cases they cite.

7

content provider within the unique definition of CDA.

8

You have to use their term

You have to have the ad either at the top

You have to have that little blue -- it's
Those are all

It's not a suggestion like the

And therefore, they're an information

THE COURT:

9

endorsement claim here?

10

MR. ROSS:

11

THE COURT:

Have you set forth a false

Yes, Your Honor.
And I'm focused more

12

specifically on the issue of the likelihood of confusion

13

as to the source or origin of the goods or services.

14

does sponsored mean to you?

15

MR. ROSS:

What

Sponsored means to somehow convey

16

to the consuming public that you are giving an endorsement

17

to this product or that you approve it.

18

And our claim is that the way Google goes

19

about this, the people surfing online are under the

20

misimpression that Rosetta Stone is sponsored -- is the

21

sponsor of those sponsored link.

22

deliberately used that word sponsored link for the

23

purpose.

24
25

THE COURT:

We think they

Well, you know, in another

context, a sponsor is someone who pays money for permanent

RENECIA A. SMITH-WILSON, RMR, CRR

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1

display.

2

listed as a sponsor of the X, Y, Z Ball.

3

necessarily suggest that the organization has adopted the

4

sponsor, does it?

5

For example, a charitable activity, a sponsor is

MR. ROSS:

That does not

No, it doesn't.

You're

6

absolutely right, Your Honor, and remember this is a

7

12(b)(6) motion and so --

8

THE COURT:

9

is one of plausibility.

10

MR. ROSS:

Yeah, the issue is -- the test

Yes, Your Honor.

That's

11

absolutely right, under Twombly.

12

There are specific academic studies out there that say in

13

the context of the Internet, common users perceive that to

14

mean, sponsored link to mean that their search for a

15

specific company, Rosetta Stone.

16

Let me put it this way.

You know, this all starts when you the

17

searcher put in the term Rosetta Stone.

18

language software.

19

You don't put in

We wouldn't be here complaining.

You punched Rosetta Stone.

In your mind

20

you're thinking I'm going to get results to tell me how to

21

get there.

22

of the page, the sponsored link.

23

You punch in Rosetta Stone and you get the top

All the academic studies show that people

24

commonly think that that means Rosetta Stone sponsored

25

that.

And so it's a little bit different where in a

RENECIA A. SMITH-WILSON, RMR, CRR

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1

football, you know, college bowl series, year after year

2

we all know that when they say the Tortilla Doritos Fiesta

3

Bowl, we know what sponsored means there.

It's different

4

here.

I know you've

5

been here very long time this morning.

6

THE COURT:

7

MR. ROSS:

8

Their argument sort of morphed the opening

9

Now, if I may add one other point.

Thank you.

This is honest government work.
Yes, it is.

Thank you.

brief that Ms. Caruso admitted, and they're no longer

10

arguing about competition.

11

didn't -- they didn't put there name Rosetta Stone on

12

their products.

13

Lanham Act and the words of the Lanham Act answer this

14

question directly.

15

They're saying that we

And that's just not required in the

So, if I may just read to you from Title 15

16

of the United States Code Section 1125(a), if you'd bear

17

with me, the words are right here.

18

It says "any person who, or in connection

19

with any goods or services or containers for goods uses in

20

commerce, any word, term, name, symbol, device, any

21

combination thereof" --

22
23

THE COURT:

Slow down, slow down.

The court

reporter's got to take this down.

24

MR. ROSS:

25

THE COURT:

I'm so sorry.
And I can't even think as fast

RENECIA A. SMITH-WILSON, RMR, CRR

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as you can talk.

2
3

MR. ROSS:

She is actually very fast.

She's

very good.

4

So, false or misleading representation of

5

fact which, in commercial advertising, what they do

6

"misrepresents the nature, characteristics, qualities or

7

geographic origin of his or her or another person's goods

8

or services".

9

Another person's goods or services.
The notion that the false endorsement has to

10

be on a Google product is directly belied by the words of

11

the statute.

12

statute says Google can put our name falsely endorsing

13

some other person's goods, and that's a clause of action.

14
15
16

We don't need a case for that because the

THE COURT:
questions that I have.

All right.

I've asked you the

Thank you very much.

MS. CARUSO:

Thank you, Your Honor.

I'll

17

pick up right where Mr. Ross left off with the language of

18

the Lanham Act.

19

Lanham Act is not the portion that controls here.

20

the preamble that gets to where the Lanham Act lays out

21

what the claims can be.

22
23

And the portion he was reading of the
That's

And, there if again -- the language is a
little cumbersome, but I'll read it for the record.

24

THE COURT:

Slowly.

25

MS. CARUSO:

Yes.

To state this type of

RENECIA A. SMITH-WILSON, RMR, CRR

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1

claim under Lanham Act, the allegation has to be that "the

2

use of the word, term or trademark is likely to cause

3

confusion as to the affiliation, connection, or

4

association of such person" and that means the one alleged

5

to have used the false designation of origin here, the

6

defendant, "with another person", which the case law tells

7

us is the plaintiff, "or as to the origins, sponsorship or

8

approval of his or her", the defendant's "goods, services

9

or commercial activities by another person", the

10

plaintiff.

11

And what's important, Your Honor, because

12

it's not immediately apparently maybe the first time you

13

look at it, this by-another-person language.

14

the case law tells us that that is the plaintiff.

Uniformly,

15

The cases that the defendant -- the Rosetta

16

Stone cites all say the defendant, the defendant's goods.

17

It has to be confusion as to the plaintiff's endorsement

18

of the defendant's goods.

19

And, Rosetta Stone has not offered any case

20

that is to the contrary.

21

law is.

22
23
24
25

It's just not simply what the

I'd like to go back to the forum selection
clause because I think that really moots this issue.
First of all, the language about -- in the
preamble that these terms govern the customer's

RENECIA A. SMITH-WILSON, RMR, CRR

23
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participation, this language, we don't need to shy away

2

from it in any way.

3

requirements.

4

has to agree to participate in Google's programs.

It -- these terms are the

They're the rules under which the customer

5

The customer could separately -- it could

6

choose not to be a customer and not to advertise to the

7

AdWords program and separately bring this case.

8

true.

9

That's not what they did.

That's

They agreed to

10

play it by these rules, the rules in which they agreed to

11

bring any claim relating to Google advertising programs in

12

California.

13

And one of the cases that they cite even

14

makes this point.

15

case.

16

It says that -- what is the Transfirst

It points out in a forum selection clause

17

that the plaintiff's claims relate to their employment

18

agreements but they would exist independently of those

19

employment agreements.

20

But, given the language of that forum

21

selection clause, it covers those claims, even though they

22

could have been brought in the absence of a contractual

23

relationship.

24
25

And, what's important here is that there is
this contractual relationship.

And, it's not necessary

RENECIA A. SMITH-WILSON, RMR, CRR

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1

that the claims to be brought in California relate to the

2

contractual relationship.

3

And again, going back to the language of the

4

contract, this is clear.

5

says all claims, not just arising out of but relating to

6

this agreement.

7

So, the forum selection clause

So, if you just stopped right there, already

8

you have enough language to see that Rosetta Stone's

9

argument is not correct, that their interpretation of

10

the -- of Google programs would add anything else because

11

tort claims that relate to this agreement would clearly be

12

covered by it.

13
14

So, the "or Google programs" has to add
something.

15

THE COURT:

16

MS. CARUSO:

17
18

All right.
And they don't identify or fill

us in with what that might be.
In addition, I think it's worth pointing out

19

that the terms of -- the advertising program terms aren't

20

just limited to what's necessary for Rosetta Stone to

21

advertise on the AdWords program.

22

In paragraph four, section B, it specifies

23

that the customer shall not use any automated means or

24

form of scraping or data extraction to access, query or

25

otherwise collect Google's advertising related information

RENECIA A. SMITH-WILSON, RMR, CRR

25
1

from any program, website or property.

2

So whatever ability Rosetta Stone had to do

3

that technically or lawfully otherwise, they've now

4

agreed, just like they've agreed to bring any claims

5

relating to the program in California, not to do that.

6

So, these program terms are all required, do

7

govern the conditions of Rosetta Stone's participation,

8

but they're not limited just to that advertising

9

relationship.

10

THE COURT:

11

MS. CARUSO:

Thank you very much.
You're welcome, Your Honor.

12

you would like to hear more about the CDA, I can talk

13

If

about that.

14

THE COURT:

I'm trying to be polite.

15

say thank you very much, that means that I think I

16

understand your position.

17

MS. CARUSO:

18

The --

19

THE COURT:

When I

20

In California, that -- in

Virginia, that means the judge has heard enough.

21
22

Okay.

MS. CARUSO:

Thank you very much, Your

Honor.

23

THE COURT:

24

This matter is before the Court on the

25

Thank you.

defendant's motion to dismiss.

And the parties have

RENECIA A. SMITH-WILSON, RMR, CRR

26
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properly briefed the matter, and there are, I think, three

2

critical issues, and the first that has to be decided at

3

the outset is whether or not this lawsuit belongs in

4

Virginia under the forum selection clause of the AdWords

5

contract submitted by Google.

6

And, of course, such clauses are enforceable

7

under Virginia law and federal law.

8

dealing with here is terms that are set forth in the

9

AdWords program contract in paragraph nine.

10

And what we're

And both parties have briefed the matter.

11

So, I have to, as I am supposed to, determine if the

12

clause is clearly communicated to the other side, whether

13

it's mandatory permissive, whether the claims involved are

14

subject to the clause, and whether the resisting party has

15

rebutted the presumption of enforceability under the

16

Phillips versus Audio Active case.

17

Obviously, the first and the second are met

18

because the clause is obvious and it is, I think, a

19

mandatory clause.

20

to the Rosetta Stone's marketing manager.

21

And it was communicated electronically

And as it relates to the issue of whether or

22

not the claims are subject to forum selection clause, I

23

hold that they are not, because none of the claims concern

24

Rosetta Stone's participation in Google's advertising

25

programs.

RENECIA A. SMITH-WILSON, RMR, CRR

27
1
2

Three of the claims concern Virginia
business law, and five are based on the Lanham Act.

3

Obviously, the Yahoo case from the Fifth

4

Circuit is not controlling.

5

Circuit upheld District Court's judgment to not enforce a

6

forum selection clause because the clause in that case

7

required American Airlines to submit claims to California

8

forums and claims brought by Yahoo against it and the

9

clause is ambiguous.

10

But in that case, the Fifth

And the claims between American

Airlines and Yahoo arose out of different circumstances.

11

Here what we're dealing with is a trademark

12

infringement claim that could have been brought

13

notwithstanding the contract.

14

turn on the contractual relationship between Google and

15

Rosetta Stone.

16

The cause of action do not

The claims arguably turn on Google's

17

relationship with other advertisers, that is to say the

18

relationship that Google has with other advertisers who

19

are being presented on the website as sponsored links.

20

And if that's an independent relationship between Google

21

and Rosetta Stone, obviously, the facts would be different

22

if Rosetta Stone brought a breach of contract claim which

23

would require interpretation of the AdWords contracts.

24

So, because the claims are not subject to

25

forum selection clause, I'm going to deny the motion to

RENECIA A. SMITH-WILSON, RMR, CRR

28
1

dismiss as it relates to the forum selection clause.

2

That brings us to the false representation

3

claim under 12(b)(6).

Obviously, I'm applying Bell

4

Atlantic versus Twombly and Ashcroft versus Iqbal.

5

seems to me that I'm going to grant the motion to dismiss

6

as it relates to the false representation of the so-called

7

false endorsement claim because the plaintiff here has not

8

sufficiently asserted that there is a likelihood of

9

consumer confusion as to the origin, approval or

And it

10

endorsement of the product under the Comins -- and Comins

11

is C-O-M-I-N-S versus Discovery Communication case.

12

And I think that a false endorsement claim

13

can be viable even if the parties are not competitors

14

under the Holland versus Psychological Assessment case.

15

But what we have here is a failure to, I

16

think, sufficiently set forth a likelihood of confusion as

17

it is required in the Fourth Circuit under the Synergistic

18

case.

19

case, Fourth Circuit, 2006.

20

And Synergistic is spelled S-Y-N-E-G-I-S-T-I-C

Focusing on the seventh factor which is

21

actual confusion, while the plaintiff sets forth

22

background about the information on the Internet, Google

23

Search Engine being based on keyword "advertising", I do

24

not think that they sufficiently set forth a showing that

25

would demonstrate confusion by web users or confusion by

RENECIA A. SMITH-WILSON, RMR, CRR

29
1

web users that would allow web users to think that

2

sponsored link means that Rosetta Stone somehow endorses

3

the link.

4

I think that it has -- sponsored links means

5

arguably paid ads, not necessarily ads paid by or approved

6

or endorsed by Rosetta Stone.

7

Rosetta Stone a chance to revisit if they want to replead

8

that.

9

the false endorsement claim.

And obviously, I give

But I'm going to grant the motion as it relates to

10

As it relates to the issue of whether the

11

conspiracy claim is encompassed in the immunity afforded

12

by the Communications Decency Act, depending upon the

13

status of Google, I think that Google is an interactive

14

computer service provider.

15

that Google creates the contents of the ads.

16

And there's no indication here

I understand the theory about the banners

17

and the headings.

18

Chevrolet case address something about the banners and

19

headings.

20

sufficient to plead that Google would fall outside the

21

Communications Decency Act's immunity.

22

And I think my Neiman Ford -- Neiman

But in any event, I do not think that is

Rosetta Stone has cited to the Fair Housing

23

Council of San Fernando Valley case, and I think that that

24

case is distinguishable in about three ways.

25

First, the Roommates.com requires an

RENECIA A. SMITH-WILSON, RMR, CRR

30
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interested member to complete a questionnaire.

2

Roommates.com sends out e-mails containing member's

3

profile to other members; and third, information provided

4

by Roommates.com members in a comment box are displayed

5

for others to view.

6

Second,

In that case, the Court found that

7

Roommates.com is an information content provider because

8

as to the contents of the questionnaire and the e-mail

9

distribution, its content ads formulated by Roommates.

10

Here, Google is displaying its sponsored

11

links based upon the web user query.

And a web user has

12

to decide to use Google.

It's the marketplace

13

on the web.

14

there is Yahoo and Bing, B-I-N-G and others.

It's open.

It's not the only game in town.

15

Obviously

So, the displaying of a formatted

16

advertising is passive.

17

e-mails and soliciting private information which is shared

18

with others.

19

distinguishable in at least two ways.

20

It's not the same as sending out

And similarly the 800-JR Cigar case is

First the Court did not determine whether

21

the defendant's conduct made it an information content

22

provider.

23

qualify as an interactive computer service provider.

24
25

Rather it found that the defendant does not

And second, the Court held that immunity was
inapplicable because the alleged fraud is use of the

RENECIA A. SMITH-WILSON, RMR, CRR

31
1

plaintiff's trademark in the advertiser's bidding process,

2

not necessarily adds information from the third party that

3

may appear on the search results page.

4

So, seems to me that Rosetta Stone's claims

5

turn on the Google's relationship with other paid

6

advertisers regarding the use of Rosetta Stone's marks.

7

And since the purpose of the CDA is not to

8

shield parties from fraud or abuse, arise from their own

9

pay for priority advertisement but from the actions of

10
11
12
13

third parties, it is applicable for this case.
For those reasons, I'm going to grant the
motion to dismiss as it relates to Count VIII.
Thank you for the quality of your

14

preparation and your patience.

15

We're in recess.

16

(Proceedings concluded at 1:11 p.m.)

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RENECIA A. SMITH-WILSON, RMR, CRR

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CERTIFICATE OF REPORTER

2
3

I, Renecia Wilson, an official court reporter

4

for the United State District Court of Virginia,

5

Alexandria Division, do hereby certify that I reported by

6

machine shorthand, in my official capacity, the

7

proceedings had upon the motions in the case of Rosetta

8

Stone, LTD vs. Google, Inc.

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I further certify that I was authorized and

10

did report by stenotype the proceedings and evidence in

11

said motions, and that the foregoing pages, numbered 1 to

12

31, inclusive, constitute the official transcript of said

13

proceedings as taken from my shorthand notes.

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15

IN WITNESS WHEREOF, I have hereto subscribed
my name this 25th day of September , 2009.

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/s/
Renecia Wilson, RMR, CRR
Official Court Reporter

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RENECIA A. SMITH-WILSON, RMR, CRR