Rosetta Stone LTD v. Google Inc.

Filing 174

Memorandum in Support re 173 MOTION for Sanctions filed by Rosetta Stone LTD. (Allen, Warren) Unredacted Version received and placed in civil vault. Modified on 4/19/2010 (tche).

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF VIRGINIA

ALEXANDRIA DIVISION

ROSETTA STONE LTD.,

Plaintiff,
VS.

GOOGLE INC.,

Defendant.

)
)
)
)
)
)
)
)
)

Civ. Action No. 1:09-cv-00736(GBLlTCB)

)

MEMORANDUM OF LAW IN SUPPORT OF

ROSETTA STONE LTD.'S MOTION FOR SANCTIONS

FILED IN PART UNDER SEAL

Rosetta Stone Ltd. ("Rosetta Stone") respectfully submits this Memorandum of Law in
Support of its Motion for Sanctions. For the reasons that follow, the motion should be granted.

INTRODUCTION
On February 4, 2010, this Court ordered Google to produce documents responsive to a
number of document requests served by Rosetta Stone (the "February 4 Order"). (Dkt. 54.) Of
particular relevance here, the Court ordered Google to produce documents responsive to Rosetta
Stone's Request No. 77, (Ex. 1 at 36:7-9), which called for:
All documents relating to consumer or user confusion related in any way to
Google's Sponsored Links, Google's Advertising Program and/or the use of
Keywords in search engines, including surveys conducted by or for Google
relating to the sale, marketing, promotion, offering, designation, use, or inclusion
of Keywords by Google in any way. This Request specifically includes draft
surveys and survey results relating to the potential for likelihood of consumer
confusion arising out ofthe sale, marketing, promotion, offering, designation, use,
or inclusion of trademarks as Keywords or designated search terms in Google's
Advertising Programs.
(Ex. 2.)

The only documents excluded from the scope of the Court's order were those

maintained in Google's Trax system, which Google represented would be unduly burdensome to
search. (See Ex. 1.)1
At the time of the February 4 Order, Google had produced

-Exhibits referenced herein are attached to the Declaration of Jennifer L. Spaziano in Support
of Rosetta Stone's Motion for Sanctions.

By letter dated March 8, 2010, Rosetta Stone asked Google to confirm that it had
produced "all documents, other than those maintained only in Google's Trax system, that are
responsive to Request Nos. 18, 19,20,21,22,23,76,77,78,79 and 93." (Ex. 7.) By letter
dated March 10,2010, Google expressly confirmed, with respect to each of these requests, that it
had "produced all non-privileged responsive documents that it has been able to locate after a
reasonably diligent search. Google is not aware of other responsive material." (Ex. 8.) _

Nevertheless, on April 9, 2010, in support of its opposition to Rosetta Stone's motion for
partial summary judgment, Google submitted to the Court
(Dkt. 151.) These three
documents were attached to the declaration of Kris Brewer,

As discussed above, these documents were not produced to Rosetta Stone during the
course of discovery even though they were required to be produced under the February 4 Order
and even though Google counsel expressly confirmed that Google had "produced all non­
privileged responsive documents that it has been able to locate after a reasonably diligent

2

search."

(Ex. 8.) Nor did Google produce documents bearing the Bates range GOOG-RS­

0494057 through GOOG-RS-0494128.
In fact, Google did not produce documents within this bates range,
until the afternoon of April 14, 20 I 0, when
counsel for Rosetta Stone advised counsel for Google of its intention to file this motion. (See Ex.
9.) Although Google's counsel advised that the failure to produce the documents in advance of
the April 9, 2010 filing was due to inadvertent oversight, Google's counsel acknowledged that
the documents were identified after the close of discovery and in connection with Google's
preparation of its opposition to Rosetta Stone's motion for summary judgment. As discussed
herein, irrespective of when these documents were intended to be produced to Rosetta Stone,
Google's failure to identify these documents for production until Google wanted to use them to
oppose Rosetta Stone's motion for summary judgment demonstrates Google's failure to comply
with the February 4 Order with respect to Request No. 77, and raises serious questions about
Google's compliance with its other discovery obligations in this case.
As a result of Google's violation ofthe February 4 Order, Rosetta Stone requests that the
Court reject Google's attempt to dispute Undisputed Fact 20 and direct that Undisputed Fact 20
be taken as established for purposes of this action:

In
addition, Rosetta Stone requests that the Court order Google to certify, under oath, that it has
complied with the February 4 Order in all respects and to provide the details of all actions taken
to comply with the Order. 1fGoogle is not able to so certify immediately, Rosetta Stone requests

3

all relief necessary to avoid prejudice to Rosetta Stone.

Finally, Rosetta Stone seeks its

reasonable expenses, including attorney's fees, caused by Google's failure to comply with the
February 4 Order.

ARGUMENT
Pursuant to Federal Rule of Civil Procedure 37 and Local Rule 37(0), sanctions may be
imposed where a party fails to comply with a discovery order entered by the Court. See Fed. R.
Civ. P. 37(b)(2); E.O. VA. R. 37(0). Sanctions for failure to comply with a discovery order may
include:
(i)

directing that the matters embraced in the order or other designated facts be taken
as established for the purposes of the action, as the prevailing party claims;

(ii)

prohibiting the disobedient party from supporting or opposing designated claims
or defenses, or from introducing designated matters in evidence;

(iii)

striking pleadings in whole or in part;

(iv)

staying further proceedings until the order is obeyed;

(v)

dismissing the action or proceeding in whole or in part;

(vi)

rendering a default judgment against the disobedient party; or

(vii)

treating as contempt of court the failure to obey any order except an order to
submit to a physical or mental examination.

Fed. R. Civ. P. 37(b)(2)(A). "Instead of or in addition to the orders above, the court must order
the disobedient party, the attorney advising that party, or both to pay the reasonable expenses,
including attorney's fees, caused by the failure, unless the failure was substantially justified or
other circumstances make an award of expenses unjust." Fed. R. Civ. P. 37(b)(2)(C).

I.

GOOGLE FAILED TO COMPLY WITH THE FEBRUARY 4 ORDER
Rosetta Stone has met the standard for imposing sanctions on Google. As noted above,

on February 4,2010, this Court ordered Google to produce "all documents relating to consumer
or user confusion related in any way to Google's Sponsored Links, Google's Advertising
4

Program and/or the use of Keywords in search engines." (See Exs. 1 and 2.) The Court also
ordered Google to produce:
(i)

Documents sufficient to identify and disclose the conclusions or findings
of all Studies conducted by, for, on behalf of, or to the benefit of Google
concerning the use of the term "Sponsored Link" as opposed to any other
form of designation for the Sponsored Links in Google's Advertising
Programs (Request No. 26)

(ii)

Documents sufficient to identify and disclose the conclusions or findings
of all Studies conducted by, for, on behalf of, or to the benefit of Google
concerning ways in which Internet users distinguish between Sponsored
Links and natural (organic) search results, including but not limited to
Studies that test the effect of any language, colors, design elements,
placement, or disclaimers on such Sponsored Links and natural (organic)
search results (Request No. 27)

(iii)

All documents analyzing or reporting on the effect on consumers of the
layout, design or wording of the results page that a consumer sees after
conducting a Google search, including without limitation the selection of
the fonts, the colors, the placement of ads and the use of Sponsored Links
to denote paid advertisement (Request No. 28)

(iv)

Documents sufficient to identify and disclose the conclusions or findings
of all Studies conducted by, for, on behalf of, or to the benefit of Google
concerning the use of any trademark as a Keyword in one of Google's
Advertising Programs (Request No. 29)

(v)

All documents relating to consumer or user understanding or perception of
Google's Sponsored Links, including but not limited to research or
analysis conducted by or for Google on such understandings and
perceptions. (Request No. 76)

(vi)

All documents relating to consumers' ability, or lack thereof, to recognize
Google's Sponsored Links as paid advertisements, including but not
limited to research or analysis conducted by or for Google on such
understandings and perceptions. (Request No. 78)

(ld.) These requests go to the heart of Rosetta Stone's trademark infringement claims ­
consumer confusion arising from Google's use of trademarks as keyword triggers for Sponsored
Links and Google's knowledge ofthe same. See PETA v. Doughney, 263 F.3d 359, 364 (4th Cir.

2001).

5

Google does not contest the relevance of these documents.

To the contrary, at the

February 4, 2010 hearing, GoogJe counsel expressly stated: "Right, and we agreed that that's
relevant, general studies, and that's why we have agreed to produce them." (Ex. 1 at 41:13-15;

see also id. at 14: 15-22 ("It's important, I think, to understand when we say we're not using
these third party-type documents it doesn't mean they're not getting any general studies, any
general policy, reasoning, any policies. All of these things that Google has done with respect to
trademarks generally speaking, it has agreed to provide and has provided mostly, still in the
process of production.").)
Notwithstanding Google's recognition of the relevance of these documents, its assertion
that these documents would be produced and the Court's order requiring that they be produced,
Google produced very few documents responsive to Request Nos. 26-29 and 76-78. Many of the
documents that Google did produce in response to these critical requests had been produced in
connection with earlier litigations involving other parties as they bear exhibit labels from
previously conducted depositions and multiple bates ranges.

(See, e.g., Exs. 3-6.)

Such

documents, moreover, were designated as "Confidential Attorney's Eyes Only," precluding their
filing on the public record and limiting distribution within Rosetta Stone to a single in-house
counsel.

(ld.) Accordingly, Google considers these documents to be business sensitive and

proprietary materials and presumably maintains them within its own files in a segregated manner
to ensure their confidentiality.
The paucity and incomplete nature of Google's document production prompted Rosetta
Stone to query whether Google had complied with the February 4 Order. First, on February 22,
2010, three days after the deadline for compliance with the Order, Rosetta Stone wrote to Google
and identified perceived deficiencies in its production. (Ex. 10.) In response to that inquiry,

6

Google represented with respect to Request No. 77 (and many others) that "Google has produced
documents responsive to the [requests], excluding those documents maintained only in Google's
Trax system." (Ex. 11.) Unconvinced that Google had complied with the Court's order, on
March 8, 2010, Rosetta Stone again wrote to Google to request confirmation that Google, in fact,
had complied with the Court's discovery order:
In addition to the above, please confrrm that Google has produced all documents,
other than those maintained in Google's Trax system, that are responsive to
Request Nos. 18, 19,20,21,22,23, 76, 77, 78, 79 and 93. We have received only
a nominal number of documents responsive to these requests overall and none
prior to 2004. We remind Google that the Court's Order requires the production
of all responsive documents, other than those maintained in Google's Trax system,
going back to 2002. (02/04/10 Hearing Tr. at 36:9-10).
(Ex. 7.) On March 10, 2010, Google's counsel confrrmed that all responsive documents had
been produced:
With respect to Request Nos. 18, 19, 20, 21, 22, 23, 76, 77, 78, 79 and 93, Google
has produced all non-privileged responsive documents that it has been able to
locate after a reasonably diligent search. Google is not aware of other responsive
material.
(Ex. 8). Based upon this representation, Rosetta Stone concluded that it had no basis to pursue
further the requests that had been the subject ofthe February 4 Order.
On March 26, 2010, Rosetta Stone filed its Motion for Partial Summary Judgment as to
Liability. (Dkt. 103-111.) In its memorandum of law in support of its motion, Rosetta Stone
referenced certain of the materials responsive to Requests Nos. 26-29 and 76-78.

7

On April 9, 2010, Google filed its Opposition to Rosetta Stone's Motion for Partial
Summary Judgment. (Dkt. 153.). Google included in its papers the Brewer declaration,_

As noted
above, not one of the documents attached to the Brewer declaration previously had been
produced by Google in this litigation.

There thus can be no argument that the subject documents were responsive to
the Court's order and should have been produced.

II.

ROSETTA STONE HAS BEEN PREJUDICED BY GOOGLE'S CONDUCT
Google's failure to provide the subject documents has prejudiced Rosetta Stone because

8

-

Rosetta Stone should have had the Brewer documents ­
- when it deposed Google's witnesses, including
Instead,

Google's Rule 30(b)(6) witnesses
forced to conduct the depositions without knowledge of the specifics

0

Rosetta Stone was unable to examine any of Google's witnesses about these highly relevant
documents. Rosetta Stone also should have had these documents when drafting its Motion for
Summary Judgment and its opposition to Google's Motion for Summary Judgment in order to
provide context for

And

Rosetta Stone should have had these documents when it prepared its opposition to Google's
motion to strike Rosetta Stone's expert witness to demonstrate that

Unfortunately, Rosetta Stone did not have these documents during any of

9

these critical periods in this case because Google did not produce them, in violation of its
discovery obligations and the February 4 Order.

III.

GOOGLE'S CONDUCT RAISES SERIOUS QUESTIONS REGARDING ITS
COMPLIANCE WITH THE FEBRUARY 4 ORDER
As noted above, Rosetta Stone has expressed concerns to Google regarding the

sufficiency of Google's production and repeatedly has been assured that Google has complied
with the February 4 Order. (See Exs. 7, 8, 10, 11.) The fact that Google readily identified
additional documents responsive to the February 4 Order when it believed the documents
advanced Google's position vis-a-vis summary judgment raises serious questions regarding
Google's efforts to search for and produce other documents called for by the Order.
For example, as noted above, Request Nos. 26, 27, 28 and 29 called for documents
relating to studies conducted by Google relating to consumer understanding of Sponsored Links.

Rosetta Stone raised this issue in its March 8
letter and asked Google to "produce these documents as soon as possible or confirm that the
studies did not relate in any way to Google's trademark policies. In addition, please confirm that
all other responsive documents have been produced." (Ex. 7.) On March 10, 2010, Google
responded:

10

whether those documents are even responsive, and are not otherwise aware of any
other responsive documents.
(Ex. 8.)

Google's recent production raises questions regarding the sufficiency of Google's

search for documents relating to
It also raises questions regarding Google's search for documents related to studies more

generally. In this regard,

The questions regarding Google's production are not limited to its production of
documents related to studies. Request No.7 called for "[a]1I documents relating to any senior
executive or board meeting, including but not limited to Board of Directors meetings, Executive
Management Group meetings, and GPS meetings at which Google's trademark policy or any
lawsuit related to that policy was discussed. Such documents shall include, but not be limited to,
minutes, notes, or reports of meetings." (Ex. 2.) By letter dated February 22, Rosetta Stone
notified Google that its February 19 production did not contain any minutes, notes or reports of
such meetings. (Ex. 10.) By email dated February 22, Google advised that "[o]nly one set of
minutes had responsive information. Google is producing a redacted version of those minutes
today." (Ex. 11; see also Ex. 14.) Thereafter on March 8, 2010, Rosetta Stone advised Google
11

that it had received

_ a n d asked Google to "confirm that no other responsive minutes exist." (Ex. 7.) On
March 10, 2010, Google confirmed that it "has produced all non-privileged documents
responsive to Rosetta Stone's request that it has been able to locate after a reasonably diligent
search. With respect to meeting minutes, we are aware of no others that are responsive to this
request." (Ex. 8.) It is difficult to accept that Google's trademark policies, which were the
subject of two significant policy changes, an SEC disclosure, multiple lawsuits, extensive press
coverage and tens of thousands of complaints, were addressed in just a single set of minutes. 2
In short, the impact of Google's recent conduct extends beyond the 129 pages of
documents that Google identified last week. Indeed, Google's ability to readily identify these

2

Notably, although the February 4 Order required Google to produce all trademark complaints
other than those maintained in the Trax system, Google resisted producing such documents.
(Ex. 1 at 35:21-36:1, Ex. 2 (Request 10).) Initially, Google did not produce the trademark
complaints and instead produced "a spreadsheet that contains information about every
trademark complaint Google has received and logged." (Ex. 11.) In connection with this
production, Google represented to Rosetta Stone that ''there is limited additional information
related to each of these entries, exemplars of which have also been produced." (Id.) Rosetta
Stone insisted that Google produce the trademark complaints as ordered by the Court, and
Google advised Rosetta Stone that it would "reserve[] its right to seek fees and costs
associated with the collection effort" and asked Rosetta Stone to confirm whether it wanted
''the additional documentation." (Ex. 15 at 2.) Rosetta Stone again insisted that Google
produce the complaints, noting that the spreadsheet "does not include the substance of the
complaints that were submitted to Google" and reminding Google that it was under Court
order - at its ex ense - to roduce the trademark com laints. Id. at 1.

12

documents when it needed them suggests that the searches initially employed by Google were
not sufficient to identify documents responsive to Rosetta Stone's document requests. 3

IV.

GOOGLE'S CONDUCT WARRANTS mE REQUESTED SANCTIONS
In this Circuit, a four-part test is used to determine what sanctions to impose under Rule

37: "(I) whether the non-complying party acted in bad faith, (2) the amount of prejudice that
noncompliance caused the adversary, (3) the need for deterrence of the particular sort of
noncompliance, and (4) whether less drastic sanctions would have been effective." Anderson v.

Foundation for Advancement, Education, and Employment ofAmerican Indians, ISS F.3d 500,
504 (4th Cir. 1998) (affirming entry of default judgment as sanction for discovery abuse).
Applying these factors to the present case compels the conclusion that the relief requested
by Rosetta Stone is appropriate.

First, Google's conduct reflects bad faith.

On March 10,

Google represented that it had conducted a "reasonably diligent search" for documents
3

Rosetta Stone is not the first litigant to raise questions regarding Google's compliance with
its discovery obligations. In a similar case brought by American Airlines, American Airlines
sought an order striking Google's answer as a result of Google's discovery violations there,
advancing arguments that apply with equal force to Rosetta Stone here:
At this point, with the deadline for summary judgment passed, the discovery period
nearly over, and trial just three months away, Google's strategy has worked as
planned to inflict irreparable damage to American's prosecution of its case against
Google. Google's withholding of information has resulted in American's not being
able to use relevant, discoverable, and properly-requested information in the
depositions taken to date, or in the written discovery propounded to Google. These
opportunities are forever lost to American. American also has not been able to
incorporate the withheld discovery in its expert analyses on confusion or damages,
and has been denied the opportunity to learn whether additional experts are needed.
American also has been denied the right to use Google's withheld information in a
summary judgment motion of its own or to oppose Google's currently filed motion
for summary judgment. American has had to make irreversible strategy calls on the
limited information that Google chose to parcel out. The time for Google to cure its
misdeeds has passed.
(Ex. 16 at 14.) The court did not get a chance to rule on American Airlines' request for
sanctions as the case was voluntarily dismissed within days ofthe request. (Ex. 17.)

13

responsive to Request No. 77 and had produced all non-privileged responsive documents. When
it needed to respond to Rosetta Stone's motion for summary judgment, however, it had no
difficulty identifying additional documents responsive to this request which it used to support its
opposition.
Significantly, Rosetta Stone's motion for summary judgment was filed on March 26,
2010, and Google's opposition was filed on April 9, 2010, allowing just a two-week period for
Google to search for, identify and incorporate into its opposition the subject documents. That
Google was able to do so demonstrates that these documents were not difficult to locate.

Google cannot
reasonably assert that these documents would not have been captured had a "reasonably diligent
search" in fact been conducted.
Second, Google's non-compliance has prejudiced Rosetta Stone. As discussed above, the
documents at issue support Rosetta Stone's position that
and Rosetta Stone was not able to use them (i) in deposing Google's
witnesses; (ii) in moving for and opposing summary judgment; or (iii) in opposing Google's
motion to strike the opinions and report of Kent D. Van Liere.

In addition, Rosetta Stone

justifiably relied on Google's representation that it had conducted a reasonably diligent search
and produced all responsive documents with respect to confusion studies and did not seek relief
with respect to other categories of documents that appeared to be insufficient. To the extent
Google has failed to comply with the February 4 Order in any other respect, Rosetta Stone is
prejudiced by not having the benefit of such documents during discovery, summary judgment
briefing and pretrial preparations.

14

Third, there is a need to deter litigants from failing to comply with court orders and then
using responsive, but unproduced, documents to support their positions. There also is a need to
deter litigants from making unwarranted representations regarding the sufficiency of their
productions.

This type of behavior obviously places the opposing party in the position of

proceeding in the litigation without knowledge that relevant, discoverable documents may be
available.
Finally, the sanctions sought by Rosetta Stone are appropriate in light of Google's
conduct.

Rosetta Stone requests that (i) the Court deem as established the fact that Google

attempts to dispute with the subject documents, (ii) Google be required to certify, under oath, its
compliance with the February 4 Order and provide the details of all actions taken to comply with
the Order, and (iii) Rosetta Stone be awarded reasonable expenses caused by Google's conduct.

See Wu v. Tseng, No. 2:06cv580, 2008 WL 4360990 (E.D. Va. Sept. 22, 2008) (awarding
evidentiary sanction prohibiting defendant from introducing certain evidence at tria\). These
sanctions are narrowly tailored to address the harm caused by Google's conduct and less drastic
sanctions would not be effective.

15

CONCLUSION

For the foregoing reasons, Rosetta Stone respectfully requests that the Court grant its
motion for sanctions and:
(i)

facts be taken as established for ur oses of this action:

(ii)

Require Google to certify, under oath, that it has complied with the February 4
Order in all respects and provide the details of all actions taken to comply with
the Order.

(iii)

Require Google to pay Rosetta Stone's reasonable expenses, includinp attorney's
fees, caused by Google's failure to comply with the February 4 Order.
Respectfully submitted,

lsi

April 16, 2010
Of Counsel:
Mitchell S. Ettinger
(Pro hac vice)
Clifford M. Sloan
(Pro hac vice)
Jennifer L. Spaziano
(Pro hac vice)
Skadden, Arps, Slate, Meagher & Flom, LLP
1440 New York Avenue, N.W.
Washington, D.C. 20005-2111

4

Warren T. Allen II
Virginia Bar Number 72691
Attorneyfor PlaintiffRosetta Stone Ltd.
Skadden, Arps, Slate, Meagher & Flom, LLP
1440 New York Avenue, N.W.
Washington, D.C. 20005-2111
[phone]
[phone]
[e-mail]

Rosetta Stone will submit a declaration setting forth expenses incurred through April 22,
2010, in advance of the hearing on this Motion.

16

CERTIFICATE OF SERVICE
I hereby certify that on April 16, 2010 I will electronically file the foregoing with the
Clerk of the Court using the CM/ECF system which will then send a notification of such filing
(NEF) to the fo 1I0wing:
Jonathan D. Frieden
ODIN, FELDMAN & PETTLEMAN, P.c.
9302 Lee Highway, Suite 1100
Fairfax, VA 2203 I
[e-mail]

Counsel for Defendant, Google Inc.
True and correct copies of documents filed under seal will be sent electronically to:
[e-mail]
[e-mail]

April 16, 2010
Date

/s/
Warren T. Allen II (Va. BarNo. 72691)
Attorney for Rosetta Stone Ltd.
Skadden, Arps, Slate, Meagher & Flom LLP
1440 New York Avenue, N.W.
Washington, D.C. 20005-2111
Telephone: [phone]
Facsimile: [phone]
[e-mail]