Rosetta Stone LTD v. Google Inc.

Filing 226

MEMORANDUM ORDER re 94 Defendant Google Inc's Motion to Dismiss. Signed by District Judge Gerald Bruce Lee on 8/2/10. (klau, )

Rosetta Stone LTD v. Google Inc.

Doc. 226

IN THE UNITED

STATES

DISTRICT

COURT

FOR THE

EASTERN

DISTRICT OF VIRGINIA
DIVISION

ALEXANDRIA

Rosetta Stone Ltd., Plaintiff,

) )

v.
Google Inc.,

)
) )

Case No.

l:09cv736

(GBL/TCB)

Defendant.

MEMORANDUM ORDER

THIS MATTER is

before

the Court

on Defendant Google

Inc.'s

Motion to Dismiss.
Rosetta Stone Ltd.'s Defendant Google
advertisers

(Dkt.

No.

94.)

This case concerns Plaintiff
allegations that third party

("Rosetta Stone") ("Google")

Inc.

actively assists

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 The issue

title of paid advertisements on Google's website.

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 fail

forth in Rosetta Stone's

First Amended Complaint

to plausibly suggest a claim for unjust enrichment under
(2) the unjust enrichment claim is barred by
("CDA").

Virginia law and
the

Communications Decency Act

Dockets.Justia.com

I.

BACKGROUND

Based in Arlington, {"Rosetta Stone")
based

Virginia,

Plaintiff Rosetta Stone Ltd.

is

in the business of providing technology(First Am.

language-learning products and services.

Compl.

1(11 7 & 14.)

To preserve its trademark rights,

Rosetta
its

Stone has

secured federal

trademark registration for many of

trademarks and service marks,
STONE LANGUAGE & LEARNING

including:

ROSETTA STONE,

ROSETTA

SUCCESS,

ROSETTASTONE.COM,

and ROSETTA

WORLD
16.)

(the "Rosetta Stone Marks").

(First Am.

Compl.

lfl 15

&

Defendant Google

Inc.

("Google")

is an internet company

based in Mountain View,

California which owns and operates a to search the

search engine--a computer program that allows users

World Wide Web for particular information.
3
as

(First Am.

Compl.

HU

&

8.)

Google's search engine
other websites

is available on its
its

own website
(First

well as

that use

search engine.

Am.

Compl.

11 3 .)
Rosetta Stone began participating in one of

In 2002,

Google's advertising programs Program ("AdWords Program") as

called AdWords an advertiser.

Select Advertising (First Am. Compl.

f 36.)

Advertisers under the AdWords Program pay to have their
("Sponsored Links") displayed when a web user in Google's search

advertisements

enters certain words or phrases

("keywords")

engine.

(First Am.

Compl.

U1I 36 & 37.)

Advertisers can select

keywords

that will

trigger the Sponsored Links

directing users

to the advertisers'

chosen website.

(First Am.

Compl.
the

U 36.)

These Sponsored Links appear above or alongside
and in a color, typeface, and font size similar

search page
search
to

to the

results

generated

from a web user's

query.

In addition

triggering Sponsored Links,

the keywords may also be published

as part of the advertisement itself.
39.) Consequently,

(First Am.
to place

Compl.
their

UH 38

&

advertisers are able

advertising in front of consumers who have

identified themselves (First Am.

as interested in certain products or services.

Compl.

H 27.)
Google prohibited advertisers from

For many years,

purchasing specific

trademarks as keyword triggers for Sponsored

Link advertisements.

(First Am.

Compl.

H 44.)

However,

Google

revised this policy and began allowing advertisers to purchase specific trademarks as keyword triggers for the Sponsored Links.

(First Am.

Compl.

H 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,
words, phrases,

the right to use the Rosetta Stone Marks,
similar to those Marks as keyword

or

or terms

triggers that cause Sponsored Links to be displayed,
search engine

Google's

is helping other advertisers misdirect web users

to websites (ii) sell

of

companies

that

(i)

compete

with Rosetta Stone,

language education programs

from Rosetta Stone's

competitors,
(iv)

(iii)

sell counterfeit Rosetta Stone products,
to language education.

or

are entirely unrelated

(First Am.

Comp.

H 5.)
In its First Amended Complaint, Rosetta Stone specifically

alleges

seven Counts

for relief:

I

(trademark/service mark II (contributory

infringement under the Lanham Act);

trademark/service mark infringement under the Lanham Act);

III

(vicarious trademark/service mark infringement under the Lanham
Act);
V

IV

(trademark/service mark dilution under the Lanham Act);
VI (unfair

(trademark infringement under Virginia Law);

competition under Virginia law);
under Virginia Law).

and VII

(unjust enrichment
Count VII of

Google now moves

to dismiss

the First Amended Complaint.

II.

STANDARD OF REVIEW

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.
Civ. P.

544,

561

(2007)
"A

(internal citations omitted);

see Fed. R.

I2(b)(6).

pleading that offers labels and conclusions or a formulaic
recitation of the elements of a cause of action will not do."

Ashcroft

v.

Iqbal,

129

S.

Ct.

1937,

1949

(2009);

Twombly,

550

U.S.

at

555.

A complaint

is

also insufficient

if

it

relies upon

"naked assertions devoid of further factual enhancement."
129 S. Ct. at 194 9 (internal citations omitted).

Iqbal,

In order to

survive

a Rule 12(b)(6)

motion to dismiss a that is plausible on

complaint must set

forth "a claim for relief

its

face."

Jd.;

Twombly,

550 U.S.

at 570.
factual

A claim is
content

facially-

plausible "when the plaintiff pleads the court to draw the reasonable

that allows is

inference

that

the defendant

liable for the misconduct alleged."
Twombly, 550 U.S. at 556.

Iqbal,

129 S.

Ct.

at 1949;

In considering a Rule 12(b)(6)
construe the complaint in the

motion,

the Court must

light most

favorable to the

plaintiff,

read the complaint as a whole,
true. Mylan Lab.,

and take the
v. Matkari,

facts
7 F.3d

asserted therein as

Inc.

1130,

1134

(4th Cir.

1993).

In addition to the complaint,

the

court may also examine "documents by reference,

incorporated into the complaint judicial

and matters of which a court may take

notice."
308, 322

Tellabs,
(2007).

Inc.

v.

Makor Issues & Rights,

Ltd.,

551 U.S.
legal

"Conclusory allegations

regarding the

effect of the facts alleged" need not be accepted.
Havel, 43 F.3d 918, 921 (4th Cir. is 1995). Because

Labram v.
the central

purpose of

the complaint

to provide

the defendant "fair notice

of what the plaintiff's

claim is and the grounds upon which it

rests,"
some

the plaintiff's

legal allegations must be supported by
to allow the defendant to prepare

factual basis

sufficient

a fair response.

Twombly,

550 U.S.

at

556

n.3.

Ill.

ANALYSIS

A.

Unjust enrichment under Virginia law 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
(1)

in

nature and requires a plaintiff benefit on the defendant; conferring benefit; and (2)

to show:

it conferred a the

the defendant knew of

(3)

the defendant accepted or retained it inequitable Herald for

the benefit under circumstances which render the defendant to do

so without paying for its value.

Schmidt v.

Household Finance Corp.,

661 S.E.2d 834,

838

(Va.

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
the Rosetta Stone Marks.
Complaint states:

to Google through Google's use of
the First Amended

Specifically,

Google uses and sells Rosetta Stone's
as keywords that trigger third-party,

trademarks
paid

advertisements

on Google

search-results

web pages

without authorization from Rosetta Stone.

Through

its AdWords program,
sell, Rosetta Stone's

Google

sold,

and continues
to, among

to

trademarks

others,

Rosetta Stone's affiliates,

competitors,

resellers and Through to

and companies sales of

illegally selling pirated Rosetta Stone's

and counterfeit Rosetta Stone products. such unauthorized trademarks, Google has

received and continues

receive millions of dollars

in revenue annually.

(First Am.

Compl.

fl

122.)
Rosetta Stone's trademarks

Through the auction of
Google

unjustly derived a benefit

from Rosetta

Stone in the
Stone,

form of higher payments

from Rosetta
from third ....

increased advertising revenue

parties and other economic benefits

(First Am.

Compl.

1 123.)
requested that Google not auction

Rosetta Stone

its trademarks and affiliates,
has

to third parties,

including resellers
thus

but Google has refused to alter its
Rosetta Stone

trademark policy or practices.

conferred involuntarily a benefit on Google,

which is knowingly using the goodwill established

in the Rosetta Stone trademarks to derive additional
advertising revenues.

(First Am.

Compl.

fl

124.)
no facts which show that

However,

Rosetta Stone alleges

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
for the benefit

the defendant promised to pay the plaintiff

received.

See Nedrich v.

Jones,

429 S.E.2d 201,

207

(Va.

1993)

(citing Mullins v.

Mingo Lime

& Lumber Co.,

10

S.E.2d 492,

495

(Va.

1940)).

Here,

the First Amended Complaint contains no
an understanding by Google earned for paid There are no

factual allegations which suggest that it owed Rosetta Stone revenue containing

advertisements factual

the Rosetta Stone Marks. that Google

allegations

suggesting

engaged in

discussions with Rosetta Stone, written or oral,
Rosetta Stone was

or entered into an agreement, trademark policy such that
it would be paid for

regarding Google's
led by Google

to believe

Google's use of

the Rosetta Stone Marks as keywords.
that Google's promise to pay is

Rosetta Stone contends

implied from the consideration it received, profits

which includes the Rosetta

from the alleged unauthorized auction of

Stone Marks.
However, contract

(First Am.

Compl.

flfl 33,

62,

122,

123 & 124).
a breach of in favor

in Appleton v. case where

Bondurant & Appleton,

P.C.,

the court denied summary judgment

of defendants on a quantum meruit claim, Rosetta Stone cites to support

and the very case which the court

its contention,

reasoned that a plaintiff cannot recover under an unjust

enrichment claim unless he can show "sufficient additional facts
that imply a promise to pay."
*5 (Va. Cir. Feb. 28, 2005).

No.

04-1106,

2005 WL 5174 91,

at

Merely stating that

"Google knows

that

it is deriving monetary benefits
trademarks

from the sale of Rosetta

Stone's

through its AdWords program and it would be

8

inequitable

for Google

to retain those benefits"

is

insufficient.
must present

(First Am.

Corapl.

% 123.)

Rather,

Rosetta Stone
that

factual content beyond labels to draw the reasonable

and conclusions

allow the Court

inference that Google the Rosetta
Rosetta Stone

promised to compensate Rosetta Stone
Stone Marks as keywords

for use of
known

or should have

that

reasonably expected payment
S. Ct. at 1949.

for use

of

their Marks.

Iqbal,

129

The mere

fact

that a party holds

a registration on a mark See KP

does not preclude another's use of

the mark altogether.

Permanent Make-Up,
Ill, 121-22 (2004)

Inc.

v.

Lasting Impression I,
that within the common words

Inc.,

543 U.S.

(concluding overlap of

common law and

statutory law some

is permissible and

even expected);

OBX-Stock,

Inc.

v.

Bicast,

Inc.,

558

F.3d 334,

339

(4th Cir.

2009)

("[T]he law also protects the

'linguistic

commons'

by denying mark holders an exclusive interest in words

that do not identify goodwill attached to products or product
sources but rather are used for their common meaning or meanings

.

.

.

.")

Absent allegations of an understanding or agreement
the First Amended Complaint is also devoid

between the parties,

of allegations that Rosetta Stone must necessarily be paid by

third parties for the right to auction the Rosetta Stone Marks
as keywords. Because the First Amended Complaint fails to set

forth facts which satisfy the elements of an unjust enrichment

claim,

it

thereby fails

to satisfy the pleading

standards

of

Twombly and Iqbal.

B.

Communications Decency Act Notwithstanding Rosetta Stone's failure to sufficiently

allege

the elements

of

an unjust

enrichment

claim under Virginia

law,

the claim is barred by the CDA because Google

is no more

than an interactive computer service provider1 and cannot be
liable for the actions the CDA, "[n]o provider of . third party advertisers. . . Pursuant to

of an interactive computer service

shall be treated as the publisher or speaker of any information

provided by another information content provider."

47 U.S.C.

§

230 (c) (1) (1998).

As such,

an interactive computer services

provider is immune from liability for content created by third parties. Nemet Chevrolet,
254 (4th Cir.

Ltd.

v.

Consumeraffairs.com,
(citation omitted); 339 F.3d 1119, 1124

Inc.,

591 F.3d 250, Carafano v.

2009) Inc.,

see (9th Cir.

Metrosplash.com,

2003)

("[S]o long as a third party willingly provides the the interactive provider receives

essential published content,

full immunity regardless of the specific editing or selection
process.").

Contrary to

its contention,

Rosetta Stone's

claim here

On September 18,

2009,

the Court dismissed Rosetta Stone's business

conspiracy claim under Virginia Code § 18.2-499 after finding that Google is not an information content provider and, therefore, enjoys immunity under the
CDA. (Dkt. No. 19.)

10

relates
Google's

to the content of

the Sponsored Links appearing on
Its claim turns on Google's
Specifically, that

search results page.

relationship with third party advertisers.

Google

earns money when a user decides

that

a particular

Sponsored Link may be useful and clicks on that

link.

(First

Am.

Compl.

HH 31-33.)

The user's decision to click on a
that triggers the third party

Sponsored Link--the act

advertiser's payment

to Google--is

in fact driven by content that

provided by the advertiser. third party advertisers are
terms and create the content

Rosetta Stone acknowledges

the ones who select the keyword
for the Sponsored Links appearing

on Google's search results page.

(First Am.

Compl.

UH 36

& 60.)

As a provider of online advertising space,
third party advertisers

Google

simply assists

in refining their selected keyword

terms,

which in turn trigger the appropriate Sponsored Links.

By making available keyword tools and providing advertisers the

ability to refine their keyword term selection,

Google does not

create the Sponsored Link contents but merely exercises
editorial discretion.

In 800-JR Cigar,

Inc.

v.

GoTo.com,

Inc.,

a case relied on

by Rosetta Stone,

the court denied immunity to a pay-for-

priority internet search engine who,

like Google,

sells to 437 F.

advertisers the right to use keywords as search terms.
Supp. 2d 273, 295 (D.N.J. 2006). However,

800-JR Cigar is

11

distinguishable

from the

instant case

for at

least

two reasons.

First,

the court denied CDA immunity because the defendant,
did not qualify as an interactive computer

unlike Google,

service provider. situation, responsible Because

Id.

Second, where

the

court

did not deal with a are at 295.

like here,

third party advertisers Id.

for selecting the keyword triggers. the CDA is

the purpose of

to shield interactive computer

providers parties,

from the id.,

fraudulent and abusive conduct of third to the instant case, warrants
from any

it is applicable

granting immunity to Google,
recovery under a claim

and bars Rosetta Stone

for unjust enrichment.

IV.

CONCLUSION

For these reasons,

the Court grants Google's Motion to

Dismiss

Count VII of Rosetta Stone's First Amended Complaint.
the Court has determined in a separate memorandum

Because

opinion in this case that Google's action or words does not give

rise to civil liability to Rosetta Stone,
prejudice as
Ex'x, 371

this dismissal
Foman v.

is with
Davis,

further amendment would be
178, 182 (1962).

futile.

U.S.

The Clerk is directed to forward a copy of the Memorandum
Order to counsel.

Entered this
Alexandria,

^r%Jj day of August, 2010.

Virginia

M

12

Gerald Bruce Lee

United States District Judge