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, )

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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 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., (citation omitted); 339 F.3d 1119, 1124 Inc., 591 F.3d 250, Carafano v. 2009) Inc., see (9th Cir., 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., 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

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