Rosetta Stone LTD v. Google Inc.

Filing 227

MEMORANDUM OPINION re Plaintiff's Motion for Partial Summary Judgment as to Liability, Defendant's Motion for Summary Judgment. Signed by District Judge Gerald Bruce Lee on 8/3/10. (klau, )

Rosetta Stone LTD v. Google Inc.

Doc. 227

IN THE

UNITED

STATES

DISTRICT

COURT

FOR

THE

EASTERN

DISTRICT OF VIRGINIA

ALEXANDRIA DIVISION

Rosetta Stone Ltd.,

)

Plaintiff,

)

V.
Google Inc.,

)
)

Case No.

l:09cv736

(GBL/TCB)

Defendant.

)

MEMORANDUM OPINION

THIS MATTER is before the Court on Plaintiff's Motion for

Partial Summary Judgment as

to Liability

(Dkt. {Dkt.

No. No.

103) 112).

and This

Defendant's Motion for Summary Judgment
case concerns

Plaintiff Rosetta Stone Ltd.'s

{"Rosetta Stone")

allegations that Defendant Google Inc.

("Google")

is actively

assisting third party advertisers to mislead consumers and

misappropriate Rosetta Stone's trademarks by using the
trademarks (1) as keyword triggers for paid advertisements and

(2)

within the title and text of paid advertisements on Google's
There are five issues before the Court. The first

website.

issue is whether Google's practice of auctioning Rosetta Stone's
trademarks to third party advertisers for use in their Sponsored

Link titles and advertisement text creates a likelihood of
confusion to warrant granting summary judgment in favor of
Rosetta Stone as to Counts I (trademark/service mark

Dockets.Justia.com

infringement under the Lanham Act),
under Virginia Law), law). second and VI

V

(trademark infringement

(unfair competition under Virginia likelihood of of confusion, the

Notwithstanding issue

a finding of

is whether Google's use keyword triggers under

Rosetta Stone's

trademarks as

its advertising program is

functional and, issue

therefore,

a non-infringing use.

The third

is whether Google

intentionally induces

third party

advertisers

to bid on Rosetta Stone's

trademarks or knowingly

continues

to permit

advertisers
the

selling counterfeit Rosetta
in their Sponsored Link

Stone products

to use

trademarks

titles and advertisement

text,

despite Rosetta Stone's reports

of

infringement,

to warrant granting summary judgment in favor
to Count II (contributory trademark/service

of Rosetta Stone as

mark infringement under the Lanham Act).
whether Google exercises

The

fourth issue

is

joint ownership and control

over third

party advertisers'

Sponsored Link titles and advertisement

text

on its website to warrant granting summary judgment
Rosetta Stone as to Count III (vicarious

in favor of

trademark/service mark

infringement under the Lanham Act).

The final

issue is whether
loss resulting to
for

Rosetta Stone sufficiently demonstrates economic from a decline in its brand name,

which is attributable

Google's practice of auctioning Rosetta Stone's

trademarks

profit to third party advertisers,

to warrant granting summary

judgment in favor of Rosetta Stone as to Count IV

(trademark/service mark dilution under

the

Lanham Act).

The Court grants
Counts I,

summary judgment

in favor of Google on
trier of fact could

V and VI because no

reasonable

find that Google's practice of

auctioning Rosetta Stone's

trademarks as keyword triggers
use of in

to third party advertisers
creates

for

their Sponsored Link titles and text to the source

a likelihood

confusion as

or origin of Rosetta Stone's Rosetta Stone's searching on

goods.

Furthermore,

because Google uses

trademark to identify relevant

information to users

those
one. Count

trademarks,

the use

is a

functional

and non-infringing

The Court grants

summary judgment trier of

in favor of Google on fact could find that

II because no reasonable

Google

intentionally induces

or knowingly continues

to permit to use

advertisers the

selling counterfeit Rosetta Stone products in their Sponsored Link titles summary judgment

trademarks

and advertisement in favor of Google

text.

The Court also grants

on Count

III because no reasonable trier of joint

fact could find that

Google exercises

ownership and control over third party

advertisers'

Sponsored Links

titles and text.

Neither Google's

employees nor its Query Suggestion Tool directs or influences

third party advertisers to bid on Rosetta Stone's trademarks
when they subscribe to Google's advertising program. Finally,

the Court grants
because there

summary judgment in favor of Google on Count IV
fact that

is no genuine dispute of material

Rosetta Stone's brand awareness has only increased since Google changed its terms titles trademark policy to permit triggers and as words text. the use of trademarked

as keyword

within Sponsored Link

and advertisement

I.

BACKGROUND

A.

Plaintiff Rosetta Stone Ltd.

and the Rosetta Stone Marks

Rosetta Stone is a Virginia-based corporation founded in 1992 that provides technology-based language (PL's Mem. Supp. learning products J. 1-2.) As the

and services. foremost

Partial Summ.

language education company in the United States,
language learning products are available in over

Rosetta Stone's

thirty languages and are used by schools,

corporations,

government entities and millions of

individuals in over 150

countries.
rights,

(Adams Decl.

^ 10-11.)

To preserve its trademark

Rosetta Stone obtained federal trademark registration its marks, including: ROSETTA STONE, ROSETTA STONE

for some of

LANGUAGE LEARNING SUCCESS,

ROSETTASTONE.COM,

and ROSETTA WORLD

(the
2-7,

"Rosetta Stone Marks").
Exs. 1-6.)

(Eichmann Decl.

H 2;

May Decl.

^

These Marks have become distinctive and

uniquely associated with Rosetta Stone.
J. 3-4.)

(PL's Mem.

Supp.

Summ.

In order to build the fame,
Marks, Rosetta Stone advertises

reputation,

and goodwill of

its

through a variety of media,

including television,

radio,

newspapers,

magazines,

direct mail,

and telephone directories.

(Eichmann Decl.

1M 3-6,

Exs.

1-3.)

It conducts a substantial amount of

its business over the including those offered in the development of

Internet using many web-based services, by Google, and makes a sizeable

investment

its online business.

(Eichmann Decl.

U 6,

Exs.

1-3.)

Along

with promoting its products and services via its own website
(www.rosettastone.com), of third parties. Rosetta Stone advertises resellers on the websites

It authorizes

such as Amazon.com,

Barnes

& Noble,

and Borders,
Ex.

to sell authentic Rosetta Stone
72 at 147:9-148:18, Ex. 58 at with
Stone

products.

(Caruso Decl.

96:12-98:10.)

Specifically,
that

it entered into agreements
them to use the Rosetta

Amazon.com and eBay

allow

Marks
44.)

in connection with advertising.

(Caruso Decl.

Exs.

40-

B.

Defendant Google

Inc.

and Google's

Search Engine

Located in Mountain View, company that owns and operates

California,

Google

is an Internet

one of the world's most utilized

internet

search engines,

www.google.com.

(Spaziano Decl.

Ex.

1

(Ans.

1 3).)

The Internet is a global network of millions of
and the World Wide Web is an

interconnected computers

application running on the Internet

that allows

for the display

of text,

images,

and sound.

(First Am.

Compl.

fl

13.)

Much of

the

information on the that

World Wide Web is

stored in the

form of

web pages

can be assessed through a computer connected to

the

Internet

(available "ISPs")
such as

through commercial

Internet service

providers or
a "browser,"

and viewed using a computer program called
Microsoft Internet Explorer. A web page is

identified by its

own unique Uniform Resource Locator

("URL")

or

"web address"

{e.g.,

http;//www.rosettastone.com),
the website's "domain name"

which

ordinarily includes

(e.g.,

www.rosettastone.com).
Web users or piece of searching

(First Am.

Compl.

fl 13.)
service

for a specific company product, but who do not it may be

information,

know the exact domain found, may use Google's

name or website address where

search engine to locate it.
engine

(First Am.

Compl.

H 25.)

A search

is a computer program that allows web users

to search the

World Wide Web for websites

containing particular content.

(First Am.

Compl.

fl 3.)

A search engine checks the terms
its databases and applies a formula or

entered into it against

algorithm to produce a search results page that lists the websites that may relate to the user's search terms and their

corresponding links.
search engine,
the "enter" key

(First Am.

Compl.

t 25.)

To use Google's
and hit

a web user need only type
(or click the

in a few words
button)

"Google Search"

to receive

a list of hyperlinks identifies as

("links") to the

to web pages

that Google (First Am.

relevant

search requested.

Compl.

1 4.)

The search results generated by Google's search
"natural" or "organic" to system that the search

engine are determined by a lists results in order of

objective relevance

terms

input into the search engine,
top of

with the most relevant
the web page. (First Am.

websites appearing near the

Compl.

H 26.)
is available not only on its own

Google's search engine

website but also through other popular websites Online, Netscape, EarthLink, CompuServe,

such as America AT&T

Shopping.com,

WorldNet,
Google of

and Ask.com.

(First Am.
to affix a

Compl.

f 34.)

In addition,
at the top

invites consumers

"Google Toolbar"

their Internet browsers
searches

that allows

these users to conduct
currently visiting

Google

even when they are not

www.google.com.

(First Am.

Compl.

t 34.)

As such,

Google's
and over

content network reaches
70% of U.S. Internet

80% of

global

internet users,

searches use Google's

search engine.

(First Am.

Compl.

11 35.)
the "enter" key, Google not only

When a web user hits

provides web users with organic search results,

it also displays

paid advertisements above or alongside the organic search
results.
76 at

(Caruso Decl.
Ex.

Ex.
64

59 at 202:1-9
at

& 205:20-206:25,
These paid

Ex.

175:22-177:16,

112:16-113:1.)

advertisements consist of a combination of content and a link to
the advertiser's website such that if a user clicks on the link,

she will open the advertiser's website,

which offers

additional

information about the advertiser and may provide the user with
an option to purchase the advertiser's goods Google and services. To of

offer such content-based links,

relies on at

least one

its advertising programs

called the AdWords

Select Advertising

Program

("AdWords Program").

(First Am.

Compl.

U 36.)

C.

Google's AdWords

Program

Google's AdWords
program that displays engine in the form of

Program"

is

an auction-style advertising
to users of Google's search 1

advertisements

Sponsored Links.

(Spaziano Decl.

Ex.

(Ans.

Uf 5 &= 36).)

The Sponsored Links are displayed above or
search results. (Spaziano Decl.

to the right of

the organic

Ex.

1

(Ans.

1 28).)

Those above the organic search results
those to the right

share

a yellow rectangular background while

of

the organic

search results are Exs. 10 & 13.) size

separated by a blue

line.

(Caruso Decl. color,

These Sponsored Links similar to the

appear in a

typeface,

and font

search results
Exs. 10 & 13;

generated from a web user's

query.

(Caruso Decl.

First Am.

Compl.

^ 3 8.)
Program, Google offers an advertiser the

Under the AdWords

ability to select certain words or phrases

("keywords")

that,

combined with the advertisement's quality and the maximum bid price for the advertisement, will trigger a Sponsored Link to

the

advertiser's

chosen website.

(Caruso Decl.

Ex.

52

at

18:17-

20:19,

65:13-66:8,

&

100:16-101:1.)

Advertisers

select

the

keywords

from a list of

words or phrases generated keyword tools, of which there and (3) a are

algorithmically using Google's three: (1) Keyword Tool; (2)

Query Suggestion Tool;

trademark-specific version of (Caruso Decl. Ex. 54 at

the Query Suggestion Tool. 18:11-17, & 21:25-22:11.)

13:18-14:4,

Before the list

is displayed to advertisers, terms

however,

it is

passed through a filter which removes into the filter as trademarked terms
(Caruso Decl.

that Google entered

for which Google has
Ex. 54 at 19:8-24, 23:22-

received a complaint.

24:7,

& 25:2-7.)

Alternatively,

advertisers can also select

the

keywords on their own without relying on the list generated by
Google's keyword tools. (Lloyd Decl. Ex. 9 & 11.) If the

advertisement's quality and bid price are sufficiently high, qualifies to be shown on Google.com
17:12-21:18, 65:13-66:8, &

it

(Caruso Decl.

Ex.

52 at
Ex. 1

100:16-101:1;

Spaziano Decl.

(Ans.

HH 29 & 39),
For example,

Ex.

2 at GOOG-RS-0306288,

Ex.

3 at 9.)
a

using the AdWords Program,
children's shoes,

Company B,

company that sells

can cause Google

to display

its Sponsored Link whenever a Google user conducts a search using the term, "children's shoes." Company B can also cause

its Sponsored Link to appear whenever the user searches for the
term "Company A," Company B's competitor, who also sells

children's

shoes.

Consequently,
shoes

whenever a Google user wishing
a search of the

to buy children's

from Company A conducts

term A
the

(Company A's

trademark),

a Sponsored Link would appear on
to view children's If the user

search results page, from Company B,

inviting the user

shoes

Company A's

competitor.

clicked on Company B's
the

link,

Company B's website would open on
to purchase children's

screen and the user might be able

shoes

from Company B.
advertisers

Thus,
are able

by participating in the AdWords
to place their advertising in

Program,

front of

consumers who

identify themselves as

interested in

certain products

or services

offered by the advertisers'

companies.

(First Am.

Compl.

H 27.)

D.

Google's Trademark

Policy

Google's policy of allowing third party advertisers to
purchase specific trademarks as keyword triggers (Lloyd Decl. Ex. for the 1; First Am.

Sponsored Links began in 2004.

Compl.

f 44.)

In its Form S-l Registration Statement to the
dated April 29, 2004, Google

Securities Exchange Commission,
informed its investors

of the following:
we

In order to provide users with more useful ads,
U.S. and in Canada. Under our new policy, we no

have recently revised our trademark policy in the
longer disable ads due advertisers of
the ads.

to selection by our as keyword triggers for

trademarks

(Spaziano Decl.

Ex.

7).

The S-l

Form further states:

10

As a result of subject . . . . to more

this

change

in policy, infringement

we may be lawsuits

trademark

Adverse results
in a

in these
loss of

lawsuits may

result in,

or even compel,

a change

in this practice
for us,

which could result

revenue

which could harm our business.

(Spaziano Decl.
In 2009,
Decl. Ex. 1.)

Ex.

7).
trademark policy.
Program now makes

Google again revised its
Specifically,

{Lloyd
two

the AdWords (1)

distinct uses of

a given keyword:

as a trigger to the

Sponsored Link advertisement advertisement
allows,

and

(2)

as part of Ex. 1-2.)

the The new policy
authorized in the

itself.

(Lloyd Decl.

in addition to advertisers

the brand owner and its to include the trademark

licensees,

advertisement's
bearing the

text

if

they
(2)

(1)

resell

legitimate products
replacement parts,

trademark;

sell

components,

or compatible products provide non-competitive corresponding to the
Caruso Decl. Ex. 55

corresponding to the information about

trademark;

or

(3)

the goods

or services Exs. 2, 4;

trademark term.
at 154:6-15.)

(Lloyd Decl.

To enforce
team, known as

its

trademark policy,

Google

employs a trademark
to

the Trust

and Safety Team,

which responds

complaints about advertisements
of its AdWords Program.

that violate certain conditions
Ex. 67 at 7:24-8:19;

(Caruso Decl.

Lloyd Decl.

HH 9-11.)

As a general practice,
problems with

the Trust and

Safety Team works

to address

fraud and

11

counterfeiting.

(Caruso Decl.

Ex.

68

at

50:4-51:10,

Ex.

53

at

34:21-37:11,
The

Ex.

67 at 108:2-109:16;
to notices and of

Louie Decl.

HH 1-5.)
on

Team responds

counterfeit advertisements

Google's website

takes down any advertisements

confirmed to

violate Ex. 65

its AdWords at

Program.

(Caruso Decl.

Exs.

21,

23-25,

28,

135:11-138:25.)

For example,

when Rosetta Stone's
a

Enforcement Manager,

Jason Calhoun,

informs Google that

particular advertiser is
products, the Google

selling counterfeit Rosetta Stone
including removing 23-25, 28, Ex.
its

responds by taking action, (Caruso Decl.
Exs.

advertisement.

Exs.
B-C.)

21,

65

at

135:11-138:25;

Calhoun Decl.

But

despite

efforts,

some advertisers

have used loopholes

in Google's

programming to create Sponsored Links
Google's users products to websites that

that deceive and misdirect

sell counterfeit Rosetta Stone

or suggest

to consumers a connection to Rosetta Stone

that does not exist.

(First Am.

Compl.

H

58.)

E.

Procedural History

Based on Google's

current

trademark policy,

Rosetta Stone

brings this action alleging that Google, Program,

through its AdWords

is helping third parties to mislead consumers and

misappropriate the Rosetta Stone Marks by using them as keyword

triggers for Sponsored Links and using them within the text or title of the Sponsored Links. (First Am. Compl. 1M 70-124.)

12

Rosetta Stone alleges

that by giving third party advertisers

under the AdWords Marks or words,
keyword triggers

Program the right to use or terms

the Rosetta Stone those Marks as
to be displayed,

phrases,
that

similar to

cause

Sponsored Links

Google

is helping these advertisers misdirect web users companies that (i)

to (ii)

websites of sell

compete with Rosetta Stone, from Rosetta Stone's

language education programs

competitors,
(iv)

(iii)

sell counterfeit Rosetta Stone products,
language education.

or

are entirely unrelated to

(First Am.

Comp.

H 5.)
to

According to Rosetta Stone,
trademark infringement and

Google's conduct

amounts

is driven by an economic

incentive to increase the number of Sponsored Links that appear for every term entered into its search engine because Google is "cost-per-click" basis.

paid by its AdWords advertisers on a

(Spaziano Decl.

Ex.

1

(Ans.

HI 37

& 63).)
Rosetta Stone alleges seven

In its First Amended Complaint,

Counts for relief:
the Lanham Act); II

I

(trademark/service mark infringement under

(contributory trademark/service mark

infringement under the Lanham Act);

III

(vicarious

trademark/service mark infringement under the Lanham Act); (trademark/service mark dilution under the Lanham Act); V
(trademark infringement under Virginia Law);
competition under Virginia law); and VII

IV

VI

(unfair
enrichment

(unjust

under Virginia Law).

The parties now move for summary judgment

13

on all

counts.

Because Google

filed a Motion to Dismiss Count

VII of Rosetta Stone's Amended Complaint1
filings its Motion for Summary Judgment,
only Counts I-VI.

(Dkt. No.

94.)

before

this Memorandum Opinion

addresses

II.

STANDARD

OF

REVIEW

Under Federal Rule of

Civil

Procedure

56,

the Court must

grant summary judgment if
there is no genuine

the moving party demonstrates
to any material fact,

that
the R.

issue as

and that law.

moving party is entitled to

judgment as a matter of

Fed.

Civ.

P.

56 (c).

In reviewing a motion for summary judgment, facts in a light most favorable to the nonInc., 477 U.S.

the

Court views the moving party. 255 (1986).

Anderson v.

Liberty Lobby,

242,

Once a motion for summary judgment

is properly made

and supported,

the opposing party has the burden of showing that

a genuine dispute exists.
Radio Corp., 475 U.S. 574,

Matsushita Elec.
587 (1986).

Indus.

Co.

v.

Zenith

tt[T]he mere existence of

some alleged factual dispute between the parties will not defeat

an otherwise properly supported motion for summary judgment;

the

requirement is that there be no genuine issue of material fact."
Anderson, 477 U.S. at 247-48 is a (emphasis added). fact that might affect the outcome

A "material

fact"

of a party's case.

Id.

at

248;

JKC Holding Co.

v.

Wash.

Sports

1

The Court addresses Google's Motion to Dismiss Count VII in a separate

Memorandum Order.

14

Ventures, fact

Inc.,

264

F.3d 459,

465

(4th Cir.

2001).

Whether a

is considered to be
law, and

"material"

is determined by the
facts that might law will Anderson, 265 (4th All

substantive affect

"[o]nly disputes over the suit under

the outcome of the

the governing

properly preclude U.S. at 248;

entry of v.

summary judgment." 249 F.3d 259,

Hooven-Lewis

Caldera,

Cir.

2001).

A "genuine"

issue is

concerning a

"material"

fact

arises when the evidence

sufficient

to allow a reasonable

jury to return a verdict
Anderson, ill U.S. at

in the nonmoving party's
Rule 56(e) requires

favor.

248.

the nonmoving

party to go beyond the pleadings and by its own affidavits,

or

by the depositions,
on file,

answers

to interrogatories,
facts showing that

and admissions
there is a

designate specific

genuine issue for trial.
317, 324 (1986).

Celotex Corp.

v.

Catrett,

477 U.S.

Ill.

ANALYSIS

A.

Direct Trademark Infringement Under the Lanham Act2
The first and most contentious issue between the parties is

whether Google is liable for direct trademark infringement based

on its practice of auctioning the Rosetta Stone Marks to third
party advertisers for use in their Sponsored Link titles and

2

The Court addresses Counts I, V and VI together because the test for

trademark infringement under the Lanham Act is essentially the same as that for common law trademark infringement and unfair competition under Virginia
law.

15

advertisement

text.

On

this

issue,

the

Court

grants

summary

judgment

in favor of Google because no reasonable

trier of fact

could find that Google's practice of trademarks as keyword triggers

auctioning Rosetta Stone's

to third party advertisers

creates a likelihood of confusion as to the source or origin of
Rosetta Stone's products.
provides,

Section 32(1)

of

the

Lanham Act

in pertinent part: shall, without the consent of the

Any person who

registrant counterfeit,

(a)

use

in commerce any reproduction,
imitation of a
. . .

copy,

or colorable

registered mark

in connection with the is

advertising of confusion,

any goods or services on or in
likely to cause

connection with which such use

or to cause mistake,

or to deceive; . . .

or

(b)

reproduce,

counterfeit,

copy or colorably

imitate a registered mark and apply such the . . . advertising of goods or to cause mistake,

to be used in commerce upon or in connection with or services on or in is likely to cause shall or to deceive, connection with which such use confusion,

be liable in a civil action by the registrant
15 U.S.C. § 1114(1) (2005).

....

A cause of action for trademark

infringement under the Lanham Act requires the plaintiff

to

prove that (3)

(1)

it possesses a mark;

(2)

defendant used the mark; (4)
offering

defendant's use of

the mark occurred in commerce;
sale,

defendant used the mark in connection with the

for sale,
(5)

distribution,

or advertising of goods or services;

and

defendant used the mark in a manner likely to confuse
to the source or origin of goods or services.

consumers as

People for the Ethical

Treatment of Animals v.

Doughney,

263

16

F.3d 359,

364

{4th Cir.

2001).

Whether consumer confusion is
factors: (1) the strength or two marks the marks to

likely depends on the distinctiveness of consumers; identify; (3) (4)

following nine (2)

the mark;

similarity of

similarity of

the goods and services facilities

similarity between the
(5) similarity of

used by the

markholders;

advertising used by the

markholders;

(6)

defendant's

intent;

(7)

actual confusion;

(8)

quality of

the defendant's product;
George & Co., 393 (4th Cir.

(9)

sophistication of
v.

the

consuming public. Ltd., 575 F.3d 383,

L.L.C. 2009).

Imagination Entm't Not all Id. factors,

however,
Busch, 1992)) .

are relevant or weighed equally.
v. L & L Wings, Inc., 962

{citing Anheuser320 {4th Cir.

Inc.

F.2d 316,

Here,

the parties do not dispute

the

first

four trademark

infringement elements.
20; Def.'s Mem. Supp.

(PL's Mem.
Summ. J.

Supp.
The

Partial Summ.
inquiry,

J.

15-

8-23.)

therefore,

is whether Google's practice of auctioning the Rosetta Stone
Marks as keyword triggers for Sponsored Links and allowing their use within the Sponsored Links' text or title is likely to

create confusion among consumers as to the source or origin of Rosetta Stone's goods or services. Specifically, only three of

the nine confusion factors are in dispute:

(1)

defendant's

intent;

(2)

actual confusion;
(PL's Mem.

and
Supp.

(3)

the consuming public's
J. 17-26;

sophistication.

Partial Summ.

17

Def.'s Mem. factors
1.

Supp.

Summ.

J.

15-20.)

The

Court addresses

these

in turn.

Intent

No genuine dispute of material cause a reasonable juror to
potential purchasers of

fact exists which would intended to confuse

find that Google

Rosetta Stone's as

products by auctioning or allowing their

the Rosetta Stone Marks

keyword triggers

use within the is no evidence

Sponsored Link titles and text.

Moreover,

there

that Google is attempting to pass off "[T]he relevant
to profit

its goods in
but an

or services as Rosetta Stone's.
trademark cases

intent
. . .

is not merely an intent

'intent to confuse v. L & L Wings,

the buying public' 962 F.2d 316,

"

Anheuser-Busch, (4th Cir. 1992)

Inc.

Inc.,

321

{quoting Pizzeria Uno Corp. Cir. 1984)). Intent

v.

Temple,

747

F.2d 1522,

1535

(4th

is generally shown by the defendant's
and pass them off as those of

efforts

to create knock-offs

other's.

See Pizzeria Uno,

747 F.2d at 1535

("[0]ne

intending

to profit from another's reputation generally attempts

to make

his signs,

advertisements,

etc.,

to resemble the other's so as
Best & Co.
335

deliberately to induce confusion.");
F.2d 374, 377 (2d Cir. 1948), cert,

v.

Miller,
818

167

denied,

U.S.

(1948)

(wIf the defendant selects a trademark or trade name similar to
the plaintiff's with intent
the plaintiff, proof of his

to palm off his wares as
intent may be

those of
. .

strong evidence of

18

.

the likelihood of confusion.").
In simplified terms, Google's popular search engine

aggregates

information and provides advertising space.

This

is

akin to a newspaper or magazine

selling advertising space.

To attract advertisers,
advertisements

Google created a system for displaying
for its

that would be economically profitable

company and paid advertisers.

It does not,

however,

sell

Google-made products on its website.

Web users do not visit

Google's website to buy Google products because Google does not
sell products. Any argument that Google is trying to palm off

its goods as those of Rosetta Stone's is,
To prove that Google

therefore,

unfounded.
on the

unlawfully intended to trade

Rosetta Stone Marks,

Rosetta Stone points

to Google's knowledge

that use of trademarked keywords
can generate more revenue. 0309882 & Ex. 19; PL's Mem.

in the text of Sponsored Links
Ex. 23.) 18 at GOOG-RSRosetta Stone

(Spaziano Decl. Supp. Summ. J.

insists Google revised its trademark policy in 2009 knowing that
the change would result in higher click-through rates.

(Spaziano Decl.

Ex.

17.)

However,

as the Fourth Circuit

reasoned in Anheuser-Busch, insufficient evidence of

evidence of financial gain alone is 962 F.2d at 322. There, the

intent.

court reversed the district

court's grant of plaintiff beer

manufacturer's motion for judgment notwithstanding the verdict that defendant T-shirt distributor committed trademark

19

infringement.

Id.

While

recognizing that

the defendant's

primary motive profit, same
the

in creating the T-shirt design was

to make a is not the that

the

court explained that an intent to confuse.
of the . . .

to profit

thing as an intent
commercial success

Id.

("We cannot assume
resulted from

T-shirt

consumer confusion;

consumers may have been moved to buy the T-

shirt by the simple

fact

that they were

amused by the cleverness

of its design.)
more money under

Likewise,

evidence that Google stands to make
trademark policy,
burden of proving to confuse

its current

absent more,
that Google used the buying

cannot meet Rosetta Stone's the

Rosetta Stone Marks with intent

public. An alleged infringer may intend to benefit trademark without ever intending
Id. Google's intent to increase

from the

to cause

consumer confusion.
not

its earnings does

necessarily demonstrate an intent

to mislead or confuse

potential buyers of Rosetta Stone's products.
Google's own business interest,

In fact,
not

it is in
to

as a search engine,

confuse its users by preventing counterfeiters advantage of its service.

from taking

Google's success depends on its users

finding relevant responses to their inquiries.
Ex. 76 at 175:22-177:16; Def.'s Mem. Opp'n Summ.

(Caruso Decl.
J. 19.) It

does not make money from advertisements of counterfeit Rosetta
Stone products because counterfeiters generally use stolen

20

credit

cards

to secure

the

advertising,

and battling

such

counterfeiters is a drain on Google's resources.
9; Louie Decl. flU 3-6.)

(Lloyd Decl.

H

Even if it is true that Google stands
its
if

to profit

financially from higher click-through rates,
loss would far exceed its immediate

long
it

term financial

gains

provided search services without counterfeiting operations.

regard to possible intentionally confuses its

If Google

users and deprives them of a positive experience,
website will decrease, causing it to lose revenue.

traffic at

its

Moreover,
part, because

Google argues
it developed a

it revised its
technological

trademark policy,
tool by which the

in

websites

linking to advertisements on www.google.com could be the website's status as a

automatically checked to assess reseller or informational

site before an advertisement

containing a monitored trademark term would be displayed

(Caruso Decl.
Ex. 5). This

Ex.

62 at

80:18-81:5

& 88:16-90:22;

Lloyd Decl.

technological

feasibility minimized the work of

Google's

advertising and support
focus

team,

thereby leaving more
advertisements.

time

for them to

on securing additional

Consequently,

it

cannot be

shown that Google's

intent

in

providing third party advertisers with the opportunity to bid on
the Rosetta Stone Marks as keyword triggers violates
Act or related statutes.

the Lanham

21

2.

Actual

Confusion that is consumer actual the most confusion as to the

The parties agree source or origin of

goods

important

factor and the

best evidence of
Summ. J. 20;

likelihood of

confusion.
J.

(PL's Mem.

Supp.

Def.'s Mem.

Opp'n Summ.

18.)

In this vein, that Google's

Rosetta Stone relies

on two cases

for its position

trademark policy generally results (PL's Mem. J. 459 10.) Supp. Summ. J. 20-21; v.

in a

likelihood of

confusion. Summ.

PL's Reply Mem. Corp., 81

Supp.

In Sara Lee Corp. 1996),

Kayser-Roth

F.3d 455,

(4th Cir.

a manufacturer of hosiery bearing the
suit against a competitor which The plaintiff

"L'eggs"

trademark brought "Leg Looks"

marketed a

brand of hosiery.

presented six instances of actual confusion by women who bought

Leg Looks® under the impression that it was a Leggs® product.
Id. at 466. The record included consumer market surveys

indicating that about 30-40% of consumers throughout
were confused as to the source of the product, by the

the nation
similarity

of the L'eggs® and Leg Looks® marks.
infringement,
on the

Jd.

at 4 67.

In finding

the court determined the confusion element based

surveys which showed a 30-40% consumer confusion
Id.

frequency.

Decided well before Google went public Google's

in 1998 and before Sara Lee is

search engine gained widespread popularity, consequence

important for the legal

following a detailed set of

22

facts which is vastly different with in this in at
direct

from what

the Court

is

faced

case.

At

first blush, First,

Sara Lee is distinguishable

least two ways.
competitors

Rosetta Stone and Google are not

in the

language-learning software market.

Second,

the record here is devoid of consumer confusion evidence
Rather, five Rosetta Stone's evidence of actual

amounting to 30-40%.

confusion--testimonies of 100,000
Co.

individuals out of more than de minimis.
F.3d at 398

impressions over six years--is
v. Imagination Entm't, 575

See George &
(affirming

L.L.C.

summary judgment of

no infringement where plaintiff came forward
of confusion among 500,000). more than Since

with only four instances Google revised its

trademark policy in 2004,

100,000,000
Google's

advertisement

impressions have been triggered on
through the keyword use of the

search results page

Rosetta Stone Marks.

(Def.'s Mot.

Supp.

Summ.

J.

7.)

Rosetta

Stone only points
testimonies of

to Google's own internal studies and the
individuals who claim to be confused by a

five

Sponsored Link displayed on a Google
they each conducted a search for the

search results page when
term "Rosetta Stone."

However,

Rosetta Stone's evidence of statements made by Google
2004 trademark policy and internal

employees about Google's

experiments concerned consumer impressions of advertisements that made use of third party trademarks which did not
(Spaziano Decl. Ex. 8-12 & 16;

include a

Rosetta Stone Mark.

Spaziano

23

Decl. the

Tab A at Hagan Dep.

93:18-94:5,

Sept.

30,

2004.)

None

of

five

individuals who claim to be

confused referenced an used the

advertisement

that conformed to Google's policies--i.e.,

Rosetta Stone Marks

in connection with advertising genuine

goods.
Ex. 71

(Caruso Decl.
at 13:3-18:14,

Ex.
Ex.

56
74

at
at

13:4-16:15,
11:4-22 &

Ex.

57 at 13:9-24:6,
Spaziano

71:22-73:21;

Decl. 94:5,

Exs. Sept.

8-12 30,

Ec 16; 2004,

Spaziano Decl. Jeffries Dep. 70:8-73:21;

Tab A at Hagan Dep. 75:5-79:21, PL's Mem.

93:18-

Porter Dep. Supp. Summ. J.

49:16-55:3,
20-21.)

Thomas Dep.

X-IT Products,
Inc., 155 F. Supp.

L.L.C.
2d 577

v.

Walter Kidde Portable Equipment,
Va. 2001) is equally

(E.D.

distinguishable.
complaint against

There,

the plaintiff

filed an eight-count

the defendant for allegedly infringing on the

plaintiff's packaging,

sell-sheets,

and Power-Point presentation

of its residential escape ladder.

Id.

at 597.

Denying summary

judgment for both parties on the Lanham Act claim,

the court

looked to two actual instances of confusion and a survey

conducted by the plaintiff's marketing expert showing a 40% confusion rate. Id. at 624. The court noted a complete absence

in the defendant's record of any direct rebuttal evidence.
Unlike the X-IT defendant,

Id.

Google provides rebuttal evidence in

the form of declarations of various employees familiar with
Google's search engine and advertising programs. (Caruso Decl.;

24

Lloyd Decl.;
As

Louie Decl.)
five witnesses who allegedly purchased Stone products after conducting a search on shows that all five testified to

to the

counterfeit Rosetta Google, rebuttal

evidence

knowing that

they were not purchasing the products (Caruso Decl.
Ex. 71 at

directly from Ex. 57 at

Rosetta Stone.
13:9-24:6 &

Ex.

56 at

13:4-16:15,
Ex. 74 at

101:1-8,

13:3-18:14,

11:14-22,

71:22-73:21,
11:15-14:6,

& 74:12-75:12;
15:4-16:15, &

Spaziano Decl.

Tab A at Doyle Dep.
15:2-19:20, 23:19-

24:6-11,

Dubow Dep.

24:20,

32:20-33:7,

&

38:18-43:10,

Jeffries Dep.
Porter Dep.

13:5-14:17,
21:11-22:12,

20:2-21:2,

22:12-23:2,

& 24:18-26:2,

Thomas Dep.

20:4-28:5

& 75:7-12.)

Thus,

none of the Rosetta

Stone witnesses were confused about the source of their purchase but only as to whether what they purchased was genuine or counterfeit. They were not confused by the Sponsored Links, but

by the confusing nature of the websites from which they purchased.
24:20, Ex.

(Caruso Decl.
71 at

Ex.

56 at 13:4-17:16,
Ex. 74 at

Ex.

57 at 23:2In

13:3-19:22,

71:18-73:21.)

particular,

two of the witnesses could not discern between the

links offering genuine Rosetta Stone products and counterfeit ones. (Caruso Decl. Ex 57 at 117:10-21, Ex. 74 at 16:4-17:5;
Thomas Dep. 32:9-

Spaziano Decl. 43:19.)

Tab A at Dubow Dep.

117:10-21,

Additionally,

one of the witnesses purchased the
search and another

counterfeit software through an organic

25

disposed of
its

the software,

thereby preventing an investigation of
Ex 74 at 15:2-18:3, 70:8-13, &

authenticity

(Caruso Decl.

72:16-20; Dep.

Spaziano Decl.

Tab A at

Dubow Dep.

79:11-81:11,

Thomas

47:12-18).

Rosetta Stone's evidence of numerous
by the record.

contention that

it has presented anecdotal

examples of actual confusion is undermined
complaints to Rosetta Stone's

Evidence of

customer care center from individuals who purchased counterfeit
software between December 9, 2009 through March 8, 2010 rest on

the declarations

and interrogatory responses of

Rosetta Stone's

employees.
PL's Mem. documents

(Calhoun Decl.
Opp'n Summ. referenced J.

U 9;
11.)

Spaziano Opp'n Decl.
However, a review of

Ex.
the

38;

in Mr.

Calhoun's declaration shows

that

the

record of

complaints

identify sources

such as Craigslist and

spam emails,

not Google,

as

the means by which the allegedly

counterfeit products were located.
Similarly, the testimony of Google

(Le Decl.
lawyers

UU 3-4.)

concerning screen

shots presented at responses
product

their deposition is

inadequate when their the source of a
Ex. 25 at

reflect a mere uncertainty about
than actual & confusion. Ex. 30 at

rather

(Lien Decl.

189:23-190:19

194:1-195:15,

159:21-163:11.)

Finally,

Dr.

Kent Van Liere's

survey provides unreliable

evidence of actual confusion because the result contained a
measure of whether respondents thought Google "endorsed" a

26

Sponsored Link,

a non-issue.

Dr.

Van Liere's

opinion relied on

responses

to the question of whether a given
to offer Rosetta Stone products

link perceived by
for sale was

respondents

"endorse[d]" confusion as Decl. Ex.

by Rosetta Stone, to the

which is not

the

same as (Caruso

source or origin of

the products. Accordingly,

45-C at Questionnaire 3-4.) confusion,

on the point

of actual
favor.

the Court necessarily finds

in Google's

3.

Consuming Public's Sophistication Contrary to Rosetta Stone's contention, the relevant market

here is not the public its products,
the Court's market is

at-large,

but only potential buyers of therefore,
consumer

whose sophistication,
If

is a factor in
in the relevant

analysis.

the typical

sophisticated in the use of or possesses an expertise

regarding a particular product, may be pertinent

his sophistication or expertise likelihood of confusion.

in determining the

Perini Corp. Cir. 1990)

v.

Perini

Constr.,

Inc.,

915 F.2d 121,

127-28

(4th

(reversing the district court's

finding of summary

judgment for defendant because the court failed to consider
consumer sophistication). Such sophistication may be shown by
Star Indus., Inc. v.

evidence of expert opinions or surveys.

Bacardi
also

& Co.,

412

F.3d 373,

390

(2d Cir.

2005).

A court may

"reach a conclusion about consumer sophistication based

27

solely on the nature ("Unhurried consumers store,

of

the product or

its price." of

Id. the liquor

in the about

relaxed environment $12 to $24

making decisions

purchases,

may be

expected to exhibit

sufficient

sophistication to distinguish which are differently

between Star's and Barcardi's products, labeled.")
As the

(citation omitted).
record reflects, Rosetta Stone's products cost

approximately $259 three-level bundle. target market

for a single-level package and $579 (Caruso Decl. Ex. 53 at

for a Its

115:20-116:5.)

is comprised of well-educated consumers willing to

invest money and energy in the time-intensive task of learning a
language. (Caruso Decl. Exs. 31 & 34, Ex. 69 at 86:20-88:1.) large but only
a

Consequently,

it cannot encompass
in a

the public at

web users who would type Rosetta Stone Mark,

search query consisting of

and who must necessarily have unaided recall

of

the Marks.

(Caruso Decl.

Ex.

33;

Def.'s Opp'n 20.)

These

same consumers who are willing to spend hundreds of dollars on

language-learning software would reasonably take care in making such a decision.
language,

Given the

time commitment of

learning a

they are more

likely to spend time

searching and

learning about Rosetta Stone's products.
95:13-97:11.) demonstrate

(Lien Decl.

Ex.

36 at

Their expertise and sophistication would tend to they are able to distinguish between the

that

Sponsored Links and organic

results displayed on Google's

search

28

results page.

Therefore,

this

factor strongly favors Google.

Balancing all of
factors,

the

disputed likelihood of
that Google's use trademark of

confusion
the Rosetta

the Court concludes does not
I, V

Stone Marks
under Counts

amount

to direct

infringement

and VI.

B.

Functionality Doctrine Notwithstanding a favorable finding for Google under the

relevant

infringement elements,

the

functionality doctrine
as keyword

protects Google's use of

the Rosetta Stone Marks

triggers.
feature is of

The functionality doctrine provides
functional wif it is essential

that a product
or purpose the 532

to the use

the article or if

it affects Inc.

the cost or quality of v. Mktg. Displays,

article." U.S. 23, 32

Traffix Devices,

Inc.,

(2001)(citation and internal quotation omitted)

(finding that whether the product configuration is a competitive necessity is an incomplete test for functionality, feature
its

as a court to

must also consider whether the product
the use or purpose of

is essential
cost or

the device or affects

quality).

The doctrine

"prevents

trademark law,

which seeks
from

to

promote competition by protecting a firm's reputation,

instead inhibiting legitimate competition by allowing a producer to control a useful product
Prods. Co., 514 U.S. 159,

feature."
(1995).

Qualitex Co.

v.

Jacobson

164

29

Although

Traffix and Qualitex are

cases

where

the in

functional element of

the mark holder's product

was present

both parties'

products,

the principal theory is

the same-

allowing competitors a monopoly on functional uses would inhibit
legitimate competition. courts Id. Applying this principle role as to a

search engine,

have

recognized its

a valuable

information provider. F.3d 796, 803-04

See Playboy Enters., 2002)

Inc.

v.

Welles,

279

(9th Cir.

{''Searchers would have if

a much

more difficult

time

locating relevant websites

they could do

so only by correctly guessing the

long phrases necessary to

substitute

for trademarks.");
Inc., 560 F.

see also Designer Skin,
Supp. 2d 811, 819 n. 7

L.L.C.
Ariz.

v.

S & L Vitamins,

(D.

2008)
still, as it

(citation omitted)
and a pity, if the

("[I]t would seem more remarkable
law, in its over-exuberant giddiness in cyberspace,

thrashes about with mark-type conflicts

should kill
engines].") Here,

[readily available Internet directories and search

Google uses

trademarked keywords,

including

the

Rosetta Stone Marks, use is no different

to identify relevant Sponsored Links. than the use of a Google search query to

This

trigger organic search results
In both cases, a

relevant to the user's search.
"Rosetta Stone" will return a

search term like

string of Sponsored Links and organic
results page. The keywords,

links on Google's search
have an essential

therefore,

30

indexing

function because relevant

they enable Google

to readily identify to a web
Inc., 977 F.2d

in its databases
user's query.

information in response
Ltd. v. Accolade,

See Sega Enters.

1510,

1531

(9th Cir.

1992)

(finding that use of to achieve

the plaintiff's

trademark initialization sequence functional because without the
v.

compatibility was

interoperability could not be achieved see also Compaq Computer Corp.
1409, 1423 (S.D. Tex.

trademark sequence);
Inc., 908 F.

Procom Tech.,

Supp.

1995)(finding that
for purposes of

the word

"Compaq"

inserted in computer code
This is

compatibility was

functional).

especially important

as

advertisers

rely on the keywords

to

place their products and services before interested consumers.
Moreover, the keywords affect the cost and quality of Google's

AdWords

Program because absent

third party advertisers'

ability

to bid on trademarked terms as keyword triggers,

Google would be

required to create an alternative system for displaying paid advertisements on its website-a system which is potentially more
costly and less effective in generating relevant advertisements.

In terms of encouraging competition,

the keywords also serve an

advertising function that benefits consumers who expend the time
and energy to locate particular information,
and to compare prices. Google's

goods,

or services,

search engine provides

consumers with a highly useful means

of

searching the internet

for products and competitive prices.

If Google is deprived of

31

this use

of

the Rosetta

Stone Marks,

consumers

would

lose

the

ability to rapidly locate potentially relevant websites
promote genuine Rosetta Stone products at

that

competitive prices.

Consequently,

because

the

Court

is persuaded that Google's
as triggers for paid

particular use of

trademarked keywords

advertisements

is

functional,

and no prohibition exists

otherwise,

the Court holds that the functionality doctrine
infringement.

prevents a finding of

C.

Contributory Trademark Infringement Under the Lanham Act
On the issue of contributory trademark infringement, the

Court

finds that no reasonable trier of

fact could find that

Google intentionally induces or knowingly continues to permit third party advertisers selling counterfeit Rosetta Stone
products to use the Rosetta Stone Marks in their Sponsored Link text. To prevail on a contributory a plaintiff must another to show that the

titles and advertisement

trademark infringement claim, defendant
trademark,

"intentionally induces
or [] continues

infringe a
to one whom it

to supply its product

knows or has reason to know is

engaging in trademark

infringement
456 U.S. 844,

.

.
854

.

."

Inwood Labs.,
Although

Inc.

v.

Ives Labs,

Inc.,
to

(1982).

facially applicable

manufacturers and distributors of goods, Inwood's test for contributory trademark

courts have applied infringement "to a

32

service provider if he

or she exercises

sufficient

control

over

the

infringing conduct."

Tiffany Inc.

v.

eBay Inc.,

600

F.3d

93,

104

{2d Cir.
Inc.,

2010)
194

(citing Lockheed Martin Corp.
980,
v.

v.

Network

Solutions,

F.3d

984

(9th Cir.

1999));
Inc.,

see Hard
955 F.2d

Rock Cafe Licensing Corp.

Concession Servs.,

1143, as a

1148-49

(7th Cir. tort,"

1992) the

(treating trademark infringement analogized a swap meet owner to a . . . [as

"species of

court

whose vendors

sold infringing Hard Rock Cafe T-shirts common law "imposes the same duty

licensor on whom the

Inwood]

imposed on manufacturers and distributors"); Inc. v. Cherry Auction, Inc., 76 F.3d 259,

see also 265 (9th

Fonovisa, Cir.
test

1996)

(finding Hard Rock Cafe's application of the Inwood
to be "sound").

for contributory trademark infringement As proof of contributory infringement, (the

Rosetta Stone points

to Google's Query Suggestion Tool

trademark-specific trademark policy in

version launched after Google changed its

2009)

and its purported allowance of known infringers to bid on (Caruso Decl. Ex. 61 at 53:17-61:1;

the Rosetta Stone Marks.

Spaziano Decl.
0309893, Exs.

Ex.

1

(Ans.

f 57),

Ex.

18 at GOOG-RS-0309888-

21-23;

Spaziano Decl.

Tab A at Gultekin Dep.

123:8-124:4;
Rosetta Stone

Calhoun Decl.
argues that

Uf 4-6 & 8,
the

Exs.

B-D.)

First,
function

Query Suggestion Tool's

of generating suggested keywords to bid on brand names,

for advertisers

encourages to

them

which directly induces advertisers

33

infringe Second,

the Rosetta Stone Marks. Rosetta Stone argues

(Spaziano Decl.

Exs.

19-20.) to

that by allowing counterfeiters

open AdWords accounts and to bid on the Rosetta Stone Marks,

despite receiving notice of
supplying a service to those

their counterfeit
it knows or has

status,

Google

is

reason to know is

engaging in trademark infringement.

(Spaziano Decl.

Exs.

21-23;

Calhoun Decl.
Stone,

Ufl 2,

4-5,

8,

Exs.

B-D.)

According to Rosetta
is evident

Google's knowledge of Form S-l

the ongoing infringement

from its

Registration Statement to

the Securities "may be subject
(Spaziano

Exchange Commission,
to more

which predicted that Google
lawsuits . . . ."

trademark infringement

Decl.

Ex.

7.)

To illustrate,
that Google

Rosetta Stone proffers evidence of
the dates when

a spreadsheet

received which reflects

Rosetta Stone advised Google fraudulent,

that

a Sponsored Link was

the domain names associated with each such Sponsored

Link,

the text of each Sponsored Link,
response.

and the date and
Ex. 28; Calhoun

substance of Google's

(Caruso Decl.

Decl.

K 5,

Ex.

C.)

As documented,

from September 3,

2009 through

March 1,

2010,

Rosetta Stone notified Google of approximately

200

instances of Sponsored Links advertising counterfeit Rosetta

Stone products.
Summ. J. 11.)

(Calhoun Decl.

% 4,

Exs.

C-D;

PL's Mem.

Supp.

Rosetta Stone contends that even after being

notified of these websites,
Links

Google continued to allow Sponsored
same advertisers to use the

for other websites by these

34

Rosetta Stone Marks

as keyword triggers and in the text of
For example,

their

Sponsored Link advertisements.

between October

2009

to December 2009,

110 different

Sponsored Links purportedly "Rosetta Stone" as a keyword or

selling Rosetta Stone products used trigger, and most of the Links

included

"Rosetta Stone"
to the same

"Rosettastone"

in their display.

Registered

individual,

these 110 Links were displayed on 356,675 different (Calhoun Decl. Ex. D at GOOG-RS-011-

search-results pages.
000114

to GOOG-RS-011-000187.) Court, however, is unpersuaded by Rosetta Stone's

The

arguments.
advertisers

First,

the mere existence of a tool that assists
in

in optimizing their advertisements does not,

itself,

indicate intent to induce infringement.

Google's Query

Suggestion Tool operates by searching or indexing the particular website identified by an advertiser and returning a limited number of keyword ideas for websites not affiliated with the

URL.

(Spaziano Decl.

Ex.

18 at GOOG-RS-0309888-0309893.)

Before
Google

the list of keyword ideas is provided to the advertisers,

informs them that they are responsible for the keywords selected
and for ensuring that their use of the keywords does not violate any applicable laws.
22:11, 60:1, & Ex. 23:22-24:18; 30 at

(Caruso Decl.
Lien Decl. Ex.

Ex.

54

at 19:8-16,
40:25-42:11 Exs.

21:25& 58:15 & 12.)

29 at

124:10-17

& 125:11-20;

Lloyd Decl.

It is no secret that Google is in the business of

selling

35

advertising advertisers

space on on a

its

website

and profits basis.

from AdWords therefore has

"cost-per-click"

Google

an economic
and links

incentive

to increase

the number of

advertisements
its search

that appear

for every term entered

into

engine.

It would be good business practice to bid on keywords

for Google

to

encourage advertisers
result

that they know will
desire for economic

in higher click-through rates.

This

gain is common in all businesses.

Google

is no different.
into

A

desire for economic gain alone does not translate contributory trademark infringement.
Second, there is no evidence that Google is

supplying a

service to those it knows or has reason to know is engaging in trademark infringement. In a recent case from the Second

Circuit involving eBay Inc., auction and shopping website,
eBay's promotion of

a company that operates an online the court found that despite

certain vendors of premium branded jewelry

and its encouragement to those vendors to take advantage of the
demand for Tiffany merchandise, its relationship with third

parties'

advertisements is

insufficient to warrant a finding of
Tiffany Inc. v. eBay Inc.,

contributory trademark infringement. 600 F.3d 93, 107-09 (2d Cir. 2010).

Tiffany failed to

demonstrate that eBay was supplying services to individuals who

it knew sold counterfeit Tiffany goods.

Id.

eBay's generalized

knowledge of infringement of a seller's trademark on its website

36

was

insufficient

to

impose upon eBay an affirmative duty to Id. Absent evidence showing that eBay had

remedy the problem. specific

contemporary knowledge of which particular

listings

were be

infringing or would

infringe Id.

in the

future,

eBay could not

contributorily liable.

Like Tiffany, of

Rosetta Stone

fails

to show that Google knew

the alleged infringing activity by its AdWords advertisers. is little Google can do beyond expressly prohibiting for counterfeit goods, learns of taking down those and creating a

There

advertisements

advertisements when it

their existence,

team dedicated to fighting advertisements for counterfeit goods.
Google has worked closely with law enforcement and brand owners

to combat counterfeiting because

it knows

that

those

advertisements can create a bad experience for web users, Google ultimately relies on for its business.
Exs. 21, 23-25, & 28, Ex. 65 at 135:11-138:25,

who

{Caruso Decl.
Ex. 67 at 7:24-

8:19

& 108:2-109:16,

Ex.

68

at

50:4-51:10,

Ex.

53

at

36:5-37:16;

Lloyd Decl.
Exs. B-D.)

flU 10-11 & Ex.

6;

Louie Decl.

H 4-6; Calhoun Decl.

It would run counter to good business practice for
to those it

Google to encourage and provide advertising space

knows are infringing on the Rosetta Stone Marks.
eBay's

Similar to
Google

inability to detect which vendors were genuine, sold

has no mechanism for detecting which advertisers

counterfeit Rosetta Stone products.

As Rosetta Stone admits,

it

37

cannot determine

if

a Rosetta Stone product

is a counterfeit Opp'n Summ. J.

without physically inspecting it.
4.) Even with eBay's the knowledge of

(PL's Mem.

the high rate of Tiffany impute the degree of

counterfeits,

Second Circuit

did not

specific knowledge necessary for liability. at 109. In two surveys conducted in 2004

Tiffany,

600

F.3d the

and 2005

to assess site,

extent of counterfeit merchandise being sold on eBay's Tiffany found that 73.1% of
purchased under the 2004

the purported Tiffany goods
75.5% of those purchased

survey and

under the 2005 survey were counterfeit.3

Id. at 97.

eBay also

received thousands of Notice Of Claimed Infringement Formsonline
report

forms that allow intellectual property right owners
to eBay when they have good faith belief that a

to

listed

item infringed on a copyright or trademark.

Id.

at 106.

Comparing the evidence of knowledge attributed to eBay to the
roughly 200 notices Google received of Sponsored Links on its search

advertising counterfeit Rosetta Stone products results pages, has not met the Court necessarily holds showing that

that Rosetta Stone is

the burden of

summary judgment

proper as to its contributory trademark infringement claim.

3 The district court found that the surveys were methodologically flawed and
of questionable value. 600 F.3d at 97.

38

D.

Vicarious Trademark Infringement Under Rosetta Stone's claim for vicarious

the

Lanham Act

trademark infringement third party

also

fails because Google has

no control over

advertisers'
Marks

Sponsored Links or their use
text.

of

the Rosetta Stone

in the advertisement

Absent an agency relationship, imposed if the defendant and over the

vicarious infringer

liability can only be "exercise

joint ownership or control

infringing product."
Assoc, 494 F.3d 788,

Perfect
807

10,

Inc.

v.

Visa

Int'l

Serv.

(9th Cir.

2007}

(quoting Hard Rock

Cafe Licensing Corp.

v.

Concession Servs.,

Inc.,

955

F.2d at

1150

(reasoning that vicarious
liability)).

liability is a joint-tortfeasor
Rosetta Stone would have

theory of

In this case,

to show that,

aside

from providing a list of keywords to its
to choose from, Google has joint ownership

AdWords advertisers or controls

the alleged infringing advertisements

appearing on

its website.
Rosetta Stone's Supp. There, 2d 700, 705 reliance on GEICO v. Va. 2004) offers Google, little Inc., 330 F.

(E.D.

assistance.

the court addressed a motion to dismiss and ended its

analysis by testing the sufficiency of GEICO's allegations

that

Google monitored and controlled third-party advertisements after
selling to the advertisers links to trademarked terms. Id. at

702.

While the court found that GEICO sufficiently stated a infringement, it did not address the merits

claim for vicarious

39

of to

the

claim.

Id.

Thus,

contrary to Rosetta Stone,

GEICO had 10,

satisfy a lower burden of proof.

Relying on Perfect

Rosetta Stone also argues
because it has a legal

that Google is vicariously liable
to stop the infringing conduct and

right

the ability to do so,
at Hagan Dep. 27:3-18,

but

fails
5,

to act.
2010,

{Spaziano Decl.
62:4-22,

Tab A
Louie

Mar.

Lloyd Dep.

Dep.

25:01-27:17,

28:2-11,

33:19-34:19,

&

37:4-8;

Spaziano Decl.

Ex.
This

1

(Ans.

1U 41,

43,

Sc 56);

Calhoun Decl.

UH 6 & 8,

EXS.

B-D.)

standard is

inapplicable here because Perfect

10 concerned its

a plaintiff's

allegations of

copyright infringement of

thumbnail

images of nude models.

494

F.3d at 807.

Finding that
of its

the plaintiff was unlikely to succeed on the merits vicarious infringement claims against the defendant

internet

retailer,

the court explained that a financial relationship is
to establish joint ownership and control.
Thus, the mere fact that Google has a

insufficient
at 807-08.

See id.

financial

relationship with the alleged infringers does not demonstrate
Google's
website.

control

of

the

Sponsored Links appearing on its

Google

is not engaged

in the business of

selling goods but

in selling space on a search page which happens to be a prime
location for advertisers wishing to display their advertisements to online shoppers. This is no different
space

than building owners
for billboards. Given

in New York's Times Square who sell

40

Times

Square's high pedestrian and vehicular

traffic,

billboards

located there offer advertisers great visibility, Google's popular search engine offers

just as

third party advertisers a for goods and

great opportunity to display their advertisements services. Aside from their location and size,

advertisement by

billboards also allows creative
and embellishments, a feature

"customizing"

through extensions

similar to a third party their Sponsored

advertiser's ability to create the content of
Link on Google's website.

Without evidence that Google's Keyword Tools or its employees direct or influence advertisers
Stone Marks, Rosetta Stone has not

to bid on the Rosetta
Google controls

shown that

the appearance and content of the Rosetta Stone Marks

the Sponsored Links

and the use of vicarious

in those Links.

Therefore,

liability cannot be imposed on Google.

E.

Trademark Dilution Under the Lanham Act

Insofar as Google does not sell

language learning software,

it cannot be held liable

for trademark dilution.

Additionally,

Rosetta Stone fails to show trademark dilution where its brand awareness has only increased and where the reputation of
Marks has not been harmed since Google changed its

its

trademark

policy in 2004. ("TDRA"),

Under the Trademark Dilution Revision Act

which removed a plaintiff's obligation to show proof

41

of

economic

loss,

a markholder at

is

"entitled

to an

injunction

against another person who, has become famous, commences

any time after the owner's mark of a mark or trade name in

use

commerce

that

is

likely to cause dilution by blurring or
the famous mark[.]" 15 U.S.C. §

dilution by tarnishment of

1125(c)(l)
Dog,

(2006);
507

Louis Vuitton Malletier S.A.
264 n.2 (4th Cir.

v.

Haute Diggity
To

L.L.C.,

F.3d 252,

2007).

establish trademark dilution, famous Marks are distinctive; that allegedly dilutes the

Rosetta Stone must prove: (2) Google uses a mark (3)

(1)

its

in commerce

famous Marks;

a similarity exists
rise to

between the Rosetta Stone Marks and Google's mark giving

an association between the marks;

and

(4)

the association is

likely to impair the distinctiveness or reputation of the
Rosetta Stone Marks. Louis Vuitton, 507 F.3d at 264-65 (listing

the elements of a trademark dilution claim under the TDRA). dispute are the first,
Stone's claim.

At

third,

and fourth elements of Rosetta

As

to the first element,

the Rosetta Stone Marks are

famous

and have been since at
awareness
112:1-7,
6 &

least 2009,

when Rosetta Stone's brand
Ex. 69 at 111:6-12
Mot.

reached 75%.
Ex. 30-34, Ex.

(Caruso Decl.
60
24.)

&
J.

at

131:6-132:6;
The Marks

Def.'s

Summ.

26-27;

PL's

Opp'n

need not

have been

famous

when Google revised its
Rosetta Stone must only

trademark policy in 2004.
show that at any time after

Instead,
its Marks

42

became

famous,

Google began using a mark or

trade name

in

commerce Marks. §

that was

likely to cause dilution of As

the Rosetta Stone Rosetta Stone
to the Rosetta
(PL's Opp'n

1125(c)(1).

to the third element,
a mark similar

does not argue
Stone Marks

that Google uses

on Google's

own goods

or services.

25.)

The TDRA provides if it

that a claim for dilution is not "[a]ny fair use . . . of a famous mark
source for the

actionable

involves

by another person other than as a designation of

person's . . .

own goods or services,

including use

in connection with to compare

advertising or promotion that permits
§ 1125(c)(3)(A)

consumers

goods or services[.]"

(emphasis added).

Nonetheless,

Rosetta Stone relies on cases involving defendants

who used plaintiffs'

marks

to capitalize on the plaintiffs'
own goods
No.

fame

and boost the defendants'
Furstenberg Studio v.

or services.

Diane Von
2007 WL

Snyder,

l:06cvl356

(JCC),

2688184,

at *4

(E.D.

Va.

Sept.

10 2007)

(finding no dispute that

defendants used the identical DVF mark on the inferior-quality
dresses they sold and that such act was likely to cause dilution

of the DVF mark);
Inc. v. Doughney,

People for the Ethical
113 F. Supp. 2d 915,

Treatment of Animals,
(E.D. Va. 2000)

920

(finding the defendant guilty of blurring the famous PETA Mark
because he used an identical mark to mentally associate to that mark), aff'd, 263 F.3d 359, 369 (4th Cir. 2001). PETA.ORG Absent

proof that Google uses the Rosetta Stone Marks

to identify its

43

own goods and services, liable for

the

Court

finds

that

Google

is not

trademark dilution.

Even if § 1125(c)

the Court

adopts

the argument

that

liability under

may be

imposed for Google's
fails

sale of

the Rosetta Stone
final

Marks,

Rosetta Stone nonetheless

to satisfy the

element of

its

trademark dilution claim--that the association is likely to impair the distinctiveness the of the

between the marks famous marks or is marks. that

likely to harm the reputation of 507 F.3d at 265. If there is

famous

Louis Vuitton,

evidence of

the association is

likely to impair the distinctiveness
there may be a dilution by blurring

the Rosetta Stone Marks,

claim.

§

1125(c);

See Louis Vuitton, in turn refers

507

F.3d at

264 recognition

("'Distinctiveness'

to the public's

that the famous mark identifies a single
using the famous mark."). If there

source of the product
that the

is evidence

association is likely to harm the reputation of the Marks,
may be a dilution by tarnishment claim. § 1125(c).

there

Assuming the Rosetta Stone Marks were distinctive since 2004,

famous and

the Court sees no evidence of dilution

by blurring when Rosetta Stone's brand awareness has only

increased since Google revised its trademark policy in 2004.
The TDRA allows courts to consider the degree of recognition of

a famous mark when determining whether that mark's

distinctiveness has been impaired.

§

1125

(c)(2)(B).

The

44

Fourth Circuit has also found that no claim for dilution by
blurring exists where a defendants' public 507 identification of 264 product only increases Louis Vuitton,

the plaintiffs'

marks.

F.3d at

(finding no

likelihood of dilution by blurring dog toy parodied plaintiff's

where

defendant's

"Chewy Vuiton"

marks
Here,

and caused an increase
Rosetta Stone's in 2005

in plaintiff's

brand recognition).
increased since Ex. 69 at

brand awareness has to 75% in 2009.
Ex. 60

only

2004-from 15%
111:6-12 &

(Caruso Decl.
at 131:6-132:6;

112:1-7,

Ex.

30-34,

Def.'s

Mot.

Summ.

J.

6

& 26-27;

PL's

Opp'n 24.)

Its

brand awareness

equity also increased from 19%
Decl. Ex. 32, Ex. 69 at

in 2005

to 95%
Thus,

in 2009.
the

(Caruso

120:21-122:8.)

distinctiveness

of

the Rosetta Stone Marks has

not been

impaired,

and Rosetta Stone cannot

show that Google's trademark

policy likely caused dilution by blurring. The Court also finds no dilution by