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Appeals Court Breathes Life Into Rosetta Stone's Claims Against Google

25 Apr, 2012 By: Jackie Jones

WASHINGTON, D.C. – The United States Court of Appeals for the Fourth Circuit has revived Rosetta Stone Ltd.’s trademark infringement and dilution claims against Google Inc. in relation to its AdWords program, according to a blog post by Jacqueline Patt, partner at Venable LLP.

Rosetta Stone, a prominent figure in world of direct response television, filed a complaint against Google in 2009, saying that changes to the search engine’s policies led Internet users into purchasing counterfeit Rosetta Stone products. While the district court sided with Google on all counts in 2010, the Fourth Circuit overturned that decision last week.

“The appellate court reasoned that there were still issues of material fact with respect to whether or not Google’s use of the Rosetta Stone mark was likely to cause confusion among consumers. One remaining factual issue in the confusion analysis was whether or not Google intended to create confusion by permitting advertisers to use trademarked items,” Patt wrote. “The record showed that Google’s underlying reason for changing its policy with respect to trademark terms was ‘largely for financial reasons’ and its own internal study suggest that there was significant confusion as to the source of ads among Internet users when trademarks were used in the title or text of ads.”

Although many companies have brought complaints against Google in relation to its use of trademarks within AdWords, this is the first time an appeals court has established that a marketer can bring a trademark infringement case against the search engine giant “on the basis that the sponsored links are confusing to consumers,” according to a Washington Post report. To date, 33 companies, trade associations, professional sports leagues and nonprofits have filed briefs in support of Rosetta Stone.

“The case has ramifications for every business out there,” Brad Newberg, an attorney who represents several companies supporting Rosetta Stone, including 1-800 Contacts and PetMed Express, told the Washington Post. “So many consumers find websites by going to a search engine and entering the brand name ... If the most prominent results that come up when the trademark is (searched) are advertisements for infringers or counterfeiters, that is detrimental to the business as a whole.”

The appeal is an “important precedent” for the industry, said Cliff Sloan of Skadden Arps, counsel for Rosetta Stone. Google, who has been backed by big names including Yahoo and eBay on the issue, said it is “confident we will prevail on both the merits and the law” for the remainder of the case.

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