Rosetta Stone and Google Settle Trademark Lawsuit

After three years, language-learning software company Rosetta Stone settled its trademark lawsuit against Google over the company’s Adwords advertising program. (read the settlement below).

The litigation rollercoastered during that time. The U.S. District Court for the Eastern District of Virginia granted Google’s motion to dismiss Rosetta Stone’s lawsuit on August 2, 2010, and the Rosetta Stone appealed the dismissal. In April 2012, however, the U.S. Court of Appeals for the Fourth Circuit reinstated three (3) Rosetta Stone claims for direct infringement, contributory infringement, and trademark dilution.

Unfortunately, here is why the undisclosed terms of their settlement agreement won’t give any more insight into preventing online advertising trademark litigation in the future.

Eric Goldman’s April 2012 critique of the Fourth Circuit’s opinion provides an excellent roadmap to unresolved legal issues in trademark disputes over online advertising. Since the Fourth Circuit’s reasoning in Rosetta Stone just muddled some of theses issues even more, their clarification and resolution will have to wait for another day in court.

First, Goldman argues, Google shouldn’t be held liable for direct trademark infringement for conduct of advertisers using keywords in Adwords ads. Assuming that consumers even get confused upon viewing an ad, he posits, it’s the fault of the advertisers themselves. “Google is at most secondarily liable for that,” he reasons. The appellate court doesn’t even discuss this possibility. Nor does it clearly address the meaning of “trademark use in commerce,” Goldman argues.

Second, the appeals court came up with its own definition of contributory infringement, and concluded that “the evidence was sufficient” for a jury to find contributory negligence, and remanded the case back to the District Court to determine if that was the case. But, in my opinion, that didn’t appear justified. The District Court found that:

“[t]here is little Google can do beyond expressly prohibiting advertisements for counterfeit goods, taking down those advertisements when it learns of their existence, and creating a team dedicated to fighting advertisements for counterfeit goods.”

Honestly, what else can an online advertising service do?

Finally, as to trademark dilution, Goldman maintains that “[c]haracterizing keyword ad sales as dilution is unprecedented and virtually unsupportable doctrinally. [The Fourth Circuit] opinion doesn’t address that.”

Online advertising isn’t going to disappear anytime soon. Nor will online trademark infringement lawsuits over the ads. Facebook and online agency adSage were hit with a similar trademark lawsuit several weeks ago. The murkiness continues.

Stipulation and Order of Voluntary Dismissal with Prejudicie (Rosetta Stone, Inc. v. Google, Inc.)

Image credit: 3dsguru via iStockphoto