Rosetta Stone LTD v. Google, Inc.

Rosetta Stone LTD (Rosetta Stone) (plaintiff) sold language-learning software. Google, Inc. (Google) (defendant) offered advertising though sponsored links. To advertise though a sponsored link, an advertiser purchased a keyword. When a Google user searched the purchased keyword, a link to the advertiser’s website would come up in the search results. Initially, Google prohibited advertisers from purchasing third-party trademarks as keywords if the trademark owner objected. In 2004, Google changed its policy to allow advertisers to purchase trademarks as keywords even if the trademark owner objected. Internal studies by Google indicated that including third-party trademarks in the advertising or link text would confuse consumers. Google disallowed unauthorized trademark use in text until 2009, when Google changed its policy. Subsequently, Rosetta Stone complained to Google that owners of sponsored links using Rosetta Stone’s trademarks as keywords and in text were marketing counterfeit Rosetta Stone products. Rosetta Stone reported 190 instances of sponsored links’ owners’ selling counterfeit Rosetta Stone products, but Google allowed the owners of those links to continue using Rosetta Stone’s trademarks in other sponsored links. Rosetta Stone sued Google, asserting various trademark claims, including direct infringement, dilution, and contributory infringement. Rosetta Stone presented anecdotal evidence from consumers who purchased counterfeit software after clicking on a sponsored link. Rosetta Stone also presented an expert report concluding that 17 percent of consumers demonstrated actual confusion. The district court granted all of Google’s dispositive motions, and Rosetta Stone appealed.