In what might be a ground breaking case that could shake up the entire PPC industry, the US Court of Appeals for the 4th Circuit Monday reversed a lower court’s ruling allowing Rosetta Stone’s trademark infringement suit against Google to continue.
Rosetta Stone filed suit in 2009 accusing Google of committing trademark infringement by selling ads under keywords of Rosetta Stone Trademarks to third-party advertisers.
A Virginia district court dismissed the case in 2010, finding that sale of the keywords was not likely to create confusion in the minds of consumers over the source of Rosetta Stone’s goods.
The US Court of Appeals overturned most of the lower court’s ruling, allowing claims that Google committed direct trademark infringement and diluted the Rosetta Stone brand to continue.
There have been other cases brought by other TM holders against Google alleging that selling ads under their trademark amounted to trademark infringement.
Google has generally won every case brought by Trademark Holders but in one of the most interesting findings by the court, “(about 7% of Google’s) total revenue was driven by trademarked keywords.”
This case may change the entire industry.
Here is some of the courts ruling:”
“”We agree that summary judgment should not have been granted.
“As explained in the discussion that follows, the district court did not properly apply the summary judgment standard of review but instead viewed the evidence much as it would during a bench trial.”
“The record shows that prior to 2004, Google did not allow the use of trademarks as keyword search triggers for unauthorized advertisers or in the body or title of the text of an advertisement. In 2004, Google loosened its restrictions on the use of trademarks as keywords to “[p]rovide users with more choice and greater access to relevant information.””The underlying reason was largely financial, as Google’s research showed that “about 7% of its total revenue was driven by trademarked keywords.”
“”We conclude that there is sufficient evidence in the record to create a question of fact as to consumer sophistication that cannot be resolved on summary judgment. The record includes deposition testimony from Rosetta Stone customers who purchased counterfeit ROSETTA STONE software from sponsored links that they believed to be either affiliated with or authorized by Rosetta Stone to sell genuine software. The evidence also includes an internal Google study reflecting that even well-educated, seasoned Internet consumers are con- fused by the nature of Google’s sponsored links and are some- times even unaware that sponsored links are, in actuality, advertisements. At the summary judgment stage, we cannot say on this record that the consumer sophistication factor favors Google as a matter of law. There is enough evidence,
“In sum, we conclude that there is sufficient evidence in the record to create a question of fact on each of the “disputed” factors—intent, actual confusion, and consumer sophistication to preclude summary judgment.
“Because the district court’s likelihood-of-confusion analysis was limited only to these “disputed” factors, the likelihood-of-confusion issue cannot be resolved on summary judgment, and we vacate the district court’s order in this regard.”
VI. Trademark Dilution
Until 1996, trademark dilution was based entirely upon state law because federal law did not recognize the dilution doctrine. The Federal Trademark Dilution Act (FTDA) was passed in 1996, see Pub. L. No. 104-98, 109 Stat. 985 (1996), and was amended substantially in 2006 with the passage of the Trademark Dilution Revision Act of 2006, see Pub.L. No. that trigger the display of sponsored links rather than the content of the sponsored links.
In light of our conclusion that Rosetta Stone failed to state an unjust enrichment claim as to the use of its marks as keywords, we need not address the district court’s alternative holding that, to the extent advertisers used Rosetta Stone’s marks in the text of their ads, Google was entitled to “immunity” under the Communications Decency Act “because Google is no more than an interactive computer service pro- vider and cannot be liable for the actions of third party advertisers.” Rosetta Stone Ltd. v. Google Inc., 732 F. Supp. 2d 628, 632 (E.D. Va. 2010) (footnote omitted); see 47 U.S.C. § 230(c)(1) (“No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.”).
[T]he owner of a famous mark . . . shall be entitled to an injunction against another person who . . . commences use of a mark or trade name in commerce that is likely to cause dilution by blurring or dilution by tarnishment of the famous mark, regardless of the presence or absence of actual or likely confusion, of competition, or of actual economic injury.”
domains are not allowed to contain trademarks, so I’ve always wondered why search engines could sell traffic using a trademarked keyword… which in essence is the same issue.
if this ruling holds going forward, it might elevate the value of generic keyword domains, as there will be more competition among advertisers for the traffic from non-trademarked category specific generic terms.
The uniquely democratic internet always walks a fine line.
TM holders are screwing themselves royally. They are going to take away the free market’s ability to decide their keyword prices and lay that decision soley on Google, since there will be no advertiser competition for these terms, google will get to just pick a price. Then google will control the price of the TM keywords, based on whatever they want to charge for whatever justification.
At the same time much higher demand for generic keywords will result because they will be the only ones available for open bidding, yet the TM holders will still want to bid these keywords.
At the end of the day, Google’s bottom line is no different, TM competitors shift their spend to generic keywords only, TM holders pay more for the same advertising, and generic keyword domain names more important.
Winners:
Generic Keyword Domain Holders
Losers:
TM holders
Draw:
Google
Misc Advertisers
@4oz …… you beat me to the comment.
Also, Google may end up being more dependent on domainers as domainer’s market share of Google’s overall traffic increases.
This is damn good news, I should add.
This is the way it should have been from the beginning. Why is Google getting the free ride?
Also, why have registrars and ISPs been off the hook also?
@ JP
That is one potential outcome, I see another likely outcome.
If the courts rule that Google’s selling TM’s on open market PPC to competitors is no go, expect the next salvo in that battle to be mark holders claiming that *any* commercial use of their mark by G is injurious, including forcing them to pay for ads using their own mark.
It may result in the forcible elimination of PPC for TM terms (and all the associated wrangling over what constitutes a TM, who gets to lay claim over what search strings, etc) and a return to organic search for certain strings, or Google giving P1/Ads to mark holders, free of charge. It will require Google to institute a significant TM division very quickly. It won’t come cheap.
It will also be gas on the fire of the antitrust issue since the alternative marketplaces are extremely marginal.
As far as this being earth-moving, IMO, no.
Kind of a big deal to mark holders, a potential bag of vipers for Google itself, short term relief to businesses getting outbid on their own marks by competitors with a more robust eMarketing regime but at the end of the day, the real market is for descriptive search terms, collaterally attacking competitors marks with targeted PPC.
What I got out of this is if someone types in coke in Google and gets links for pepsi or other competitors that is fine.
What is not fine is if that same search yield a link to JoesBeverageCompany.com – with a claim that “Joes sells the cheapest coke on the planet” – and Joes is really making their own bootleg coke in a sweat shop in china.
This is no different than the Yallow Page book advertising that same boot legger – buit because the amount of bootk\legging on the internet is so much more than the yellopw page book – the ultra conservative 4th circuit reversed that part of of the summary judgement.