Rosetta Stone Ltd. v.
Google, Inc., 676 F.3d 144 (4th Cir. 2012) [enhanced version available to lexis.com subscribers] presented
the Fourth Circuit with challenging questions involving federal trademark
infringement and dilution claims in the context of Google's keyword advertising
program. The court squarely addressed several of these questions, while leaving
others for future resolution. In this Analysis, Mary LaFrance addresses the
issues covered as well as those left unanswered. She writes:
Rosetta Stone, a maker of language-learning software, sued Google for
federal trademark infringement and trademark dilution, plus unjust enrichment
under Virginia law. The claims arose from Google's use of Rosetta Stone's
well-known federally registered trademarks in Adwords, Google's keyword advertising
The Adwords program allowed Rosetta Stone's competitors to
"purchase" Rosetta Stone's trademarks so that, when a user entered
one of those marks as a search term in Google's search engine, the competitor's
advertisement and link would appear in as "Sponsored Links," which
were displayed separately from the natural search results, but on the same
page. Advertisers bid competitively for their desired keywords in order to
obtain the most prominent placement among the Sponsored Links.
Beginning in 2009, Google also permitted advertisers to use third-party
trademarks in the text of their sponsored ads, but only where: (1) the sponsor
was a reseller of the trademarked product; (2) the sponsor made or sold parts
for the trademarked product; (3) the sponsor offered compatible parts or goods
for use with the trademarked product; or (4) the sponsor provided information
or reviews relating to the trademarked product. Rosetta Stone contended that
some of the advertisers who took advantage of this policy were selling
counterfeit Rosetta Stone software.
The District Court dismissed the unjust enrichment claim and granted
summary judgment to Google on all the other claims. Rosetta Stone appealed.
II. The Fourth Circuit's Analysis
A. Direct Infringement
The question of trademark infringement in Rosetta Stone presents two
especially interesting questions - whether there is a functionality defense to
infringement of a valid trademark, and whether the sale of trademarks as
keyword triggers for online advertising involves a "use" of those
marks which is actionable under §
32(1) of the Lanham Act, 15 U.S.C. § 1114(1). The Fourth Circuit answered
the first of these questions, but not the second.
1. Are Functional Uses Non-Infringing?
The most controversial aspect of the District Court's trademark
infringement analysis was its ruling that Google's use of the plaintiff's
trademarks was protected by the doctrine of functionality. It is settled law
that a feature is functional, and therefore ineligible for trademark
protection, "if it is essential to the use or purpose of the article or if
it affects the cost or quality of the article." Ordinarily, an
infringement defendant invokes the functionality doctrine to establish that the
plaintiff does not own a valid mark, by demonstrating that the plaintiff's
putative mark is unprotectable because it is a functional feature of the
plaintiff's product. However, the District Court in this case held that a
defendant's unauthorized use of a plaintiff's nonfunctional (and thus
protectable) mark may be non-infringing if the defendant uses the mark in a
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