The Association for Competitive Technology and a diverse group representing a broad cross-section of the business sector have filed an amicus brief in the Fourth Circuit Court of Appeals seeking reversal of certain key holdings in a U.S. District Court’s ruling the case of Rosetta Stone Ltd. v. Google Inc.
Publisher of popular language instruction software, Rosetta Stone has filed suit against Google to halt the internet advertising giant from promoting criminals that steal and counterfeit its software. Google users searching for “Rosetta Stone” are often confronted with advertisements for counterfeit copies of the software being sold by foreign criminal syndicates. Google allows counterfeiters and pirates to place search-based advertisements throughout its internet advertisement network. This not only depresses trademark holder’s sales, but often requires them to bid in AdWords auctions just to protect their own trademarks.
“Google is using its search advertising dominance to shakedown trademark holders,” said ACT executive director Morgan Reed. “It allows counterfeiters to advertise on its networks, forcing companies like Rosetta Stone to outbid pirates to prevent them from selling fraudulent copies of its software. Since Google controls 78% of the search advertising marketplace, Rosetta Stone has no choice but fight the counterfeiters by continually paying Google more money for advertising”.
Complicating matters is that pirates place ads in response to search queries based on keywords, geographic location and a constantly changing number of other variables. This forces Rosetta Stone to continually search for the pirates’ ads in different places, using different criteria, in the effort to combat counterfeiting. Trademark holders’ efforts to find and stop counterfeiters using Google’s search advertising networks is a giant game of whack-a-mole.
While Google allows trademark holders to register complaints against counterfeiters, Google makes it a very cumbersome process, and often too costly and time consuming for small businesses.
The brief focuses on two key aspects of the district court’s ruling regarding settled tenets of trademark law. First, the district court applied the wrong standard on the issue of dilution under in order to prove that Google had ‘diluted’ its trademarks that are not required under federal trademark dilution law. This has broad-reaching adverse implications for all owners of famous brands seeking to protect their brands from dilutive uses by others.
Second, the brief points out problems with Google’s interpretation of “functionality”, an element of the law intended to prevent a person from claiming trademark rights in ‘functional’ product features. In extending the functionality doctrine to protect Google’s use of trademarked words in its ‘AdWords’ program, the court opened the door for anyone to claim that its use of another party’s famous brand name is beneficial to its business and thereby escape liability for trademark infringement.
