Why Google Won

Posted on August 5, 2010 by Joshua Heslinga

At the end of April, we posted about Google’s victory over Rosetta Stone in the Eastern District of Virginia suit (case no. 1:09-cv-00736) over the use of the prominent language software company’s marks in Google’s AdWords advertising program.

Judge Gerald Bruce Lee has now handed down (on August 3rd) a memorandum order and an opinion explaining his decision to grant final judgment to Google.  The case and the 58 pages of order and opinion merit in-depth analysis and discussion.  Here is a summary of the rationale to begin that conversation.

Unjust enrichment claim dismissed

The order deals with Google’s motion to dismiss the unjust enrichment count of Rosetta Stone’s suit.  In it, the Court rules for Google on two grounds. 

First, applying the “Twiqbal” pleading standard (from the U.S. Supreme Court’s recent decisions in Twombly and Iqbal, about which we’ve previously posted with respect to patent cases here and here), the Court concludes that Rosetta Stone failed to plead sufficient factual material to make its unjust enrichment claim plausible.  Specifically, Rosetta Stone did not plead facts that would, if proven, show two of the three elements of a Virginia unjust enrichment claim -- namely, that Google (i) knew of the benefit conferred by use of Rosetta Stone’s marks; and (ii) accepted or retained the benefit under circumstances which render it inequitable for the defendant to do so without paying for its value.  On the latter point, the Court relies on Virginia law that the plaintiff cannot recover for an unjust enrichment claim unless he can show sufficient additional facts which imply that the defendant promised to pay the plaintiff for the benefit received, and the Court finds no facts that would show such a promise by Google.

Second, the Court concludes that Google is immune from such claims as an interactive computer service provider under the Communications Decency Act, which provides that such entities are not liable for the actions of third party content creators (here, the advertisers in Google’s AdWords program).

Summary judgment on trademark counts

The Court first identifies the five issues before it:

            1) whether Google's practice of auctioning Rosetta Stone's trademarks to third party advertisers for use in their Sponsored Link titles and advertisement text creates a likelihood of confusion to warrant granting summary judgment in favor of Rosetta Stone as to Counts I (trademark/service mark infringement under the Lanham Act), V (trademark infringement under Virginia Law), and VI (unfair competition under Virginia law).

            2) whether Google's use of Rosetta Stone's trademarks as keyword triggers under its advertising program is functional and, therefore, a non-infringing use.

            3) whether Google intentionally induces third party advertisers to bid on Rosetta Stone's trademarks or knowingly continues to permit advertisers selling counterfeit Rosetta Stone products to use the trademarks in their Sponsored Link titles and advertisement text, despite Rosetta Stone's reports of infringement, to warrant granting summary judgment in favor of Rosetta Stone as to Count II (contributory trademark/service mark infringement under the Lanham Act).

            4) whether Google exercises joint ownership and control over third party advertisers' Sponsored Link titles and advertisement text on its website to warrant granting summary judgment in favor of Rosetta Stone as to Count III (vicarious trademark/service mark infringement under the Lanham Act).

            5) whether Rosetta Stone sufficiently demonstrates economic loss resulting from a decline in its brand name, which is attributable to Google's practice of auctioning Rosetta Stone's trademarks for profit to third party advertisers, to warrant granting summary judgment in favor of Rosetta Stone as to Count IV (trademark/service mark dilution under the Lanham Act).

It then summarizes why it grants summary judgment to Google as follows:

The Court grants summary judgment in favor of Google on Counts I (trademark/service mark infringement under the Lanham Act), V (trademark infringement under Virginia Law), and VI (unfair competition under Virginia law) because “no reasonable trier of fact could find that Google's practice of auctioning Rosetta Stone's trademarks as keyword triggers to third party advertisers for use in their Sponsored Link titles and text creates a likelihood of confusion as to the source or origin of Rosetta Stone's goods.  Furthermore, because Google uses Rosetta Stone's trademark to identify relevant information to users searching on those trademarks, the use is a functional and non-infringing one.”

The Court grants summary judgment in favor of Google on Count II (contributory trademark/service mark infringement under the Lanham Act) because “no reasonable trier of fact could find that Google intentionally induces or knowingly continues to permit advertisers selling counterfeit Rosetta Stone products to use the trademarks in their Sponsored Link titles and advertisement text.”

The Court also grants summary judgment in favor of Google on Count III (vicarious trademark/service mark infringement under the Lanham Act) because “no reasonable trier of fact could find that Google exercises joint ownership and control over third party advertisers' Sponsored Links titles and text.  Neither Google's employees nor its Query Suggestion Tool directs or influences third party advertisers to bid on Rosetta Stone's trademarks when they subscribe to Google's advertising program.”

Finally, the Court grants summary judgment in favor of Google on Count IV (trademark/service mark dilution under the Lanham Act) because “there is no genuine dispute of material fact that Rosetta Stone's brand awareness has only increased since Google changed its trademark policy to permit the use of trademarked terms as keyword triggers and as words within Sponsored Link titles and advertisement text.”
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Twombley and Iqbal in Patent Cases (Cont.)

Posted on February 23, 2010 by Dabney Carr

Last August, we raised here whether the Supreme Court’s decision in Ashcroft v. Iqbal, 129 S.Ct. 1937 (2009) foreshadowed enhanced pleading requirements in patent infringement cases. After several months, the answer from the district courts appears to be yes and no.

For claims of direct infringement, the district courts have followed the Federal Circuit’s decision in McZeal v. Sprint Nextel Corp., 501 F.3d 1354, 1357 (Fed. Cir. 2007), a pre-Iqbal decision in which the Court set a low bar for pleading direct infringement.

For claims of indirect infringement, however, the courts have required specific factual allegations showing knowledge and intent to induce or contribute to infringement by another.

Direct Infringement

Only two reported decisions, Elan Microelectronics Corp. v. Apple, Inc., 2009 U.S. Dist. LEXIS 83715 at *5 (N.D. Cal. Sept. 14, 2009), and Fifth Market, Inc. v. CME Group, Inc., 2009 U.S. Dist. LEXIS 108776 at *3-*4 (D.Del. May 14, 2009), have granted a motion to dismiss a complaint for failure to meet the pleading requirements of Fed.R.Civ. P. 8, and in Fifth Market, the defendant's victory was short-lived, as the Court held that an amended complaint was sufficient.

Form 18 of the Federal Rules of Civil Procedure contains a sample complaint for direct patent infringement, and a range of district courts have held that a Complaint asserting a claim for direct infringement is sufficient if it contains the minimal information listed in Form 18. While several courts have noted that it is difficult to reconcile Form 18 with the Supreme Court’s guidance in Iqbal and Twombley, it appears that a claim for direct infringement requires only the following:

  • An allegation of jurisdiction and the specific patent law infringed;
     
  • An identification of the patent and a statement that the plaintiff owns the patent;
     
  • An identification of at least one infringing product and a statement that the defendant has been infringing the patent “by making, selling, and using” the product;
     
  • A statement that the plaintiff has given the defendant notice of its infringement, and
     
  • A demand for an injunction and damages.

See McZeal, 501 F.3d 1354, 1356-58;
Mark IV Indus. Corp. v. Transcore, L.P., 2009 U.S. Dist. LEXIS 112069 at *8-*10 (D.Del. Dec. 2, 2009);
Sharafabadi v. University of Idaho, 2009 U.S. Dist. LEXIS 110904 at *10-*11 (W.D. Wash. Nov. 27, 2009);
Mallinckrodt, Inc. v. E-Z-EM, Inc., 2009 U.S. Dist. LEXIS 108696 at *9-*10 (D.Del. Nov. 20, 2009);
Fifth Market, Inc. v. CME Group, Inc., 2009 U.S. Dist. LEXIS 108776 at *3-*4 (D. Del. May 14, 2009)

  • A plaintiff is not required to plead specifics as to how an allegedly infringing product works. McZeal, 501 F.3d at 1358; Mark IV, at *10.

Indirect Infringement

There is no form complaint for indirect infringement analogous to Form 18.  As a result, district courts have applied a higher standard for pleading claims of indirect infringement.   One court, Elan, has even held that where a Complaint alleges that a defendant “directly and/or indirectly” infringed, a plaintiff cannot rely on Form 18 but must comply with the stricter standards in Iqbal and Bell Atlantic Corp. v. Twombley, 550 U.S. 544 (2007).

To satisfy Iqbal and Twombley, a claim of indirect infringement must include:

  • Facts showing how the alleged infringer either induced or contributed to another party’s direct infringement. Sharafabadi at *14.
     
  • An allegation that the alleged infringer knew of the patent at the time of the infringing activities. Mallinckrodt at *11.
     
  • For induced infringement, an allegation that the alleged infringer specifically intended to induce infringement. Mallinckrodt at *11.
     
  • For contributory infringement, an allegation that the alleged infringer knew that the combination for which his component was especially designed was both patented and infringing. Mallinckrodt at *12.
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