Google might not fare so well in the recent appeal before the US Court of Appeals for the Fourth Circuit brought by Rosetta Stone, the internationally-known language learning company. In Rosetta Stone Ltd. v. Google Inc., the Fourth Circuit considered a host of IP issues raised by the language learning company involving Google’s sale of Rosetta Stone’s trademarks as keywords. This case is made all the more interesting by the district court’s unusual and (in the authors’ view) misguided interpretation of the trademark and dilution laws. (In full disclosure, the authors represented more than a dozen major brand owners, among them Coach, The Professional Golfers’ Association of America, and Rolls Royce, as amici curiae who urged reversal of the lower court’s opinion on the issues of trademark functionality and dilution.)
Rosetta Stone initially brought suit against Google for selling its trademarks as keywords, including keywords to trigger paid advertisements (then known as “Sponsored Listings”). A panel comprised of Chief Judge William Traxler, Jr., Judge Clyde Hamilton, and Judge Barbara Keenan heard oral argument on September 22, 2011.
On summary judgment, the district court had ruled in favor of Google on all counts. But this ruling might well be overturned on appeal. The difficulty, from Google’s perspective, is that the district judge misapplied the law in some instances and went out on a limb in others, deciding issues in a novel and unsupported way. And this was not lost on the panel.
One of the trial court’s “legal errors” Judge Keenan emphasized was its holding that Google was shielded from liability for infringement by the functionality doctrine. The functionality doctrine -- which typically is applied only to trade dress or nontraditional trademarks (i.e. sound, taste, color) -- is a challenge to the ability of a useful or “functional” aspect of the trade dress or product feature of the trademark owner’s product to serve as a trademark. Consequently, marks deemed to be “functional” are not entitled to any trademark protection. The lower court, however, analyzed whether Google’s use of Rosetta Stone’s word marks allowed Google’s search engine to function more efficiently. Finding that it did so, the trial court held that the functionality doctrine barred a finding of trademark infringement against Google. The application of the functionality doctrine to word marks and the focus on the defendant’s use of the marks represent major deviations from the traditional functionality analysis.
Other panel members, while less focused perhaps on the trial court’s errors, also seemed to find fault with Google’s conduct for practical reasons, and thus could be inclined to rule against the search engine king. Judge Hamilton, for example, repeatedly asked Google’s counsel why her client re-posted Sponsored Listings for alleged counterfeiters after Rosetta Stone asked that they be removed. Google has a strong record in intellectual property cases. Based on docket research for trademark cases since September 2008, it has been sued in this country for trademark infringement at least 19 times, has mounted successful defenses on approximately eight occasions, and has resolved another six cases informally. The remaining cases are still pending. Google, therefore, has yet to be on the losing end of one of these disputes but that may soon be changing.
The average time from argument to decision in the Fourth Circuit is eight to nine months. Although it is impossible to predict how the Fourth Circuit will rule, the pointed questions from the panel may suggest how the wind will blow on this one long before then.