Rosetta Stone loses court case against Google over AdWords; considering appeal

Thursday, April 29, 2010

Rosetta Stone loses court case against Google

ARLINGTON, Va. — Foreign language education company Rosetta Stone Inc. said Thursday it lost a court case in which it sued Google Inc. for allowing rivals to advertise copycat software when Rosetta trademarks are used in search terms.

The company said it was “deeply disappointed” that its suit was dismissed by the U.S. District Court for the Eastern District of Virginia.

The company said the decision will “permit Google to continue to create consumer confusion” by allowing counterfeit products to be sold using its trademarks.

Rosetta Stone said that Google knows counterfeit software is being advertised using its AdWords system and takes no effective steps to stop the activity.

The company said it will consider an appeal upon reviewing the court’s written decision.

Google said in a statement it was pleased with the decision, and that the use of trademarks as search words that trigger competing ads was legal and supported by other court precedents.

“Users searching on Google benefit from being able to choose from a variety of competing advertisers and we found no evidence that legitimate use of trademarks as keyword triggers or in the text of advertisements confuses consumers,” said Google’s senior litigation counsel, Adam Barea.

Last month, the European Court of Justice of the European Union also said that companies who buy ads when competitors’ trademarks are searched are not adversely affecting the owner of the trademarks.

In that case, Google in France faced off against luxury handbag maker Louis Vuitton and others.

But the court set a new test for Google’s liability in such cases, saying national courts would have to decide whether the company knowingly accepts these ads.

Google would be in the clear if it can show that it moves swiftly to remove an ad once it is told that it is misusing a trademark.

Google said it has a team that monitors advertisements and pulls those of companies that are acting fraudulently or selling counterfeit goods.

Rosetta Stone shares closed down 16 cents at $26.33 on Thursday. Google shares rose $2.81 to close at $532.

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