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Google's Use of Trademarked Keywords Not Immunized by Functionality Says Fourth Circuit

By Bryan Graff

Trademark owners agonizing over internet search engine technology and their ability to protect their brands can step back from the ledge, at least for the moment. The fact that their trademarks may serve important indexing or advertising functions for internet search engine companies, like Google or Bing, does not serve to immunize search engine providers from liability for trademark infringement. On Monday, April 9th, the Fourth Circuit breathed new life into Rosetta Stone’s trademark suit against Google, vacating in large part the Eastern District of Virginia’s 2010 decision dismissing Rosetta Stone’s claims against Google on summary judgment. The Fourth Circuit remanded Rosetta Stone’s claims for direct trademark infringement, contributory infringement, and trademark dilution for further proceedings.

Rosetta Stone’s appeal to the Fourth Circuit was widely-followed, in part because of the district court’s novel application of the functionality doctrine to the search engine context. The district court concluded that the functionality doctrine protected Google’s use of Rosetta Stone’s marks as keyword triggers as a matter of law. According to the district court, keywords, including trademarks such as “Rosetta Stone,” serve an “essential indexing function” for Google, allowing it to readily identify websites or information relevant to an online user’s search query. The district court found that the use of such keywords also served an “advertising function” that provides consumers with “a highly useful means of searching the internet for products at competitive prices.” The online functions articulated by the district court would apply to virtually any (if not every) trademark imaginable, as trademarks are meant to identify products, brands, and suppliers. An order approving the district court’s functionality analysis would have had far-reaching implications. Where adopted, it would have effectively immunized internet search engine providers selling trademarks as keywords from trademark infringement liability.

The Fourth Circuit unequivocally rejected the district court’s reliance on the functionality doctrine. It found it irrelevant whether Google’s search engine may function better through the use of trademarked keywords, such as Rosetta Stone’s marks. The relevant inquiry is not whether use of the mark makes Google’s product more useful or functional, but whether the mark itself or the trademark holder’s use of the mark is functional. According to the Fourth Circuit, there was clearly nothing functional about Rosetta Stone’s use of its mark. Rosetta Stone uses its mark as a classic source identifier for its products. Accordingly, the Fourth Circuit explicitly rejected the functionality doctrine as a possible affirmative defense.

It remains to be seen whether Rosetta Stone will ultimately prevail in its claims against Google. Numerous key issues remain for trial, including Google’s intent, the extent of actual customer confusion, the sophistication of consumers of Rosetta Stone’s products, as well as the potential application of the nominative fair use defense. What is clear is that trademark owners are not yet relegated to actions solely against the infringing advertisers using internet search engines. Companies, such as Google, that provide the search engine services will remain key targets and their ability to rely upon functionality as a defense has taken a significant blow.

Bryan Graff is an attorney at Ryan Swanson and can be reached at [email protected] Because each situation is different, this information is intended for general information purposes only and is not intended to provide legal advice on any specific facts and circumstances. Ryan, Swanson & Cleveland, PLLC is a full-service law firm located in Seattle, Washington.

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