With Rosetta Stone Settlement, Google Gets Closer to Legitimizing Billions of AdWords Revenue (Forbes Cross-Post)

By Eric Goldman

After 3+ years of litigation, Google ($GOOG) and Rosetta Stone ($RST) settled Rosetta Stone’s trademark lawsuit over Google AdWords.  The settlement terms are confidential, but a joint statement published in Reuters says that the parties will “meaningfully collaborate to combat online ads for counterfeit goods and prevent the misuse and abuse of trademarks on the Internet.”  This does not clarify if Google will do anything more than it’s currently doing, or if Google will do something special for Rosetta Stone.  It’s possible neither happened.  The statement also doesn’t indicate if money changed hands.

As a result, it’s hard to determine who “won” this litigation.  But even if the settlement terms favored Rosetta Stone (and I wonder about that), I would be surprised if those results justified three years of litigation costs.  Rosetta Stone might have cash to burn, but most litigants who threaten Google’s cash cow will not.  I continue to believe that trademark lawsuits against Google for AdWords is categorically a losing proposition for the plaintiff.  Trademark owners, beware.

Irrespective of the specific settlement terms, ending this case is a strategic win for Google because it takes out the last “major” US trademark owner challenger to AdWords.  Combined with the recent dismissal of the Jurin lawsuit, Google is now down to two pending US trademark lawsuits over AdWords: CYBERsitter and Home Decor Center.  Despite CYBERsitter’s recent intermediate “win,” I don’t think either of the two remaining lawsuits are dangerous to Google.  As a result, Google is tantalizingly close to successfully running the table on all of the US trademark challenges to its AdWords practices.  When this happens, Google will have legitimized the billions of dollars of revenues it makes by selling trademarked keywords in AdWords.

Otherwise, with this case ending by settlement, the Rosetta Stone lawsuit did little to shape trademark law.  The district court’s opinion was a complete win for Google, but the Fourth Circuit reversed the district court on several key points but didn’t provide much useful precedent.  Most of the key legal issues remain unresolved, but if Google knocks out the CYBERsitter and Home Decor Center lawsuits, no one else may emerge to test Google’s practices.

The case library (see also the Joint Appendix material):

* Settlement notice.

* The Fourth Circuit’s opinion. Blog post.

* Public Citizen’s motion (with Marty Schwimmer and me) to intervene and request to unseal the joint appendix.

* Rosetta Stone reply brief.

* Public Citizen amicus brief in support of Google.

* Public Knowledge/EFF amicus brief in support of Google.

* eBay/Yahoo amicus brief in support of Google.

* Google’s opening response brief: redacted and unredacted (warning: 60MB file).

* UK Intellectual Property Law Society amicus brief in support of neither party.

* Rosetta Stone’s opening appellate brief: redacted and unredacted.

* INTA’s amicus brief in support of Rosetta Stone.

* Carfax et al amicus brief in support of Rosetta Stone.

* Association for Competitive Technology et al amicus brief in support of Rosetta Stone.

* ConvaTec et al amicus brief in support of Rosetta Stone.

* Volunteers of America amicus brief in support of Rosetta Stone.

* District court’s main opinion granting SJ. My blog post.

* District court’s opinion granting a motion to dismiss on the unjust enrichment claim.

* Rosetta Stone’s initial complaint. My blog post.