�ҴǴDz�����’s AdWords platform allows an advertiser to “bid” on the right to have an advertisement link displayed with search results for a word or combination of words relevant to the advertiser’s business. Rosetta Stone is accusing Google of trademark infringement on the basis that Google is “selling” trademarked words and phrases, such as “Rosetta Stone” and “The Fastest Way to Learn a Language …”, to advertisers on Google pages and the result pages are confusing to consumers. A full list of registered Rosetta Stone trademarked phrases may be found on the . The Google AdWords platform determines where advertisements are placed by assigning an “Ad Rank” based on factors such as an advertiser’s maximum monetary bid and “quality score” metrics. A summary of how the AdWords platform works may be found .

Rosetta Stone asserted several claims in the district court: 1) direct trademark infringement; 2) contributory trademark infringement; 3) trademark dilution; 4) vicarious trademark infringement; and 5) unjust enrichment. The district court disposed of the case in �ҴǴDz�����’s favour by summary judgment and dismissed the unjust enrichment claim. The Court of Appeal, however, vacated the district court’s summary judgment with respect to direct infringement, contributory infringement and dilution claims.

Overall, in vacating the district court’s summary judgment on 3 claims, the Court of Appeal remanded issues for further proceedings by objecting to the lower court decision on doctrinal and procedural points. On several points of evidence, the Court of Appeal held that the testimony and evidence considered in the district court could not sustain the summary judgment and that there was evidence to establish several questions of fact. On the claim of trademark dilution, the Court of Appeal found that the lower court erred by incorrectly placing a burden of proof on Rosetta Stone to demonstrate that Google was using trademarks as a source identifier for �ҴǴDz�����’s own products. The Court of Appeal also found the lower court omitted a “fair use” analysis for trademark infringement.

As the Court of Appeal reviewed evidence and testimony from the lower court, several interesting events were brought to light. Firstly, the court considered the Google AdWords policy changes that occurred over the years. The record shows that prior to 2004, trademarks as keyword search triggers for unauthorized advertisers were not allowed. In 2004, restrictions were loosened. The court heard evidence, however, that a Google study at the time (in 2004) suggested that the unrestricted use of trademarks in the text of an advertisement might confuse Internet users. Despite these finding, in 2009, restrictions were further loosened, allowing trademark terms to be used in ads without the approval of a trademark owner. �ҴǴDz�����’s research showed that about 7% of its total revenue was driven by trademarked keywords. The court heard testimony that �ҴǴDz�����’s policy changes were revenue driven. Secondly, the court heard testimony from 5 consumers who, in 2009, mistakenly purchased counterfeit software from links on a Google search page. The consumers mistakenly believed the software to be affiliated or authorized by Rosetta Stone for distribution.  Thirdly, the court heard evidence that Google purportedly allowed known infringers and counterfeiters to bid on Rosetta Stone trademarks as advertising search keywords. On many points of testimony, the Court of Appeal concluded there to be sufficient evidence to create questions of fact that cannot sufficiently be resolved by summary judgment.

This case is important for a few reasons. To start, it is one of the first United States appellate court opinions on a “trademark owner v. search engine keyword advertiser” case addressing whether trademark infringement liability may arise. Secondly, a decision against Google could impact the future of �ҴǴDz�����’s AdWords platform and the Internet keyword search advertising business model. On the other hand, if the court ends up deciding in favour of Rosetta Stone, the result could spur many more cases over keyword advertising. Any company with a website could assert that customers are being mislead by �ҴǴDz�����’s AdWords program and bring similar lawsuits.

On his , Professor Goldman, Associate Professor of Law at Santa Clara University School of Law, criticizes the Court of Appeal decision as failing to provide a judgment based on “the big picture normative conclusion that keyword ad sales shouldn’t violate trademark law.” As the Court of Appeal remanded the case for further proceedings, we’ll need to wait at least a few more years for the landscape to settle on whether keyword advertisement sales violate trademark law.

Stephen Lam is a JD candidate at Osgoode Hall Law School.

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Luís Miguel Poiares Maduro, the Advocate General of the European Court of Justice (ECJ), concluded in a recent recommendation to the ECJ that �ҴǴDz�����’s AdWords system does not violate trademarks when it allows advertisers to select trademarks as keyword triggers for its advertisement service.

�ҴǴDz�����’s is a service that allows advertisers to create ads that are displayed alongside Google search results (i.e. the “Sponsored Links” on the right side). These ads are triggered by specific keywords found in user search queries. What is controversial about this system is the fact that Google has allowed trademarked keywords (e.g. brand names) to be used with its service without permission from the trademark owners. Not only is there the claim that Google would be profiting from the use of an unauthorized use of a trademark, there is growing fear that the ability for any advertiser to choose these trademark keywords may lead to potential damages in lost profit and reputation (e.g. counterfeit products sold on the advertisers' websites).

There have recently been three actions taken against Google Inc. by various brand holders in the EU (, , and ). The French Cour de Cassation has referred a number of questions regarding the interpretation of �ҴǴDz�����’s use of trademarks in its AdWords service to the European Court of Justice. These three cases have since been reviewed by the Advocate General together as a single case ()

One of the main issues in all three cases was the interpretation of the rights conferred by a trademark provision found in . The provision provides that registered trademarks (and similarly ) are given protection against any unauthorized use of signs which are identical or similar to the trademark in relation to the goods and services provided, and to which there is possible confusion from the public as to the original source.

Google has argued that since the keywords are not affixed to goods nor do they conduct their business activity under them, that the use of keywords does not constitute a ‘sign’ and thus cannot be considered an infringement of trademark. It was in Poaires Maduro’s opinion that such a narrow interpretation was not what the policymakers had envisioned when drafting the provision. Keywords which correspond to trademarks can also be said to be representing those marks.

Despite this fact, Poaires Maduro stated that AdWords had not met the threshold for trademark infringement on the basis that the selection of keywords was not in the same form of goods and services as the trademark according to Article 5 (i.e. the selection of keywords was used to attract advertisers to �ҴǴDz�����’s own advertising services). He also stated that the risk of confusion for the public as to the original source of the trademark was not a sufficient concern stemming from the mere appearance of advertisements alongside the search result. Internet consumers are conscious and knowledgeable enough to understand that other sites other than the trademark holder’s site may appear in the advertisement slots.

Poaires Maduro was also careful to point out that the trademark proprietors’ push for a more expansive reach of trademarks (i.e. even a mere possibility that a system may be used by a third party to infringe a trademark makes the system in itself an infringement), would be going beyond the scope of trademark rights. An internet user’s access to information regarding the trademark should not be restricted to or by the trademark owner.

Poaires Maduro does make the conclusion that while not directly at fault in the advertisement system, Google profiting from its AdWords service means that it is no longer a neutral information vehicle. �ҴǴDz�����’s “pecuniary interests” with its advertisers removes it from the immunity of providing the “natural results” presented by the search engine. As such, Google may be liable for the content that it places in the advertisement space if trademark owners can prove specific instances of damage.

While the Advocate General’s recommendation carefully straddles the boundaries of the ‘freedom of expression v. freedom of commerce’ concepts, his recommendations are not binding on the ECJ. This is of some relief to opponents of the AG’s recommendation, who see the recommendation as a step-backwards in the development of commerce and trademark law and hope that the ECJ will consider the ramifications of such an outcome (read more about these concerns ). The ECJ must still examine the case and the final decision is not expected until early next year – however, about 80 per cent of AG recommendations are upheld by the ECJ.

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Ballmer that these searches are primary gateways to all information and knowledge on Internet, and online advertisements fuel internet content and commerce. Therefore, to ensure search innovation, greater return to advertisers on their investments and more choice to the rest of the world, this partnership may play a noticeable role in shifting the market dynamics.

According to the pact, . Yahoo is reported to benefit by focusing its investments on audience properties, display advertising and the mobile Internet experiences. It is also speculated to further its strategy on its strengths as a publisher of . Furthermore, Yahoo gets of the search revenues for search ads on Yahoo's sites. But, it gets nothing from premium advertiser clicks on Bing even though it is selling the ads. Microsoft benefits by winning a wider exposure to its newly overhauled and well-received search engine Bing.

Both Yahoo and Microsoft are deeply committed to protecting . Yahoo retains people's search data, including keywords, cookie information and IP address, but no names or addresses, for three months. After that, the data gets further anonymized so that it cannot be connected to a particular person. Microsoft retains such data for 18 months, after which it undergoes complete anonymization. Google retains data for 9 months after which it makes it difficult to link IP addresses to actual people. However, the cookie information becomes anonymous at 18 months. This retention of data is an for Google to take steps to improve its engines and searches.

Search inquiries are a sensitive issue since they hold the power to expose personal information about things like illness, financial concerns and various political and personal preferences. European regulators hold that Internet companies should not hold data beyond six months. The teaming up of Yahoo and Microsoft can further alter the approach to privacy and retention of search inquiries as the is likely to increase.

For those who are either displeased by the aforementioned privacy policies of these search giants, or those who want to opt for a search tool which doesn't keep IP addresses, some options include , and Ask.com and its feature.  And those who are interested in switching on the grounds of accuracy and extent of search results, the website provides a user-friendly way of comparing search results from the three major Internet Search engines: Google, Yahoo and Bing (although sometimes the third search engine results can be found by scrolling down, instead of all three available in three parallel columns). Using this website can enable the consumers to instantly see the tool that best meets their needs. In conclusion, however, the question that only time can answer is whether the Yahoo-Microsoft merger will be sufficient to entice consumers and advertisers into re-evaluating their search engine preferences.

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