Carfax et al Amicus Brief in Rosetta Stone v Google

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    (additional counsel listed inside)

    No. 10-2007

    _______________________________________

    IN THE

    UNITED STATES COURT OFAPPEALS

    FORTHE FOURTH CIRCUIT

    _______________________________________

    ROSETTA STONE LTD.,

    Plaintiff-Appellant,

    v.

    GOOGLE INC.,

    Defendant-Appellee_______________________________________

    On Appeal From the United States District Court

    For the Eastern District of Virginia, Alexandria Division

    _______________________________________

    BRIEF FOR AMICI CURIAE CARFAX, INC., FORDMOTOR

    COMPANY, HARMON INTERNATIONAL INDUSTRIES,

    INCORPORATED, THE MEDIA INSTITUTE, VIACOM INC. AND

    BLUES DESTINY RECORDS, LLC IN SUPPORTOF

    PLAINTIFF-APPELLANT ROSETTA STONE LTD.

    _______________________________________

    Marcia B. Paul

    Kevan Choset (Of Counsel)

    Davis Wright Tremaine LLP

    1633 Broadway

    27th

    Floor

    New York, New York 10019Telephone: (212) 489-8230

    Counsel for Amici Curiae Carfax, Inc.,

    Harmon International Industries,

    Incorporated, The Media Institute, Viacom

    Inc. and Blues Destiny Records, LLC

    Daniel P. Reing

    Davis Wright Tremaine LLP

    1919 Pennsylvania Avenue, N.W.

    Suite 800

    Washington, DC 20006

    Telephone: (202) 973-4200

    Counsel for Amici Curiae Carfax, Inc.,

    Harmon International Industries,

    Incorporated, The Media Institute, Viacom

    Inc. and Blues Destiny Records, LLC

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    Mark S. Sparschu

    Brooks Kushman P.C.

    1000 Town Center

    22nd

    Floor

    Southfield Michigan 48075

    Telephone: (248) 358-4400Counsel for Amicus Curiae Ford Motor

    Company

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    TABLE OF CONTENTS

    Page

    TABLE OF AUTHORITIES .....................................................................................1

    IDENTITY OF AMICI ..............................................................................................1

    PRELIMINARY STATEMENT ...............................................................................3

    I. THE DISTRICT COURT ERRED IN REJECTING THE

    CONTRIBUTORY INFRINGEMENT CLAIM ON SUMMARY

    JUDGMENT....................................................................................................4

    A. The Court Below Applied Far Too Narrow a Standard for

    Inducement to Engage in Trademark Infringement ..............................5

    B. That An Online Keyword-Based Advertising Service Can Be

    Used to Create and Post Lawful Advertisements Does Not

    Insulate It From Its Otherwise Infringing Conduct............................ 10

    C. The Court Below Erroneously Limited its Contributory

    Infringement Analysis to Counterfeiters............................................ 14

    D. The District Courts Narrow View of Contributory Infringement

    Resulted in an Incorrect Analysis of Secondary Liability for

    Counterfeiters Advertisements.......................................................... 17

    1. The District Court Ignored the Facts Demonstrating

    Googles Knowledge of Infringements.................................... 17

    2. The Decision of the Court Below Places an Unreasonable

    Burden on Trademark Owners to Police Their Intellectual

    Property.................................................................................... 21

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    TABLE OF AUTHORITIES

    Page(s)

    CASES

    Allstar Marketing Group, LLC v. Your Store Online, LLC,666 F. Supp. 2d 1109 (C.D.Cal 2009) .....................................................................................20

    CollegeSource, Inc. v. AcademyOne, Inc.,

    No. 08-cv-1987, 2009 WL 2705426 (S.D.Cal. Aug 24, 2009)................................................20

    Fonovisa, Inc. v. Cherry Auction, Inc.,

    76 F.3d 259 (9th Cir. 1996) ...................................................................................................8, 9

    FragranceNet.com, Inc. v. FragranceX.com, Inc.,

    679 F. Supp. 2d 312 (E.D.N.Y. 2010) .....................................................................................16

    FragranceNet.com, Inc. v. Les Parfums, Inc.,672 F. Supp. 2d 328 (E.D.N.Y. 2009) .....................................................................................16

    G.H. Bass & Co. v. Wakefern Food Corp.,21 U.S.P.Q.2d 1862 (S.D.N.Y. 1991)......................................................................................10

    Georgia Pacific Consumer Products, LP v. Von Drehle Corp.,618 F.3d 441 (4th Cir. 2010) ...............................................................................................5, 11

    H-D Michigan Inc. v. Bikers Dream Inc.,

    48 U.S.P.Q.2d 1108 (C.D. Cal. 1998), affd in relevant part, 230 F.3d 1366 (9th

    Cir.

    2000) ..........................................................................................................................................9

    Hard Rock Cafe Licensing Corporation v. Concession Services, Inc.,

    955 F.2d 1143 (7th Cir. 1992) .............................................................................................9, 18

    Inwood Labs., Inc. v. Ives Labs., Inc.,456 U.S. 844 (1982)...................................................................................................4, 5, 11, 17

    Lockheed Martin Corporation v. Network Solutions Inc.,194 F.3d 980 (9th Cir. 1999) .....................................................................................................8

    Metro-Goldwyn-Mayer Studios Inc. v. Grokster,

    545 U.S. 913 (2005).....................................................................................................11, 12, 13

    Morningware, Inc. v. Hearthware Home Products, Inc.,

    673 F. Supp. 2d 630 (N.D.Ill. 2009) ........................................................................................20

    Parts Geek, LLC v. U.S. Auto Parts Network, Inc.,

    No. CIVA 09-5578, 2010 WL 1381005 (D.N.J. Apr 1, 2010) ....................................15, 16, 19

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    Rescuecom Corp. v. Google Inc.,

    562 F.3d 123 (2d Cir. 2009).....................................................................................................15

    Sony Corp. v. Universal City Studios,464 U.S. 417 (1984)...........................................................................................................10, 11

    Symantec Corp. v. CD Micro, Inc.,

    286 F. Supp. 2d 1278 (D. Ore. 2003).........................................................................................9

    Tiffany (NJ) Inc. v. eBay Inc.,

    600 F.3d 93 (2d Cir. 2010).....................................................................................16, 17, 19, 22

    STATUTES

    Lanham Act, 15 U.S.C. 1051 et seq...................................................................................... 11, 22

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    BRIEF OFAMICI CURIAE

    CARFAX, INC., FORD MOTOR COMPANY, HARMAN

    INTERNATIONAL INDUSTRIES, INCORPORATED, THE MEDIA

    INSTITUTE, VIACOM INC. AND BLUES DESTINY RECORDS, LLC

    IN SUPPORT OF PLAINTIFF-APPELLANT

    This brief is respectfully submitted by Carfax, Inc., Ford Motor Company,

    Harman International Industries, Incorporated, The Media Institute, Viacom Inc.

    and Blues Destiny Records, LLC (together, amici), urging reversal of the order

    below.1

    IDENTITY OF AMICI

    Amici include some of this nations major corporations, who own a great

    number of valuable trademarks, as well as a nonprofit research organization that

    studies intellectual property issues.

    Amicus Carfax, Inc., a privately held company founded in 1984, pioneered

    the Vehicle History Report. Carfax owns federal trademark registrations for a

    number of marks, including the CARFAX mark. Carfaxs products and services

    are delivered primarily through the Internet, and Carfax actively markets to

    customers via the Internet.

    Amicus Ford Motor Company is a global automotive industry leader that

    manufactures or distributes automobiles across six continents and provides related

    1Both parties have consented to this amici curiae brief. No counsel for a party

    authored this brief in whole or in part, and no person or entity other than amici and

    their counsel made a monetary contribution to the preparation or submission of this

    brief.

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    products and services. It is the owner of many trademarks, including the iconic

    FORD mark, which has been in use since 1895 and is one of the most well-known

    marks in the world.

    Amicus Harman International Industries, Incorporated is a multinational,

    publically held consumer electronics company with brands protected in many

    countries worldwide and owns over two thousand trademarks worldwide.

    Amicus The Media Institute is an independent, nonprofit research

    organization located in Arlington, Va. Through conferences, publications, and

    filings with courts and regulatory bodies, the Institute advocates a strong First

    Amendment, a competitive communications industry, and journalistic excellence.

    The Institute also has a strong interest in intellectual property issues, and sponsors

    the National CyberEducation Project.

    Amicus Viacom Inc. is a leading global entertainment media company that

    delivers entertainment content around the globe through television, motion pictures

    and a wide range of digital media, including mobile platforms and video games. Its

    family of prominent and respected brands includes MTV Networks (comprised of

    the MTV, VH1, Nickelodeon, Comedy Central, CMT and TV Land channels,

    among others), BET Networks, and Paramount Pictures.

    Amicus Blues Destiny Records, LLC is an independent Blues record label

    based in Destin, Florida. It owns the Blues Destiny Records trademark.

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    PRELIMINARY STATEMENT

    Amici are owners of valuable trademarks (and an organization involved in

    intellectual property issues) who work diligently to develop and protect the

    goodwill associated with their brands. Amici actively police their trademarks and

    currently devote significant resources to guard against unauthorized uses of the

    marks online. Increasingly, such unauthorized uses occur in the context of online

    advertising. Because consumers often search online for known brands when

    seeking to locate goods and services (and, in doing so, rely on trademarks to

    signify a particular level of quality), there can be adverse consequences to such

    brand owners and to consumers when they are misled and/or confused by

    competitors or, worse, by counterfeiters. Accordingly, brand owners must often

    rely on good-faith efforts by operators of online advertising platforms. Where an

    online keyword-based advertising service such as appellee Google Inc. (Google)

    fails to take the necessary steps to deter infringement, creates an environment that

    fosters infringement, or suggests and implements the tools that allow others to

    infringe, secondary liability is often the only realistic avenue on which amici can

    rely to prevent complete erosion of the goodwill in their trademarks.

    Amici take no position here as to whether the record below establishes as a

    matter of law that specific third parties have (or have not) engaged in conduct

    constituting primary infringement underlying a claim for secondary infringement

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    by Google. However, it appears that neither party disputes that some underlying

    primary infringement does in fact occur through AdWords, whether by

    counterfeiters, advertisers posting misleading advertisements, or otherwise. A

    program like AdWords works with advertisers by suggesting specific words,

    including trademarked terms, on which they should bid; allows advertisers to

    associate their ads with these specific words; displays the advertisers messages to

    users who search for information about that trademarked term; and chooses which

    advertisement appears, and in what order. Thus, the question addressed in this

    brief is whether that level of involvement in promoting such potentially infringing

    activities rises to a sufficient level to constitute infringement. Amici believe that

    the district court erred when it answered that question in the negative.

    ARGUMENT

    I.

    THE DISTRICT COURT ERRED

    IN REJECTING THE CONTRIBUTORY

    INFRINGEMENT CLAIM ON SUMMARY JUDGMENT

    In order to be liable for contributory infringement, one must intentionally

    induce[] another to infringe or continue[] to supply its product to one whom it

    knows or has reason to know is engaging in trademark infringement. Inwood

    Labs., Inc. v. Ives Labs., Inc., 456 U.S. 844, 854 (1982). The court below failed to

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    apply the proper standard as explicated in the case law to the facts at issue in this

    case, as explained below.

    A. The Court Below Applied Far Too Narrow a Standard for Inducement

    to Engage in Trademark Infringement

    The district court erred in its reading of the inducement prong of the

    contributory infringement standard. In Inwood, the Supreme Court provided the

    framework that would eventually evolve into contributory trademark infringement

    jurisprudence. The court below construed this standard of intentionally

    induc[ing] another to infringe a trademark narrowly, equating inducement with

    nothing less than holding ones feet to the fire. But the case law in this Circuit and

    elsewhere simply does not support such a narrow view.

    Just this year, this Circuit decided Georgia Pacific Consumer Products, LP

    v. Von Drehle Corp., 618 F.3d 441 (4th Cir. 2010). In that case, defendant

    manufactured low-price paper towels that could fit into paper towel dispensers

    manufactured by plaintiff (and designed to dispense plaintiffs own paper towels).

    Noting that [defendants] sales personnel made in-person sales calls on

    distributors and end-user customers to market [defendants] Toweling as a less

    expensive alternative to [plaintiffs] Toweling, this Court found that defendant

    was contributorily liable for the fact that third parties were placing defendants

    towels in plaintiffs dispensers. Id. at 451. Defendant did not itself place its paper

    towels into plaintiffs paper towel dispensers, and it did not tell third parties to do

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    so. Rather, it provided towels the same size as plaintiffs, and told consumers the

    true fact that its paper towels were less expensive than plaintiffs. But, this Court

    held, secondary liability nonetheless attached.

    Just as Von Drehles sales representatives reached out and stated objective

    facts to sell its product, not suggesting any actions consumers should take once

    they bought that product, Google, by offering trademarks for auction to those other

    than their owners in AdWords, and separately by its Keyword Tool2, likewise

    appears to be reaching out and suggesting that its customers use specific

    AdWords including trademarked names of their competitors to attract

    customers. Use of the AdWord tools bears this out. For any customer seeking to

    advertise cola (whether a counterfeiter, a manufacturer of a specific cola product,

    or anyone else), Googles Keyword Tool suggests keywords that include brands

    such as RC Cola and cola coca. (See Appendix A.) Such activity by keyword-

    2

    The district court states that there are three separate tools that suggest keywordsto advertisers: (1) Keyword Tool; (2) Query Suggestion Tool; and (3) a

    trademark-specific version of the Query Suggestion Tool. Op. at 9. Because a

    large part of the record is under seal, amici do not fully understand the workings of

    all three of these tools. Amici have used the current online version of the

    Keyword Tool in preparing this brief, and cite several examples of results

    obtained therefrom.

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    based advertising services clearly encourages the use of brand names to attract

    unwitting consumers.3

    In setting up a program that allows third parties to bid for a competitors

    trademarks and then suggesting that they do so, a keyword-based advertising

    service indeed evidences the requisite intent to induce competitors to bid for

    competitive trademarks and to induce counterfeiters to use the real brand to lure

    customers to their fake wares. The service need not have the intent to sell to

    counterfeiters or competitors, so long as it intends to sell the right to use anothers

    trademark in a way that is likely to cause confusion.

    The court below also concluded that the mere existence of a tool that assists

    advertisers in optimizing their advertisements does not, in itself, indicate intent to

    induce infringement. Op. at 35. That may well be true in general terms, but it is

    not the mere existence of the tool, but the inclusion in it of trademarked terms that

    demonstrates the requisite intent. Likewise, for the court below to point to a lack

    of evidence that Googles Keyword Tools or its employees direct or influence

    advertisers to bid on the Rosetta Stone Marks (Op. at 41) simply ignores the

    facts of the present case: the Keyword Tools, by their very design, do exactly that.

    3The fact that Google has a separate trademark-specific version of the Query

    Suggestion Tool makes any claim that it is not pushing the use of trademarked

    terms particularly disingenuous. Op. at 9. In any event, the standard Keyword

    Tool described above suggests RC Cola and cola coca as keywords, so that

    tool alone provides inducement.

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    They are selected and offered by Google to induce customers to bid on terms that it

    knows or has reason to know can be and are used to trade upon intellectual

    property owned by others, including but not limited to counterfeiters. When a

    customer is told, You can drive traffic to your cola site by bidding on the term

    cola coca, that is not merely optimizing [an] advertisement (Op. at 35). This

    would be precisely the same as characterizing the statement Our paper towels are

    a cheaper alternative to those trademarked paper towels, as merely a statement

    about optimizing revenue. This Court has found the latter to be an inducement

    and should find similarly with respect to the former.

    To place the present facts in context, two contributory trademark

    infringement cases from the Ninth Circuit with differing results ( Lockheed Martin

    Corporation v. Network Solutions Inc., 194 F.3d 980 (9th Cir. 1999) and Fonovisa,

    Inc. v. Cherry Auction, Inc., 76 F.3d 259 (9th Cir. 1996)), are instructive. In

    Lockheed, defendant Network Solutions was a domain name registrar who fulfilled

    third-party requests for domain names. It did not suggest particular domain names

    to applicants, but rather registered those requests and entered them into its

    database, so they could be automatically accessed, or translated, whenever an

    Internet user entered that domain name. Network Solutions did not provide the

    translation service (i.e., it did not route the user trying to access the website at a

    certain address to that website) or host the website; those functions were

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    performed by unrelated companies. Because some of the registered domain names

    were allegedly used by their operators to infringe Lockheeds rights, Lockheed

    sought to impose secondary liability on Network Solutions. The Ninth Circuit,

    equating Network Solutions wholly passive conduct with the role of the U.S.

    Postal Service, found no secondary liability.

    In contrast, in Fonovisa, defendant Cherry Auction operated a swap meet;

    customers paid an entrance fee in order to purchase various merchandise from

    individual vendors who paid Cherry Auction for booth space. Cherry Auction

    supplied parking, advertised upcoming meets, and retained the right to exclude

    vendors for any reason, including trademark infringement. Some vendors sold

    counterfeit recordings under Fonovisa trademarks. The Court concluded that the

    swap meet can not disregard its vendors blatant trademark infringements with

    impunity (76 F.3d at 265), and therefore refused to dismiss the contributory

    infringement claims. Indeed, providing trademarked keywords and then looking

    the other way, despite having the ability to prevent, monitor, and stop infringing

    activity by the purchasers of the keywords, is precisely the type of willfull[]

    blind[ness] that other courts have found to establish contributory infringement.

    Hard Rock Cafe Licensing Corporation v. Concession Services, Inc., 955 F.2d

    1143, 1149 (7th Cir. 1992); see also Symantec Corp. v. CD Micro, Inc., 286 F.

    Supp. 2d 1278 (D. Ore. 2003).

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    Courts also routinely find that when a party actually places the infringing

    mark on goods sold by another party, the first party will be liable for contributory

    infringement. See, e.g., H-D Michigan Inc. v. Bikers Dream Inc., 48 U.S.P.Q.2d

    1108 (C.D. Cal. 1998), affd in relevant part, 230 F.3d 1366 (9th

    Cir. 2000)

    (manufacturer who places mark on motorcycles is contributorily liable for

    trademark infringement even though it does not sell to public); G.H. Bass & Co. v.

    Wakefern Food Corp., 21 U.S.P.Q.2d 1862 (S.D.N.Y. 1991) (distributor

    contributorily infringed goods by delivering infringing goods to retailers). When

    both the idea to associate the advertisement with the trademarked keyword, and the

    likely consequent association in consumers minds, are created not by the

    advertiser, but by a keyword-based advertising service such as Google, which

    supplied the means and facilities and the idea to do so, liability should attach4.

    B. That An Online Keyword-Based Advertising Service Can Be Used to

    Create and Post Lawful Advertisements Does Not Insulate It From Its

    Otherwise Infringing Conduct

    Google argued below that because AdWords is capable of generating lawful

    advertisements, the overall program cannot itself be unlawful. That argument

    echoes the concept of substantial non-infringing uses which arose in the

    4Not only does Google create the idea to associate the advertisement with the

    trademarked keyword, but because of its detailed knowledge of the entire

    AdWords advertising scheme, Google knows the value of that association with

    sufficient certainty to estimate the bid price that will be needed to secure the

    specific keyword.

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    copyright context in the 1984 Betamax case, Sony Corp. v. Universal City

    Studios, 464 U.S. 417, 442 (1984). In that case, the Supreme Court found that

    Sony, the manufacturer of the then-prevalent VCR, did not have secondary

    copyright liability for the illegal copying of television programming by users of the

    VCR, because it could be used for a substantial number of perfectly legal purposes

    (the great time-shifting vs. library-building debate). But as the Supreme Court

    made clear some two decades later in Metro-Goldwyn-Mayer Studios Inc. v.

    Grokster, 545 U.S. 913 (2005), that a machine or service (or tool, as here) has

    substantial non-infringing uses does not end the analysis: This view of Sony,

    however, was error, converting the case from one about liability resting on imputed

    intent to one about liability on any theory. Id. at 934.

    As the Grokster Court explained, nothing in Sony requires courts to ignore

    evidence of intent if there is such evidence, and the case was never meant to

    foreclose rules of fault-based liability derived from the common law. Id. at 934-

    35. Similarly, as both the Supreme Court and this Circuit have repeatedly

    recognized, Lanham Act claims must be analyzed under the judicially created

    doctrine of contributory trademark infringement, derived from the common law of

    torts. Georgia Pacific, 618 F.3d at 449, citing Inwood, 456 U.S. at 843-54.

    Therefore, this Court should look to the factors the Grokster Court identified, by

    analogy, to frame the analysis of secondary liability in this case.

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    In Grokster, defendants Grokster and StreamCast were not merely passive

    recipients of information about infringing use. 545 U.S. at 923. Rather,

    StreamCast marketed its service as the best Napster alternative; Grokster touted

    its ability to provide particular copyrighted materials; both presumably did so,

    according to the Court, in order to attract users of a mind to infringe. In this case,

    Google offers trademarks as keywords through its AdWords program, suggests that

    advertisers use particular trademarks or variants of them through its Keyword

    Tool, and then displays the ad. The Grokster Court stated: the classic instance of

    inducement is by advertisement or solicitation that broadcasts a message designed

    to stimulate others to commit violations. Id. at 937. This is just such a classic

    case.

    The Grokster Court relied not only on defendants marketing materials, but

    also on their fundamental business models: it held that by reason of their inherent

    structure, Grokster and StreamCast had the intent to promote infringement.

    Although they received no revenue from users of their free software (just as, here,

    the online keyword-based service does not receive revenue from users of its web

    search), Grokster and StreamCast generated their income by selling advertising

    space (just as the online service does). There, the more users, the more advertisers,

    the more profit; here, the more advertisers, the more click-through, the more profit.

    The Court explained that [t]his evidence alone would not justify an inference of

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    unlawful intent, but viewed in the context of the entire record its import is clear.

    Id. at 940. So, too, here: while profit motivation alone is not enough to imply

    secondary liability, when coupled with the other factors enumerated herein, the

    import of the intent to induce becomes clear.

    Equally important to the present analysis is the Grokster Courts conclusion

    that [w]hen a widely shared service or product is used to commit infringement, it

    may be impossible to enforce rights in the protected work effectively against all

    direct infringers, the only practical alternative being to go against the distributor of

    the copying device for secondary liability on a theory of contributory or vicarious

    infringement. 545 U.S. at 929-30. The exact same is true here: trademark owners

    such as amici cannot realistically, in the context of the Internet, police all misuses

    of their brands. While it is also no doubt true that online keyword-based

    advertising services cannot police all trademark infringements generated by online

    searches, that is not what amici seek; rather, they seek to compel those services to

    take actions that are well within their control to guard against infringement. This is

    particularly true where, as here, the keyword-based advertising service knows who

    is bidding on trademarks; knows whether the bidders are the trademark owners;

    and has the ability to determine whether such bidders are resellers or using those

    trademarks for First Amendment-protected purposes. In Googles case, it can

    and previously did weed out all trademarks from its AdWords program.

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    Consequently, strong policy reasons augur in favor of compelling such keyword-

    based advertising services to do what they clearly can do to prevent infringement.

    For all of these reasons, the fact that trademarked terms can at times be used

    by third parties lawfully as, for instance, descriptive nominative fair uses or for

    comparative advertising purposes, should be of no moment. Comparative

    advertising may and often does have a salutary effect on competition, but there is

    nothing beneficial about facilitating the sale of counterfeit goods, particularly if

    consumers have reason to believe they are getting what they searched for.

    C. The Court Below Erroneously Limited its Contributory Infringement

    Analysis to Counterfeiters

    The court below opens its discussion of secondary liability by saying: [T]he

    Court finds that no reasonable trier of fact could find that Google intentionally

    induces or knowingly continues to permit third party advertisers selling counterfeit

    Rosetta Stone products to use the Rosetta Stone Marks in their Sponsored Link

    titles and advertisement text. Op. 32. From the outset, the court limited its

    inducement analysis to advertisers selling counterfeit Rosetta Stone products.

    Indeed, the seven pages the court devoted to contributory infringement discuss

    only counterfeiters.

    But counterfeiters are by no means the only advertisers who can be primarily

    liable for trademark infringement and can unlawfully trade upon amicis

    trademarks and, in so doing, confuse the consuming public. While the district

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    court considered whether Google is responsible for direct infringement, it did not

    even address whether third parties (including counterfeiters and others, such as

    companies that purchase the trademarks of their competitors as AdWords or like

    tools) are liable for primary infringement. The courts likelihood of confusion

    analysis on direct infringement correctly focused on whether consumers were

    likely to be confused by Google as to source or origin by reason of Googles sale

    of keywords and the resultant ads. But that is not the same as assessing whether

    AdWords customers engaged in direct infringement such as to support a secondary

    liability claim against Google.

    The likelihood of confusion analysis may well be quite different when

    viewed from the perspective of direct liability of the advertiser. For example, the

    courts analysis of intent (Op. at 18-21) a key factor considered only Googles

    intent to confuse. The question of whether a keyword-based advertising service

    such as Google does or does not intend to confuse the buying public by allowing

    one company to buy another companys name as an AdWord is a different question

    from whether the purchasing company intends to confuse in this same transaction.

    For example, in Rescuecom Corp. v. Google Inc., 562 F.3d 123 (2d Cir. 2009),

    multiple competitors of Rescuecom (an on-site computer servicing company)

    purchased the trademarked name Rescuecom as an AdWords keyword.

    Certainly the level of intent on the part of those competitors (who did not even

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    arguably play a passive role) differed significantly from that of Google. Similarly,

    in Parts Geek, LLC v. U.S. Auto Parts Network, Inc., No. CIVA 09-5578, 2010

    WL 1381005 (D.N.J. Apr 1, 2010), defendant U.S. Auto Parts purchased the

    AdWords Parts Geek in order to advertise its own web site. And it should come

    as no surprise that when one conducts a Google search of Tiffany, the first

    Sponsored Link is for one of Tiffanys direct competitors, Bulgari. See Appendix

    B. To say that these examples are just a byproduct of allowing companies like

    U.S. Auto Parts to bid for whatever words they want to select to advertise their

    products is a gloss: it is part and parcel of the business model of the online

    keyword-based advertising service, and its the very way that Google attracts (and,

    in some cases, compels)5

    so many companies to bid for AdWords.6

    5The structure and scope of the AdWords marketplace has a perverse

    consequence to some trademark owners, including some amici. Because (i)

    Google controls almost 70% of the domestic search market; (ii) the Internet is

    increasingly a venue advertisers must exploit or risk demise; and (iii) the AdWords

    program not only offers up the right to use trademarks for sale to the highest

    bidder, but encourages all comers to bid; many trademark owners feel that they

    have no practical choice but to bid on their own trademarks and may even be

    forced to consider bidding on their competitors trademarks, just to protect their

    own goodwill and to stay afloat in the competitive marketplace.6

    See also FragranceNet.com, Inc. v. FragranceX.com, Inc., 679 F.Supp.2d 312,

    316 (E.D.N.Y. 2010), in which FragranceX.com purchased AdWords including

    FRAGRANCENET, FRAGRANCENET.COM, and other variations on

    plaintiffs name; FragranceNet.com, Inc. v. Les Parfums, Inc., 672 F.Supp.2d 328

    (E.D.N.Y. 2009) (same).

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    Accordingly, it was error for the court below to limit its secondary liability

    analysis to counterfeiters as that is but one type of primary infringement which

    could give rise to such liability.

    D. The District Courts Narrow View of Contributory Infringement

    Resulted in an Incorrect Analysis of Secondary Liability for

    Counterfeiters Advertisements

    Under the second prong of the Inwood standard for contributory

    infringement, Google is liable for contributory infringement if it continues to

    supply its product to one whom it knows or has reason to know is engaging in

    trademark infringement. 456 U.S. at 854. The court below again concentrates

    only on counterfeiters, as opposed to other types of primary infringers.

    1. The District Court Ignored the Facts Demonstrating Googles

    Knowledge of Infringements

    The district court relied heavily on the Second Circuits decision in Tiffany

    (NJ) Inc. v. eBay Inc., 600 F.3d 93 (2d Cir. 2010), noting that in that case, eBays

    generalized knowledge of infringement of a sellers trademark on its website was

    insufficient to impose upon eBay an affirmative duty to remedy the problem. Op.

    at 37. But the knowledge of an online keyword-based advertising service like

    Google necessarily extends far beyond the knowledge eBay had in that case, and

    the role of such a service is materially different from eBays role in its online

    auction marketplace.

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    The district court made clear that Google was aware of many infringing

    advertisements, including 110 advertisements purportedly selling Rosetta Stone

    products posted by the same individual (which were seen by Web users on 356,675

    different search results pages). Op. at 35. Google continued allowing advertisers

    to post, even after being notified of infringements by those very advertisers. Id.

    Google and online services like it should further be aware of infringements by the

    mere fact of their provision to customers of the very tools that not only make such

    infringement possible, but encourage them. It is not clear what further knowledge

    a court could or should require a trademark owner to demonstrate. If a party is

    informed of infringing activity and continues to permit such activity, that must rise

    to the level of contributory infringement.

    The district court goes on to state that Google informs them [advertisers]

    that they are responsible for the keywords selected and for ensuring that their use

    of the keywords does not violate any applicable laws. Op. at 35. But the Seventh

    Circuit did not find analogous facts persuasive in Hard Rock, where the fact that a

    flea market posted signs prohibiting vendors from selling illegal goods was

    deemed insufficient, given that defendant did not examine vendors wares before

    market, and any examination of those wares thereafter was, according to the court,

    cursory. The same can be said where a keyword-based advertising service hosts

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    advertisements for counterfeit goods: simply posting an electronic sign

    prohibiting them should not be deemed enough to evade liability.

    The district court similarly relies on technological limitations when it says

    [t]here is little Google can do beyond expressly prohibiting advertisements for

    counterfeit goods, taking down those advertisements when it learns of their

    existence, and creating a team dedicated to fighting advertisements for counterfeit

    goods. Op. at 37. The court again analogizes to Tiffany v. eBay, and posits that

    Googles hands are tied here just as eBays were in that case. Id. But plaintiff in

    eBay explicitly did not claim inducement: (Tiffany does not argue that eBay

    induced the sale of counterfeit Tiffany goods on its website id. at 106) so eBay

    does nothing to diminish the inducement arguments above. Further, the court

    below relied on Googles policy instead of its actual practice, i.e., [i]n fact, it is in

    Googles own business interest, as a search engine, not to confuse potential buyers

    of Rosetta Stones products (Op. at 20), because it knows that those

    advertisements can create a bad experience for web users (id. at 37). Once again,

    the court confined its analysis of the bad experience to resultant purchases of

    counterfeit goods, ignoring a host of other potential direct infringements. Sending

    a consumer to the U.S. Auto Parts web site when s/he searches for Parts Geek

    (see Parts Geek, 2010 WL 1381005, supra) will not necessarily cause a bad

    experience; s/he may just end up purchasing the competitive product. Parts Geeks

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    goodwill will have been exploited by U.S. Auto Parts with the online

    keyword-based advertising services complicity but that does not provide any

    disincentive to that service.

    The district court opinion also states that some advertisers have used

    loopholes in Googles programming to create Sponsored Links that deceive and

    misdirect Googles users to websites that sell counterfeit RS products or suggest to

    consumers a connection to RS that does not exist. Op. at 12. This casts the

    problem of advertisers using keywords to suggest to consumers a connection

    that does not exist as something perpetrated by a devious few. But as the spate of

    litigation between competitors, one of whom purchases the others trademark as an

    online search keyword indicates, this is more than a mere loophole utilized by the

    fringe.7

    Either Googles technological tool is not working, or Google is not

    using it.8

    7See supra at pp. 19-20; n.5; see also Morningware, Inc. v. Hearthware Home

    Products, Inc., 673 F.Supp.2d 630 (N.D.Ill. 2009) (defendant purchased

    Morningware as AdWord); CollegeSource, Inc. v. AcademyOne, Inc., No. 08-cv-

    1987, 2009 WL 2705426 (S.D.Cal. Aug 24, 2009) (allegation that defendant

    purchased plaintiffs trademarks, including Collegesource and Career Guidance

    Foundation); Allstar Marketing Group, LLC v. Your Store Online, LLC, 666F.Supp.2d 1109 (C.D.Cal 2009) (defendant purchased AdWords of plaintiffs

    trademarks, including Snuggie and Aqua Globes).8

    The opinion below also relies on a clear contradiction: it justifies Googles

    ability to include trademarked terms in the AdWords program because of this new

    technological tool (Op. at 21), but when presented with advertisements that

    violate Googles stated policy that the tool is designed to weed out, it absolved

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    2. The Decision of the Court Below Places an Unreasonable Burden

    on Trademark Owners to Police Their Intellectual Property

    If the opinion and reasoning of the district court is not reversed, the courts

    will have erected a virtually insurmountable barrier for trademark owners such as

    amici who seek to protect their intellectual property in the context of online

    advertising programs.

    Amici understand that a line must be drawn between scenarios in which an

    intellectual property owner bears the lions share of burden of policing and

    protecting its property online, and scenarios in which an online keyword-based

    advertising service must bear that burden. But as between trademark owners and

    such advertising services, the latter are in a far better position to prevent

    advertisers from improperly exploiting trademarks. Given that Google knows who

    is paying for the use of such marks (and thus whether the advertiser is or is not the

    owner of the trademark), and can often determine whether the advertiser is a

    reseller or an informational site, it has far more of the necessary information to

    determine whether any particular advertiser is an infringer than does the trademark

    owner.9

    Google because there is no mechanism for eliminating such advertisements (id.

    at 37).9

    In contrast, trademark owners must, through either manual or technical scans,

    locate the sites selling counterfeit goods or otherwise infringing their marks, which

    is a labor-intensive process, particularly given Googles geotargeting, i.e.,

    locally varying Sponsored Links.

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    Nor would placing the onus solely on trademark owners like Rosetta Stone

    and the amici to police trademark infringement in online advertising programs

    serve the underlying public purpose of the Lanham Act, i.e., preventing consumer

    confusion. Even with a diligent policing mechanism, trademark owners can only

    inform keyword-based advertising services of an infringing advertisement afterthe

    advertisement has gone live and has the potential to confuse unwitting consumers,

    and even then, the infringing links remain live for some period while the service

    investigates the complaint. The services, in contrast, have the ready means to

    identify such an advertisement before the damage is done. These facts stand in

    sharp contrast to those in eBay. If Tiffany found a listing on eBay for a counterfeit

    product, it could inform eBay, who would then remove the listing before the

    auction ends, and no counterfeit merchandise would have been sold. But online

    keyword searches do not operate on the same timeframe. While an eBay item may

    be listed for days, searches happen continuously. Based on the 100,000,000

    searches for Rosetta Stone over a six-year period (Op. at 23), this averages to

    one search for Rosetta Stone every two seconds. No matter how vigilant

    trademark owners policing, they cannot possibly inform keyword-based

    advertising services of infringing advertisements before those advertisements are

    seen by and have a potentially deleterious effect on the consuming public.

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    CONCLUSION

    The district courts decision, if left in place, would cause great harm to

    trademark owners, not merely because of its effects on the parties involved, but

    because it would be an open invitation to others both other keyword-based

    advertising services and purchasers of competitors trademarks as keywords to

    engage in wholesale in the same or similar practices. While online advertising is

    an important canvas for all types of businesses, it cannot be a free-for-all, and it

    should not be immune from the law that protects trademark owners and consumers

    in other media. Traditional trademark law and policy require that web sites (like

    others) not foster infringement. Amici recognize that the mere existence of an

    online advertising platform does not imply inducement or infringement on the part

    of that platform. But when such a platform provides the tools for and means of

    infringement like Google does here, secondary liability must attach, lest trademark

    owners will be stripped of their goodwill and online consumers confusion will

    increase manifestly.

    Accordingly, the district courts order should be reversed.

    Dated: November 1, 2010

    Respectfully submitted,

    DAVIS WRIGHT TREMAINE LLP

    By: /s/__Marcia B. Paul________________

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    Marcia B. Paul

    Kevan Choset

    Daniel P. Reing

    Attorneys for Amici Curiae

    Carfax, Inc., Harman International

    Industries, Incorporated, The Media

    Institute, Viacom Inc. and Blues Destiny

    Records, LLC

    BROOKS KUSHMAN P.C.

    By: /s/__Mark S. Sparschu______________

    Mark S. SparschuAttorneys for Amicus Curiae

    Ford Motor Company

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    APPENDIX A

    Google Keywords Tool Search Results for cola

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    APPENDIX B

    Google Search Results for tiffany

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    UNITED STATES COURT OF APPEALS

    FOR THE FOURTH CIRCUIT

    No. 10-2007 Caption: Rosetta Stone Ltd. v. Google Inc.

    CERTIFICATE OF COMPLIANCE WITH RULE 28.1(E) OR 32(A)

    Certificate of Compliance With Type-Volume Limitation,

    Typeface Requirements, and Type Style Requirements

    1. This brief complies with the type-volume limitation of Fed. R.

    App. 28.1(e)(2) or 32(a)(7)(B) because:

    [Appellants Opening Brief, Appellees Response Brief, and Appellants

    Response/Reply Brief may not exceed 14,000 words or 1,300 lines; Appellees

    Opening/Response Brief may not exceed 16,500 words or 1,500 lines; any Reply or Amicus Brief may not exceed 7,000 words or 650 lines; line count may be used

    only with monospaced type]

    this brief contains 5,401 words, excluding the parts of the brief

    exempted by Fed. R. App. 32(a)(7)(B)(iii), or

    this brief uses a monospaced typeface and contains _____ [state the

    number of] lines of text, excluding the parts of the brief exempted by

    Fed. R. App. P. 32(a)(7)(B)(iii).

    2. This brief complies with the typeface requirements of Fed. R. App. P.

    32(a)(5) and the type style requirements of Fed. R. App. P. 32(a)(6) because:

    [14-pointfont must be used with proportional typeface, such as Times New Roman

    or CG Times; 12-point font must be used with monospaced typeface, such as

    Courier or Courier New]

    this brief has been prepared in a proportionally spaced typeface using

    Microsoft Word in 14-point Times New Roman; or

    this brief has been prepared in a monospaced typeface using _____[state name and version of word processing program] with ______

    [state number of characters per inch and name of type style].

    Dated: November 1, 2010 /s/ Marcia B. Paul

    Counsel for Amici Curiae Carfax, Inc.,

    Harman International Industries,

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    Incorporated, The Media Institute,

    Viacom Inc. and Blues Destiny

    Records, LLC

    /s/ Mark S. Sparschu

    Counsel for Amicus Curiae Ford Motor

    Company

    Case: 10-2007 Document: 34-1 Date Filed: 11/01/2010 Page: 33

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    Case: 10-2007 Document: 34-1 Date Filed: 11/01/2010 Page: 40