eBay/Yahoo Amicus Brief in Rosetta Stone v Google

8/8/2019 eBay/Yahoo Amicus Brief in Rosetta Stone v Google

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RECORD NUMBER: 10-2007

United St ates Cou rt of Appeal s for the

Fou rt h Ci rcuit

ROSETTA STONE LTD.,

Plaintiff-Appellant,

v.

GOOGLE, INCORPORATED,

Defendant-Appellee.

ON APPEAL FROM THE UNITED STATES DISTRICT COURTFOR THE EASTERN DISTRICT OF VIRGINIA AT ALEXANDRIA

BRIEF OF AMICI CURIAE EBAY INC. AND YAHOO! INC.IN SUPPORT OF GOOGLE, INCORPORATED

R. BRUCE RICHJONATHAN BLOOMMARK J. FIOREW EIL , G OTSHAL & M ANGES LLP767 Fifth AvenueNew York, New York 10153(212) 310-8000

MICHAEL LYLEW EIL , G OTSHAL & M ANGES LLP1300 Eye Street NWSuite 900Washington, DC 20005(202) 682-7000

Attorneys for Amici Curiae

COUNSEL PRESS x VA (800) 275-066 8

Case: 10-2007 Document: 115-1 Date Filed: 12/06/2010 Page: 1


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TABLE OF CONTENTS

Page

i

INTRODUCTION AND INTEREST OF THE AMICI................................. 1

ARGUMENT.................................................................................................. 4

I. TRADEMARK LAW EMBRACES THE RIGHT OF ONLINESERVICES TO ENGAGE IN KEYWORD ADVERTISING............. 4

II. THE DISTRICT COURT PROPERLY APPLIED THECONTRIBUTORY TRADEMARK INFRINGEMENTSTANDARD....................................................................................... 11

A. Inducement ............................................................................... 12

B. Continued Supply to a Known Infringer.................................. 19

CONCLUSION............................................................................................. 23



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TABLE OF AUTHORITIES

Cases Page(s)

Anti-Monopoly, Inc. v. General Mills Fun Group ,611 F.2d 296 (9th Cir. 1979) ................................................................... 10

Century 21 Real Estate Corp. v. Lendingtree, Inc. ,425 F.3d 211 (3d Cir. 2005) ...................................................................... 9

CPC Intl, Inc. v. Skippy Inc. ,214 F.3d 456 (4th Cir. 2000) ..................................................................... 9

Georgia Pacific Consumer Products, LP v. Von Drehle Corp. ,618 F.3d 441 (4th Cir. 2010) ................................................................... 16

Hard Rock Cafe Licensing Corp. v. Concession Servs., Inc. ,955 F.2d 1143 (7th Cir. 1992) ........................................................... 13, 21

Inwood Labs., Inc. v. Ives Labs., Inc. ,456 U.S. 844 (1982).......................................................................... passim

KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc. ,543 U.S. 111 (2004)................................................................................... 7

Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd. ,545 U.S. 913 (2005)........................................................................... 13, 14

New Kids on the Block v. News Am. Publg, Inc. ,971 F.2d 302 (9th Cir. 1992) ..................................................................... 8

Pebble Beach Co. v. Tour 18 I Ltd. ,155 F.3d 526 (5th Cir. 1998) ..................................................................... 9

Platinum Home Mortgage Corp. v. Platinum Fin. Group, Inc .,149 F.3d 722 (7th Cir. 1998) ................................................................... 10

Prestonettes v. Coty ,264 U.S. 359 (1924)................................................................................... 9

Rosetta Stone Ltd. v. Google Inc. , No. 1:09cv736, 2010 WL 3063152 (E.D. Va. Aug. 3, 2010)........... passim



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Scholastic, Inc. v. Macmillan, Inc .,650 F. Supp. 866 (S.D.N.Y. 1987)......................................................... 10

Sony Corp. of Am. v. Universal City Studios, Inc. ,464 U.S. 417 (1984)........................................................................... 13, 15

Tiffany (NJ) Inc. v. eBay Inc. ,600 F.3d 93 (2d Cir.), cert. denied , -- S. Ct. --, No. 10-300, 2010 WL3416635 (U.S. Nov. 29, 2010).......................................................... passim

TrafFix Devices, Inc. v. Mktg. Displays, Inc. ,532 U.S. 23 (2001)..................................................................................... 9

Univ. Commcns Sys., Inc. v. Lycos, Inc. ,

478 F.3d 413 (1st Cir. 2007)...................................................................... 9

Other Authorities

1 IAN C. B ALLON , E-C OMMERCE & I NTERNET LAW (2010)............................. 9

4 J . T HOMAS MCCARTHY , MCCARTHY ON TRADEMARKS AND U NFAIR COMPETITION (4th ed.) ............................................................................. 10

Mark A. Rosso & Bernard J. Jansen, Smart Marketing or Bait & Switch?Competitors Brands as Keywords in Online Advertising (2010)http://faculty.ist.psu.edu/jjansen/academic/rosso_jansen_wicow06.pdf ................................................................ 11,17

Kurt M. Saunders, Confusion Is the Key: A Trademark Law Analysis of Keyword Banner Advertising , 7 1 F ORDHAM L. R EV . 543 (2002) ............ 11



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Amici eBay Inc. (eBay) and Yahoo! Inc. (Yahoo!) (collectively, the

Amici) are pioneers in the development of the commercial and informational

potential of the Internet. eBay, the worlds most prominent online marketplace,

provides a venue, www.ebay.com, through which some 93 million users

worldwide buy and sell wares of all types. eBay provides a platform for

transactions that are carried out directly between eBay users. Some 200 million

active listings appear on eBays website at any given time. Keyword searching

allows users to locate the listings for the products they are seeking. eBay recently

litigated direct and contributory trademark infringement claims similar to those

asserted here in Tiffany (NJ) Inc. v. eBay Inc. , 600 F.3d 93 (2d Cir.), cert. denied ,

-- S. Ct. --, No. 10-300, 2010 WL 3416635 (U.S. Nov. 29, 2010), a decision Amici

believe provides important guidance for the Courts consideration of this appeal.

INTRODUCTION AND INTEREST OF THE AMICI

Yahoo! is a global online network of integrated services. Yahoo! provides a

wide range of Internet services to consumers, including services relating to Internet

search, email, shopping, finance, news, sports, and entertainment. Yahoo!s

revenues come primarily from selling online advertising, some of which makes fair

use of third-party trademarks or uses them in a generic or descriptive manner.

The online services Amici provide have transformed commerce and

communications for millions of people worldwide. Their search engines and



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online marketplaces give users the ability to locate and purchase an almost

unlimited array of products and services and to access information on any

conceivable topic by simply typing a search term a keyword or keywords and

pushing a button. The sale of keywords and the associated advertising generates

the revenue that allows search engines such as Yahoo!s to exist without charge to

users.

Amici file this brief to provide the Court with their perspective on two issues

raised by this appeal that have a significant bearing on the services they provide to

consumers. The first is the nature and importance of keyword advertising, which

fosters competition, delivers valuable information to consumers, and generates the

revenues on which search engines and other online services depend. Many courts

have recognized the right of entities such as Amici to use trademarks in

noninfringing ways, including on the Internet.

The second, and related, issue is the proper scope of contributory trademark

infringement, which was a focus of the Second Circuits ruling in Tiffany , the

recent landmark decision involving application of the contributory trademark

infringement standard articulated by the Supreme Court in Inwood Laboratories

Inc. v. Ives Laboratories, Inc. , 456 U.S. 844 (1982), to online commerce. Amici

believe the Second Circuits interpretation and application of the Inwood standard

provides the proper framework for examining the contributory infringement



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arguments advanced in this appeal by the appellant, Rosetta Stone Ltd. (Rosetta),

and by its amici Carfax, et al. (Carfax) and Convatec, Inc., et al. (Convatec).

Those arguments are inconsistent with Tiffany and other authority and would, if

accepted, jeopardize the lawful use of trademarks as keywords and in sponsored

ads by holding online service providers contributorily liable for infringements that

the service provider neither encouraged nor knew about.

As the Second Circuit recognized in Tiffany , by requiring entities offering

online services to take action only upon notice of specific infringing activity,

trademark law sensibly allocates enforcement responsibility in a manner that

reflects the incentives and expertise of rights owners, who bear the primary

policing obligation, on the one hand, and the practical constraints on the policing

capabilities of Internet service providers, on the other. The law does not require

search engines or other online services to undertake the impossible task of

proactively monitoring their sites for potential infringements of thousands of

trademarks through millions of advertisements or listings for products they never

have the opportunity to inspect. Nor is the mere provision of a service that might

be used to infringe, without more, an adequate basis for imposing secondary

infringement liability on the service provider.

Departing from current law and imposing an affirmative policing duty on

search engines and other online services would present the crippling prospect of



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massive liability for undetected and perhaps undetectable infringements despite

these services implementation of notice-and-takedown procedures. Without

seeking to address either the remaining issues implicated by this appeal or the state

of the fact record per se, Amici urge the Court to rule with sensitivity to the legal

issues and concerns raised in this submission.

I. TRADEMARK LAW EMBRACES THE RIGHT OF ONLINE

SERVICES TO ENGAGE IN KEYWORD ADVERTISING

ARGUMENT

Ignoring decades of precedent, Rosetta and its amici argue that keyword

advertising that uses terms that might be the trademarks of others should be

deemed inherently unlawful solely because third parties may make infringing uses

of those trademarks in their advertisements. In advocating this rewriting of

trademark law, Rosetta contends that search engines should simply stop selling

the Rosetta Stone Marks to unauthorized third parties, Rosetta Stone Br. 49, while

amicus Carfax notes approvingly that Google previously . . . weed[ed] out all

trademarks from its AdWords program. Carfax Br. 13. The law, however,

imposes no such obligation. The district court recognized the rights of third parties

to make lawful uses of trademarks in a variety of contexts, including referential

uses. Many courts have examined referential uses of trademarks pursuant to the

nominative fair use doctrine or related doctrines, and Amici submit that such



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analysis provides the proper framework for examining the lawfulness of the

keyword advertising practices their policies permit.

As the district court explained, consumers searching for a specific company,

good, service, or other piece of information without knowing the exact website

address for that information will likely use a search engine to identify and locate it.

Rosetta Stone Ltd. v. Google Inc. , No. 1:09cv736 (GBL/TCB), 2010 WL 3063152,

at *2 (E.D. Va. Aug. 3, 2010). The results that appear in response to a users

search include those generated from the search engines algorithm as well as paid

advertisements that are identified separately on the search results page. These paid

advertisements contain content relating to the subject of the advertisement and a

link to the advertisers website, where the user can obtain additional information

and perhaps purchase the advertisers goods or services. Id. at *3.

As part of this keyword advertising, search engines allow advertisers (in

conformity with certain requirements) to bid on terms that may be other

companies trademarks, thereby providing advertisers with the opportunity to

place their advertising in front of consumers who identify themselves as interested

in certain products or services offered by the advertisers companies. Id. at *4.

Such keyword advertising benefits consumers by exposing them to the advertisers

offerings. The district court recognized that the use of trademarks in connection

with keyword advertising comprehends a number of lawful, pro-competitive



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practices, such as the sale or resale of products bearing the trademarks; the sale of

components, replacement parts, and compatible products; and the provision of non-

competitive information about the goods or services corresponding to the

trademarks. Id. These practices require the use of trademarked terms in a manner

that courts have held to be noninfringing fair uses.

For example, in Tiffany , the jeweler Tiffany sought to hold eBay liable for

direct trademark infringement arising from its use of the Tiffany trademarks in

advertisements on its website and in connection with sponsored links purchased

from search engines such as Google and Yahoo!. The Second Circuit rejected

Tiffanys argument, holding that a defendant may lawfully use a plaintiffs

trademark where doing so is necessary to describe the plaintiffs product and does

not imply a false affiliation or endorsement by the plaintiff of the defendant. 600

F.3d at 102-03. Although the court declined to adopt the nominative fair use

defense per se, it endorsed the principles underlying the defense, concluding that

eBays use of Tiffanys mark on its website and in sponsored links was lawful,

as eBay used the mark to describe accurately the genuine Tiffany goods offered

for sale on its website without suggest[ing] that Tiffany affiliated itself with

eBay or endorsed the sale of its products through eBays website. Id. at 103.

The Second Circuit was not persuaded by Tiffanys contention that eBay

could not use Tiffanys trademarks because some unknown items on eBays



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website bearing the Tiffany trademarks were assertedly counterfeit, particularly

where the evidence showed that eBay removed those items after receiving notice

of them. The court concluded that the presence of potentially counterfeit items,

and any specific knowledge thereof, could be relevant to contributory infringement

but did not otherwise bar eBay from using the Tiffany trademarks. Indeed, the

court observed that, if accepted, Tiffanys argument would unduly inhibit the

lawful resale of genuine Tiffany goods. Id. The same conclusion is compelled

here: there is no basis for barring the use of Rosettas trademarks in connection

with keyword-triggered sponsored advertising solely on the ground that some

third-party advertisers might engage in counterfeiting or other infringement. See

id.; see also KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc. , 543 U.S.

111, 121-22 (2004) (some possibility of consumer confusion must be compatible

with fair use, and so it is).

In addition to being contrary to established law, such a ban would have

sweeping ramifications, precluding, among other things, advertisements for

resellers of the trademark owners products; advertisements for sites providing

comparisons, reviews, commentary, criticism, or other protected speech; and

advertisements referencing unrelated goods, services, or subjects having nothing to

do with the trademark owner but nonetheless bearing the same name, such as (in

this case) the Rosetta Stone in the British Museum.



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Numerous other courts have adopted the nominative fair use defense or a

similar fair use doctrine. For example, the Ninth Circuit recognized the lawfulness

of the referential use of trademarks in New Kids on the Block v. News Am. Publg,

Inc. , 971 F.2d 302 (9th Cir. 1992), where it observed that [m]uch useful social

and commercial discourse would be all but impossible if speakers were under

threat of an infringement lawsuit every time they made reference to a person,

company or product by using its trademark. Id. at 307. See also id. at 306-07

([M]any goods and services are effectively identified only by their trademarks

. . . . Indeed, it is often virtually impossible to refer to a particular product for

purposes of comparison, criticism, point of reference or any other such purpose

without using the mark.); id. at 308 ( nominative use of a mark where the only

word reasonably available to describe a particular thing is pressed into service

lies outside the strictures of trademark law) (emphasis in original).

Other courts are in accord. As Google pointed out in its summary judgment

motion below, A century of precedent firmly establishes that use of a trademarked

term to refer to a product originating from the trademark owner is not actionable.

Google S.J. Br. 8; see also Google S.J. Reply Br. 5 (noting that both referential

and plain language uses of a trademark are lawful). Indeed, the Supreme Court

held long ago that [w]hen the mark is used in a way that does not deceive the



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public we see no such sanctity in the word as to prevent its being used to tell the

truth. It is not taboo. Prestonettes v. Coty , 264 U.S. 359, 368 (1924).

Although this Court has not expressly adopted the nominative fair use

defense, it has recognized as important that trademarks not be transformed from

rights against unfair competition to rights to control language. CPC Intl, Inc. v.

Skippy Inc. , 214 F.3d 456, 462 (4th Cir. 2000) (internal quotation marks and

citation omitted).

The application of the nominative fair use defense to the use of trademarks

in keyword advertising accords with the policies of trademark law. Although

trademark law exists to ensure that rights owners can benefit from the goodwill

associated with their trademarks, it is not intended to grant a monopoly on a word

or phrase or otherwise to stifle competition as a blanket prohibition on using

trademarks in keyword advertising would. See, e.g. , Platinum Home Mortgage

Corp. v. Platinum Fin. Group, Inc ., 149 F.3d 722, 726 (7th Cir. 1998)

([T]rademark protection should not interfere with the traditional policies of a

competitive market and courts have generally recognized that the public

substantially benefits from competition.); Anti-Monopoly, Inc. v. General Mills

Fun Group , 611 F.2d 296, 300-01 (9th Cir. 1979) (trademark policies are

designed to protect consumers from being misled, not to further or perpetuate

product monopolies); Scholastic, Inc. v. Macmillan, Inc ., 650 F. Supp. 866, 873



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(S.D.N.Y. 1987) (finding that the purpose of the trademark law is to protect

consumers from confusion not companies from competition).

Against the backdrop of the many lawful and socially beneficial uses of

trademarks in keyword-triggered sponsored advertising advertising that is

unquestionably permissible in the offline world and that generates the revenue that

makes search engines possible we next discuss the proper parameters for the

Courts contributory infringement analysis.

II. THE DISTRICT COURT PROPERLY APPLIED THECONTRIBUTORY TRADEMARK INFRINGEMENT STANDARD

The district court rejected Rosettas claims that Google (i) intentionally

induced advertisers selling counterfeit Rosetta products to use Rosetta trademarks

in their sponsored links or (ii) continued to supply its service to advertisers known

to be infringing Rosettas trademarks. The applicable legal principles that should

govern the Courts review of these holdings, discussed below, will avoid

endangering the businesses of legitimate online service providers.

A. Inducement

The Supreme Court stated in Inwood that contributory trademark liability

may lie where the defendant either intentionally induce[d] another to infringe a

trademark or continue[d] 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



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Court defined inducement as knowing and deliberate instigation of infringing

activity, id. at 851, and it further observed that liability may be imposed where the

defendant intentionally induced direct infringement. Id. at 855 (emphasis

added).

Applying Inwood , the district court held that Google did not induce

infringement of Rosettas trademarks. On appeal, Rosetta criticizes the district

court for refusing to find Googles economic incentive to encourage advertisers to

bid on keywords to be a sufficient basis for inducement. See Rosetta Br. 47.

However, a profit motive, by itself, does not establish the requisite wrongful intent.

Rosettas argument to the contrary confuses a practice bidding on keywords

that may result in some infringing ads being posted without the service provider

knowing or having reason to know of the illegality with a practice the purpose of

which is to encourage infringement . The district courts holding that the mere

existence of a tool that assists advertisers in optimizing their advertisements does

not, in itself, indicate intent to induce infringement, 2010 WL 3063152, at *14, is

correct and consistent with Inwood .

Amicus Carfaxs reliance on Metro-Goldwyn-Mayer Studios, Inc. v.

Grokster, Ltd. , 545 U.S. 913 (2005) ( Grokster ), see Carfax Br. 11-13, is

misplaced. First, Grokster was a copyright case, and the Supreme Court has held

that the narrow Inwood standard for contributory trademark infringement does



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not apply in copyright cases. See Sony Corp. of Am. v. Universal City Studios,

Inc. , 464 U.S. 417, 439 n.19 (1984). Moreover, even if Grokster did apply to this

case, the inducement standard the Court announced there plainly does not support

liability in this context. The Court held in Grokster that for inducement liability to

lie, the defendant must have engaged in purposeful, culpable expression and

conduct and have taken active steps to encourage infringement. Grokster , 545

U.S. at 924, 937. Only a defendant who acts with the object of promoting

infringement, as shown by clear expression or other affirmative steps taken to

foster infringement, the Court stated, is liable for inducement. Id. at 919.

Whereas the record in Grokster clearly established that Groksters business

model was designed to promote and, ultimately, profit from infringement

(unauthorized copying and distribution of digital music files), the district court

found no comparable evidence here. The fact that an online service may facilitate

keyword advertising that turns out to be infringing does not constitute inducement.

In this regard, the district court found that despite its efforts , some advertisers

have used loopholes in Googles programming to create Sponsored Links that

deceive and misdirect Googles users to websites that sell counterfeit Rosetta Stone

products or suggest to consumers a connection to Rosetta Stone that does not

exist. 2010 WL 3063152, at *4 (emphasis added). Such misuse or manipulation



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of a service by users does not constitute active steps to encourage infringement,

Grokster , 545 U.S. at 937, by the service provider.

Carfaxs contention that, as in Grokster , Googles fundamental business

model evinces an intent to promote infringement, Carfax Br. 12, depends on the

proposition that an online service makes money by selling advertising space and

profits from encouraging users to click on advertisements. But such conduct does

not support the conclusion that the service provider seeks actively and specifically

to encourage infringing advertising. Indeed, any such conclusion with respect to

the search engines and online marketplaces that are fundamental drivers of Internet

commerce would be absurd. This is particularly so where the service provider has

implemented detailed anti-counterfeiting policies and notice-and-takedown

practices. A contrary holding would render the business models of Amici and

other online service providers vulnerable to similarly ill-founded inducement

claims.

Carfaxs assertion that the requisite wrongful intent is demonstrated by

Googles induc[ing] customers to bid on terms that it knows or has reason to

know can be . . . used to trade upon intellectual property owned by others, Carfax

Br. 8 (emphasis added), reflects a misunderstanding of inducement. Just as

trademarks can be used for infringing purposes, so too could the Sony Betamax at

issue in Sony be used for infringing purposes. That possibility did not, in the



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Supreme Courts view, make Sony a contributory infringer. See Sony, 464 U.S. at

441 n.21 (calling extraordinary the plaintiffs suggestion that they should be

allowed to enjoin the sale of Betamax videotape recorders simply because they

may be used to infringe copyrights). It was only in Grokster , where the very

purpose of the defendants service, as manifested in both words and deeds, was to

facilitate infringement, that the Court found inducement liability appropriate.

Tiffany is also instructive. There, the Second Circuit cited evidence that

eBay actively sought to promote sales of premium and branded jewelry, including

Tiffany merchandise, on its site, 600 F.3d at 101, including by advis[ing] its

sellers to take advantage of the demand for Tiffany merchandise as part of a

broader effort to grow the Jewelry & Watches category and purchasing

advertisements on search engines to promote the availability of Tiffany items on its

website. Id. Yet the court acknowledged the legitimate secondary market for

genuine Tiffany products, id. at 98, 103, and it did not intimate that encouragement

of sales generally was wrongful because some of the Tiffany items offered for sale

might be counterfeit. To the contrary, the court held that imposing liability

because eBay cannot guarantee the genuineness of all of the purported Tiffany

products offered on its website would unduly inhibit the lawful resale of genuine

Tiffany goods. Id. at 103.



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This Courts recent ruling in Georgia Pacific Consumer Products, LP v. Von

Drehle Corp. , 618 F.3d 441 (4th Cir. 2010) ( see Carfax Br. 5-6), does not support

Rosettas inducement claim. The defendant in that case, Von Drehle, admitted that

it developed its less expensive towels specifically to be placed into plaintiff

Georgia Pacifics dispensers, which were the only ones that accepted towels of that

size, and they were marketed accordingly. 618 F.3d at 451. Whereas Von

Drehles conduct thus was directed solely toward profiting from assertedly

infringing towel substitution, there is, by contrast, nothing inherently wrongful in

suggesting to customers the use of specific, relevant keywords to attract

customers. Carfax Br. 6. The noninfringing uses of trademarks in connection

with sponsored-link advertising discussed in Part I above, coupled with policies

and practices intended to prevent infringement by advertisers, see, e.g. , 2010 WL

3063152, at *4, undermine the analogy to Georgia Pacific .

The district court recognized the counterintuitive nature of Rosettas

theory that Googles intent to increase earnings necessarily demonstrate[s] an

intent to mislead or confuse potential buyers of the trademark owners products.

Id. at *8. In fact, the court noted,

it is in Googles own business interest, as a searchengine, not to confuse its users by preventingcounterfeiters from taking advantage of its service.Googles success depends on its users finding relevantresponses to their inquiries. . . . If Google intentionallyconfuses its users and deprives them of a positive



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experience, traffic at its website will decrease, causing itto lose revenue.

Id . (emphasis added).

The district courts skepticism as to the existence of a nefarious symbiotic

relationship between Google and counterfeiters is consistent with the business

incentives of Amici and other online service providers to eliminate, rather than

encourage, counterfeiting and other infringement. In Tiffany , the Second Circuit

recognized that private market forces give eBay and those operating similar

businesses a strong incentive to minimize the counterfeit goods sold on their

websites. 600 F.3d at 109. The court pointed out that the risk of alienating . . .

users gives eBay a reason to identify and remove counterfeit listings and that

eBay had spent millions of dollars in that effort. Id. That effort involved eBay

consistently [taking] steps to improve its technology and develop[ing] anti-fraud

measures as such measures became technologically feasible and reasonably

available. Id. at 100 (internal quotation marks and citation omitted).

Rosettas expansive view of inducement would threaten search engines and

other online service providers by holding them liable not just for any infringement

they intended, encouraged, and facilitated but also for infringement that Rosetta

and its amici claim could have been foreseen . Rosettas theory thus runs headlong

into Inwood s rejection of a reasonable anticipation knowledge standard, see

Inwood , 456 U.S. at 854 n.13 (referring to a reasonable anticipation standard as



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watered down and incorrect). See also Tiffany , 600 F.3d at 110 n.15 (a

service provider is not contributorily liable under Inwood merely for failing to

anticipate that others would use its service to infringe a protected mark).

B. Continued Supply to a Known Infringer

In a straightforward reading of the plain language of Inwood , the Second

Circuit held in Tiffany that a service provider must have more than a general

knowledge or reason to know that its service is being used to sell counterfeit

goods; rather, contemporary knowledge of which particular listings are

infringing or will infringe in the future is necessary. 600 F.3d at 107. Applying

this settled rule of law, the district court, citing the evidence that Google prohibits

advertisements for counterfeit goods and takes down such ads when it learns of

them, found no basis for contributory liability. 2010 WL 3063152, at *14.

The district court noted that in Tiffany the record contained evidence of

counterfeit Tiffany items listed on eBays site but that the Second Circuit,

following Inwood s instruction that liability attaches only when the defendant

continues to supply specific known infringers, declined to hold eBay liable in the

absence of failure to act in response to knowledge of specific infringing listings .

Id. (citing Tiffany , 600 F.3d at 97) (emphasis added). In so holding, the Second

Circuit simply applied the knows or has reason to know standard articulated in

Inwood which the court properly construed as requiring specific rather than



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general knowledge of infringement, 600 F.3d at 109 to eBays vast online

marketplace. The district court below likewise refused to hold Google liable based

on non-specific knowledge of advertisements for infringing Rosetta Stone

products. 2010 WL 3063152, at *14.

Amici believe the Second Circuits statement of the Inwood standard is the

only one that is compatible with the circumstances of online service providers such

as Amici, who cannot feasibly proactively investigate the ads placed on or products

offered through their services. The Second Circuit held in this regard that eBay

was not liable for contributory infringement because when eBay was notified of

listings for assertedly counterfeit Tiffany items by Tiffany (pursuant to eBays

VeRO Program) or through buyer complaints, it removed the listings and

suspended repeat offenders. Tiffany , 600 F.3d at 109. See also id. at 110 (eBay

did not ignore the information it was given about counterfeit sales on its website.).

That analysis is applicable here as well.

Rosetta suggests that Googles removal of advertisements for counterfeits of

which it is notified is not enough to avoid liability because Google can stop

selling the Rosetta Stone Marks to unauthorized third parties, Rosetta Br. 49,

while Carfax makes the puzzling assertion that online services should . . . 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. Carfax



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Br. 18. As explained above, search engines and other online services could not

function if they were held liable merely for making available technological tools

that might be used to commit infringement but that are used predominantly for

socially and economically valuable noninfringing purposes. The claim that such a

showing should defeat summary judgment is not consistent with the rejection of a

reasonable anticipation knowledge standard in Inwood , nor is it consistent with

Sony, Tiffany , or any other decision.

Rosetta and Carfax contend that Google allowed advertisers to continue to

post advertisements after Google had been notified that other advertisements by

those advertisers were infringing. Rosetta Br. 47-48; Carfax Br. 18. Tiffany is

again instructive, as the Second Circuit recognized the factually and legally

irrelevant nature of such a showing. It found no liability even though (contrary to

Convatecs suggestion, see Convatec Br. 28 n.12) eBay did not always

immediately ban sellers found to have engaged in infringing conduct but, rather,

generally employed consequences appropriate to the circumstances, whereby a

seller who appeared overall to be a legitimate seller would be given a warning

and educational information upon a first offense and told they would be suspended

if the alleged infringement continued. 600 F.3d at 100. A rule that one infringing

ad should cause all ads placed by that advertiser to be deemed infringing has no

basis in the law.



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It may be true that it is easier to sue a service provider than its infringing

users, see Carfax Br. 13, but the law does not tolerate such expedience absent

wrongful conduct by the service provider. In defining what wrongful means in

this context, the law circumscribes the liability of service providers based on the

recognition that the public would be deprived of these services if the service

providers were held strictly liable for the conduct of their users. Thus Inwood , as

construed and applied by the Second Circuit in Tiffany , requires a failure to act on

actual or constructive knowledge of specific instances of infringement, see Tiffany ,

600 F.3d at 107, and it does not impose trademark liability based on the inability to

guarantee the genuineness of all items offered through the service. See id. at 103.

Online advertising platforms cannot be required to investigate all websites

used by certain advertisers, nor is it reasonable to expect them to presume all such

websites to be selling counterfeit merchandise. Rather, as the Second Circuit held

in Tiffany , specific information is required from the trademark owner or another

source to enable the platforms to expeditiously remove advertisements that

promote counterfeit or otherwise infringing products.



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Amici urge the Court to evaluate Rosettas appeal with the recognition that

keyword advertising involves lawful referential uses of trademarks and providessignificant benefits to consumers. They also urge the Court to hew to the

parameters of contributory trademark infringement recently outlined by the Second

Circuit in Tiffany , consistent with the Supreme Courts rulings in Inwood , Sony,

and Grokster , by requiring specific knowledge of infringement on the part of an

online service provider in order to trigger a duty to take remedial action. Such a

rule is necessary to preserve the ability of online service providers such as Amici

CONCLUSION

to continue to offer socially and economically valuable online services without

having to guarantee the absence of infringing conduct by their users.

Respectfully submitted,

Michael Lyle/s/ Michael Lyle

WEIL, GOTSHAL & MANGES LLP1300 Eye Street NW, Suite 900Washington, DC 20005Telephone: (202) 682-7000

R. Bruce RichJonathan BloomMark J. FioreWEIL, GOTSHAL & MANGES LLP767 Fifth Avenue

New York, New York 10153Telephone: (212) 310-8000



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I hereby certify that on December 6, 2010, I electronically filed the

foregoing with the Clerk of Court using the CM/ECF System, which will

send notice of such filing to all CM/ECF within the counsel of record.

CERTIFICATE OF SERVICE

Counsel Press LLC /s/ Catherine B. Simpson

1011 East Main Street

Suite LL-50Richmond, Virginia 23219(804) 648-3664

Filing and service were performed by direction of counsel


eBay/Yahoo Amicus Brief in Rosetta Stone v Google

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