For allowing competitors to advertise next to a trademark keyword

Jul 13, 2009 06:37 GMT  ·  By

Rosetta Stone, a company that develops language education software, has sued Google for allowing advertisers to infringe on its trademark. The company alleges that a recent change in the Adwords policy allows competitors to advertise next to a trademarked keyword or use a trademark in their ads without the consent of the trademark owner. The company has filed a suit in the U.S. District Court for the Eastern District of Virginia to stop Google from continuing with this practice.

“Google’s search engine is helping third parties mislead consumers and misappropriate Rosetta Stone trademarks by using them as ‘keyword’ triggers for paid advertisements and by using them within the text or title of paid advertisements,” Michael Wu, general counsel, Rosetta Stone, said. “Google and its advertisers benefit financially from and trade off the goodwill and reputation of Rosetta Stone without incurring the substantial expense that Rosetta Stone has incurred in building up its popularity, name recognition, and brand loyalty.”

Adwords allows advertisers to “buy” certain keywords so that their ads will show up when a user searches for those keywords. The Arlington, Virginia-based software company takes issue over the fact that competitors are allowed to buy keywords that are the trademark of another company, considering that the practice is misleading to consumers who may believe the ads will lead them to Rosetta Stone's website.

Google didn't comment on this particular case, for which it hasn't been served yet, but did believe the practice was perfectly legal and normal. The company has been hit with nine other similar lawsuits since the policy changed and it's up to the courts to decide if having competitor ads next to a trademarked keyword can be misleading to consumers.

“Just as it's reasonable to expect a range of brands on any shelf in a grocery store, providing users on Google with more than one option when they search for a brand name or other trademark helps them to find the best product at the lowest price,” Google spokesman Andrew Pederson told The Big Money.