• by Wendy Davis  @wendyndavis, March 31, 2010

With Rosetta Stone's trademark infringement lawsuit against Google heading toward trial, the companies are barraging the court with legal papers about the key issue in the case -- whether consumers are confused by the ads that appear after typing "Rosetta Stone" into Google's query box.

Like some other companies to sue search engines for trademark infringement, Rosetta Stone argues that consumers believe it is connected to marketers whose ads appear in response to queries on its name. But in what appears to be a more unusual allegation, the language learning company also alleges that its trademark is infringed when retailers like Amazon use "Rosetta Stone" to trigger search ads on Google.

"Rosetta Stone conducts a substantial amount of its business over the Internet and has made a sizeable investment in the development of its online business," the company argues in its lawsuit. "It is generally more beneficial for Rosetta Stone when consumers purchase directly through Rosetta Stone."

Google counters that allowing retailers to purchase trademarks as triggers for search ads enables stores to publicize which brands they carry -- which brick-and-mortar retailers have long done. "If applied in traditional advertising contexts, Sunday circulars as we know them today would cease to exist, with grocery stores unable to advertise a sale on 'Coke' without first getting permission from Coke to do so," the company argues in a motion seeking summary judgment.

Google additionally argues that sellers like Amazon are allowed to advertise the brands they offer under the "first sale" doctrine, which generally allows anyone who has lawfully purchased a product to resell it.

Rosetta Stone also complains that counterfeiters have purchased its trademark and are using it to trigger ads for knock-offs. Google says that it doesn't allow AdWords ads for counterfeits and removes such ads when it learns of them. "There is no dispute that counterfeiting constitutes trademark infringement. However, Google cannot be held liable for trademark infringement regarding advertising when it cannot tell if the advertised good is a counterfeit," the company argues.

U.S. District Court Judge Gerald Bruce Lee in Alexandria, Va. is slated to hold a hearing later this month on the motions for summary judgment.

Rosetta Stone is just one company to recently sue Google for trademark infringement. The search engine also is facing several other lawsuits, including one by Firepond, a software development company, and one by Flowbee, which manufactures home haircutting systems.

Google, which has allowed trademarked terms to trigger search ads since 2004, has not yet lost a lawsuit about the practice. The only case to go to trial in the U.S. -- a lawsuit by insurance company Geico -- resulted in a victory for Google on the key point. There, U.S. District Court Judge Leonie Brinkema in Alexandria, Va. ruled that Geico had not shown that consumers were confused when its name triggered ads for other companies.