Google Updates AdWords Policies Following Suit Over Trademark Infringement

After several years of litigation over the use of trademarks in paid search advertisements, or AdWords, Google recently introduced new policies protecting trademark owners. Google now requires written permission from the trademark owner in order to use a trademark term in the text of a paid search ad—even if the advertiser is a legitimate reseller of the trademarked product. This is a curious development considering that it departs from Google’s past practice of being less aggressive with regard to trademark issues. For example, Google long ago abandoned a policy of permitting trademark owners to block bidding on trademarks used as ad words. The explanation for this change appears to be linked to a rare defeat for Google in a lawsuit relating to its AdWords advertising service.

Back in 2009, Rosetta Stone sued Google for trademark infringement, contributory infringement, and dilution based on Google’s practice of allowing acknowledged counterfeiters of Rosetta Stone software to purchase sponsored search results using Rosetta Stone’s name. Although the suit was initially dismissed by a federal court in 2010, in April 2012, the United States Court of Appeals for the 4th Circuit reinstated Rosetta Stone’s claims. The 4th Circuit found that there was a genuine question of fact as to whether web users would be confused about the source of sponsored search results purchased by acknowledged counterfeiters of Rosetta Stone software. The court’s conclusion was based in part on internal Google documents that showed that consumers are often confused as to the meaning of sponsored search results. Moreover, the evidence in the case showed Rosetta Stone repeatedly notified of Google of paid search ads for counterfeit software—over 190 times in a seven month span.