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Rosetta Stone Agrees to Drop Google Trademark Suit

Rosetta Stone Inc. (RST), a maker of language-learning software, agreed to drop a lawsuit it brought against Google Inc. (GOOG) for selling its trademarks to other companies for search-engine advertising.

The companies agreed that all claims in the infringement case will be dismissed, according to a filing today in federal court in Alexandria, Virginia. No terms were given with the stipulation of voluntary dismissal. Rosetta Stone had claimed the keywords were being sold to competitors and counterfeiters.

U.S. District Judge Gerald Bruce Lee ruled in 2010 that the sale of Rosetta’s trademarked phrases as keywords wouldn’t confuse consumers. The U.S. Court of Appeals for the Fourth Circuit in April overturned part of that ruling and sent the case back to the lower court.

“Google and Rosetta Stone have agreed to dismiss the three-year-old trademark infringement lawsuit between them and to meaningfully collaborate to combat online ads for counterfeit goods and prevent the misuse and abuse of trademarks on the Internet,” the companies said in a joint e-mailed statement.

Google, which runs the world’s largest search engine, sells advertisers the rights to use certain words or phrases as keywords for paid ads on its site. The so-called sponsored links direct users to the advertisers’ websites.

Keyword Bids

Advertisers bid what they’ll pay Google for each click on an ad triggered by the keyword. The highest bid and other factors determine whether the keywords can be used. Mountain View, California-based Google derives most of its revenue from ad sales.

Rosetta, based in Arlington, Virginia, had said in its appellate brief that it was “entitled to its day in court before a properly instructed jury.”

Google said in its brief that “each time Rosetta Stone informed Google that a particular advertiser was selling counterfeit Rosetta Stone products, Google promptly took action including removing the advertisement.”

Google rose $3.24 to $678.39 at 1:04 p.m. New York time in Nasdaq Stock Market trading. Rosetta Stone declined 3 cents to $11.42 on the New York Stock Exchange.

The case is Rosetta Stone v. Google, 09-00736, U.S. District Court, Eastern District of Virginia (Alexandria). The appeal is Rosetta Stone v. Google, 10-2007, U.S. Court of Appeals for the Fourth Circuit (Richmond, Virginia).

To contact the reporter on this story: Don Jeffrey in New York at djeffrey1@bloomberg.net

To contact the editor responsible for this story: Michael Hytha mhytha@bloomberg.net

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