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Much Ado About Standards of Review (But Not All That Much About AdWords)

BY Timothy Denny Greene
July 30, 2012

On April 9, in Rosetta Stone Ltd. v. Google Inc., No. 10-2007 (4th Cir. Apr. 9, 2012), the Fourth Circuit issued the latest opinion in the Google AdWords wars, this time in support of the challenger, Rosetta Stone. While on the surface the Rosetta Stone opinion might seem to be a public rebuke of the merits of Google's AdWords program, on closer scrutiny it is clear that the Fourth Circuit's opinion is more properly read as a reprimand of the district court, which, according to the Fourth Circuit, improperly mixed its standards of review and made a hash of the functionality doctrine in the process. The panel remanded for a proper application of the summary judgment standard and took no firm stance on the hot-button issues of whether Google's AdWords program makes a “use in commerce” of stakeholders' trademarks and whether, assuming so, there is any likelihood of confusion.

Google AdWords

In order to understand the AdWords cases, it's important to understand how AdWords works. Basically, in addition to the expected list of search results that comes up when you run a search using Google's search engine, there is a short list of “Sponsored Links” above or to the side of the search results. AdWords allows advertisers to “purchase” keywords that trigger their advertisements when Google users search for those keywords. The price is based on an auction where advertisers bid competitively for page position on the search results page ' generally, the higher on the page, the more likely consumers are to click the link, and thus the higher the purchase price.

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