Rosetta Stone (NYSE: RST) is learning a new language: legalese.
The foreign-language software company is suing Google (Nasdaq: GOOG) for trademark infringement, alleging that Google's paid-search platform allows rival educators to use Rosetta Stone's trademarks in their text ads.
A simple Googling of "Rosetta Stone" this morning found competing sponsors using the following copy:
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Don't Get Ripped Off By The Stone.
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Do Not Buy Stone Software Until You Read Our Review!
Are the advertisers steering clear of legal fisticuffs by omitting the "Rosetta"? Googling for language-related queries like "learn French" and "learn Spanish" didn't turn up any Rosetta Stone coattail-riders.
Cynics will also argue that the real Rosetta Stone -- the roughly 2,200-year-old multilingual slab that was instrumental in deciphering hieroglyphics -- should be turning in its slate.
Today's Rosetta Stone clearly thinks it has a case. Google has faced similar lawsuits in the past. American Airlines parent AMR (NYSE: AMR) flew in with its legal eagles two years ago, when Google allowed other advertisers to bid on the term "American Airlines" to appear on related searches.
Brands have to be vigilant in cyberspace. Tiffany (NYSE: TIF) and LVMH's (OTC BB: LVMUY.PK) Louis Vuitton have sued eBay (Nasdaq: EBAY) over the sale -- and resale -- of counterfeit luxury wares on the leading auction site.
The legal challenge against Google is heavier, because it's easier for a search engine to block trademark terms than it is for an auction site to root out counterfeits being sold. The world's largest search engine wouldn't be dabbling in the gray areas of paid search -- which accounts for nearly all of Google's revenue -- unless it feels it's in the right.
Is it, though?
Companies with valuable trademarks have every right to complain when their intellectual properties are being trampled. AMR had a good case. Why should someone specifically searching for "American Airlines" be veered elsewhere? Rosetta Stone's argument is a bit trickier, because it suggests that a rival using its name -- something we see in practically every other televised commercial these days -- in the context of its ad is illegal.
Google has too much at stake not to fight this, naturally. Rosetta Stone can't afford to come up short, either. Its stock is trading 45% higher than its IPO price three months ago, and it doesn't want to get marked down by the market for getting schooled in court.
No matter how this dispute ends up, let's hope that an artifact remains, so that someone can learn from this in 2,200 years.
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