Interview: Michael Wu, Rosetta Stone
Karen Bolipata speaks to Michael Wu, General Counsel and Corporate Secretary at Rosetta Stone, about its pending search engine advertisement litigation and the company’s battle to protect its brands online.
Where were you before Rosetta Stone and how long have you been with the company?
I've been at Rosetta Stone for five and a half years as general counsel. Prior to that, I was general counsel for Teleglobe International Holdings. Prior to that, I had been in-house at another telecommunications company, Global One. It was a joint venture between Sprint, Deutsche Telekom and France Telecom. I also had practiced at two law firms—one was the predecessor to Bingham McCutchen in Washington, and before that Baker Botts in Houston, Texas.
How involved are you in IP cases and how much intellectual property do you handle?
I do have one lawyer involved 100% in intellectual property. But all of us work on intellectual property issues. It's core to Rosetta Stone, whether patents, copyrights or trademarks. I started a steering committee that meets bimonthly, and we have departments represented throughout the company. We meet on various IP issues and how we're protecting our IP. I also started our antipiracy team here at Rosetta Stone, and we now have three full-time antipiracy professionals who are not lawyers. That's all they do work on various issues to protect our IP.
What does your role entail?
It's more on a strategic level overseeing the protection of our IP. The Google case was a big issue for the company over the last few years. We're a small legal department with a total of 18 people, and we all were somehow involved in preparing for that case. It was a big part of what we were doing back in 2009 and 2010 before the case was ultimately dismissed by the Eastern District of Virginia and revived by the Fourth Circuit earlier this month.
How big is the company's trademark portfolio?
We've got about, I'd say, 30-40 marks worldwide. Our preeminent mark is the Rosetta Stone mark. We have all these other trademarks that we filed as well for our various products and other parts of our components of our language learning offerings.
What's the biggest challenge for you?
One of the biggest challenges is third parties monetizing the value of our marks. We devoted significant resources building up the brand, and we've had third parties such as search engines sell the mark to the highest bidder including to counterfeiters. That has been a huge problem at Rosetta Stone with all of these rogue websites based overseas that are confusing American consumers by purchasing advertising space and then bidding against us for placement, including using our trademark in the actual text of the ad, and selling counterfeit product at a high enough price point that consumers believe it's some authorized channel. The rogue websites copy pages right off our website. It's highly confusing and it's been a big problem.
It's a significant problem for brand owners because you have to monitor throughout the U.S. and around the world. With geotargeting, depending on where you are and what time of day, the ads can be different. It's very difficult to police this activity. We registered complaints with search engines, and they will take it down but the damage has been done.
My enforcement team works with customs border patrol to seize the counterfeit product that is being sold by foreign rogue websites. Our enforcement manual is on the customs border patrol's intranet site. Last year there were several hundred seizures in the U.S. The advantage is our products are produced here in the U.S. and are not imported from overseas. Customs officials know that anything being shipped from overseas is counterfeit software.
What do you like most about working in trademarks?
I do think there are so many different issues. It's very interesting to work with our marketing and business team to build your brand. It's really nice to see how much value a brand can be for a company.
In which countries do you protect your marks?
In approximately 40 countries—there's an extensive list of where we file. We sell directly through the Internet so we sell throughout the world. Our key markets are Korea, Japan, Germany, the United Kingdom and here in the U.S. You can find our software around the world as well as our counterfeit software around the world, from Iraq to Afghanistan to Vietnam to China to Russia to western and eastern Europe. Employees and customers take pictures of counterfeit software being sold around the world and send them to us.
What's unique about protecting your particular brand?
I don't know if there's anything unique about protecting our brand, but we're a very attractive target for counterfeiters. Because we create a premium product, these counterfeiters can sell at a high enough price point where consumers believe they are purchasing authentic software. It makes things difficult for consumers as well as the company. It's very attractive to knock us off just like Louis Vuitton or Tiffany's, copy our products and infringe our trademarks and copyrights.
Can you comment on the recent ruling in your case against Google?
We're quite pleased with the result. We're deeply concerned about trademark infringement and the rampant problem of online counterfeiters engaging in theft of our intellectual property and confusing consumers regarding the products being offered for sale. This has confused our consumers. We think this is an important decision that allows us to continue our case against this infringement. We want to thank INTA for submitting an amicus brief, which focused on the errors with the opinion with respect to the application of the functionality doctrine and trademark dilution law.
Are you confident on remand?
I think we have a compelling case.
What more would you like to see Google do independently to protect trademarks?
I think from our perspective they should do the right thing. I think it's much easier for them to protect up front rather than brand owners having to monitor and then report instances of infringement. They have the software tools. It's just whether they choose to do this or not. I believe it's a heavy burden on brand owners to do this policing given the geotargeting available. You can buy ads targeting specific localities. I would have to have computers at every location they target around the U.S. and throughout the world to monitor whether there are counterfeiters advertising on Google at any time of the day. I think it's very easy for them to do the policing up front and filter out counterfeit ads.
Some of those who backed Google in the case said that trademark law is still a mess after this ruling and that the court could have done more to explain the concept of trademark use in commerce online. Do you think clarification is still needed on that point, and if so, does it need a legislative fix?
We have pending litigation with Google so I will not comment on this question.
Is the company usually involved in much litigation?
No, we're not a litigious company.
How is Rosetta Stone preparing for the new gTLD expansion? Can you say yet whether you've applied for any?
We have not. I have one of my lawyers involved in monitoring the situation. We may oppose depending on whether someone applies for, for example, "Rosetta Stone" as a gTLD.
Do you handle domain name disputes now? Do you have a lot of them?
We've had some and we've initiated some proceedings against domain squatters. I think we probably have to be more active given all of these rogue websites that have been out there that have registered different variations of Rosetta Stone in their URLs, especially overseas. Those rogue websites are based in jurisdictions where it's difficult to go after them. We're a small company, so we don't have the resources of much larger companies to litigate these issues.
What changes would you like to see made to the trademark system overall to help you to protect your brand more effectively?
I would like to see especially search engines and other online facilitators of counterfeiting some more policing up front rather than having brand owners doing the policing on the backend.
SOPA/PIPA—did the company endorse those bills, would you support new legislation, do you think it's necessary?
We were involved in those efforts; we supported those bills. We believe that the online third party facilitators of counterfeiting should do the right thing and stop transacting with counterfeiters. Any legislation that would require online facilitators of counterfeit products to stop transacting with rogue websites based overseas is a good thing from my perspective. It's extremely difficult for companies such as Rosetta Stone to combat this type of activity.
Do you think trademarks/IP protection and enforcement generally have developed a bad name in the last year because of those bills and because of the perception that IP and internet/consumer freedom are mutually exclusive? What's the way forward?
The opponents of SOPA/PIPA have been effective in painting it in that manner. I think the way forward from the brand owners' perspective is to educate the public. I think one area to highlight is the harm counterfeit products do to American consumers and how easy it is for foreign counterfeiters to transact with American consumers and generate significant revenues. You have all of these third-party facilitators profiting off that activity at the expense of American consumers.
How do you go about choosing outside counsel? What are the key qualities you look for?
I think it's important to have a comfort level with outside counsel we work with. They have to be highly responsive. I think that you can have many firms with excellent lawyers who do the same type of work and provide the same quality work, but what differentiates the firms is how they work with you on a day-to-day basis, how responsive they are and how willing they are to work with you in terms of alternative fee arrangements, which is quite important in this economic environment.
What are you looking forward to most at the INTA Annual Meeting? Have you been before?
The networking and the receptions of the various firms. It's great to catch up with folks you haven't seen in a year or several years. I've attended the Annual Meetings in Seattle and Boston.
What would you recommend attendees do in D.C.?
There's so much to do. Obviously the Smithsonian National Air and Space Museum is fantastic. A visit to the zoo is interesting. The great thing about D.C. is that the museums are free of charge, so it's nice for tourists to see D.C. without having to pay any entrance fee. Also, the Air and Space Museum near Dulles Airport—that's quite interesting for folks if they're interested in aircraft. I believe Discovery is going to be located out there.
Did you see its last flight?
I saw pictures of it. I didn't duck out in time to see it.