UPDATE 2-Rosetta Stone sues Google alleging trademark violation

(Adds comments from Google; details, background)

By Mansi Dutta

BANGALORE, July 10 (Reuters) - Rosetta Stone Inc (RST.N), a provider of language-learning software, said it filed a lawsuit against Google Inc (GOOG.O) in a U.S. federal court, alleging trademark infringement.

In the lawsuit, the company alleged that Google is allowing third parties, including individuals involved in software piracy, to purchase the right to use its trademarks -- or other "confusingly similar" terms -- in Google's Adwords advertising program.

Google spokesman Andrew Pederson said, "Since we haven't yet been served in the matter, though, we can't comment directly on the suit."

Rosetta Stone's General Counsel Michael Wu said, "Google's search engine is helping third parties mislead consumers and misappropriate Rosetta Stone trademarks by using them as 'keyword' triggers for paid advertisements and by using them within the text or title of paid advertisements."

However, Pederson said Google allows trademarks to be used as keyword triggers in AdWords because users searching on Google benefit from being able to choose from a variety of competing advertisers.

"Just as it's reasonable to expect a range of brands on any shelf in a grocery store, providing users on Google with more than one option when they search for a brand name or other trademark helps them to find the best product at the lowest price," Google's Pederson said in an email.

Last month, Google changed its policy stating that "advertisers will be allowed to use trademark terms in their ad text even if they do not own that trademark or have explicit approval from the trademark owner to use it," Rosetta Stone said.

The lawsuit was filed in the U.S. District Court for the Eastern District of Virginia.

Last year, Rosetta Stone had sued Rocket Languages and others on a similar issue.

Rosetta Stone provides online and CD-ROM-based instruction services in 31 languages to individuals, companies and schools.

Shares of both Rosetta Stone and Google were trading up about 1 percent in afternoon trade Friday.

For alerts, double click [ID:nWNAB6187] (Reporting by Mansi Dutta in Bangalore; Editing by Gopakumar Warrier, Vinu Pilakkott)