"Googles" Suit Revived by Appeals Court

The digital giant again faces the claim that it breached a settlement deal by getting into kids' content.
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Google will again be contending with a lawsuit that alleges it breached an agreement to never get into the business of content for children thanks to a decision on Thursday from the 2nd Circuit Court of Appeals.

The suit comes from SM Kids, which claims to be the proper successor to the "Googles" brand. That's plural, but understandably, there's the possibility for consumer confusion. According to a complaint first filed back in 2018, what started out as a 1995 book titled The Googles From Goo became a multimedia platform for children. All before the big search engine came along. In 2008, the complaint continues, Google resolved a potential trademark problem with a settlement with the "Googles" owner and then allegedly breached that very deal by among other things, operating YouTube Kids, a mobile app that facilitates the sharing of videos appropriate for children.

When the original suit was filed, we compared this situation to the time when Steve Jobs got Apple Inc. into the music business through the launch of iPods. That provoked litigation from Apple Corps, the label founded in the 1960s by members of The Beatles which had a deal whereby the computer giant would stick to its lane. Eventually, via a newer settlement, Apple Inc. and Apple Corps. figured out a way to again coexist.

SM Kids couldn't likewise achieve a second settlement because in 2019, a New York federal judge shut down its suit against Google. In her decision, U.S. District Court Judge Lorna Schofield traced a complicated history of transfers of the "Googles" intellectual property. Along the trail, she determined that there was a gap period where Googles.com was dormant, and since the trademark wasn't being used in commerce, she rejected the proposition of a valid assignment. Because of this situation, she concluded that SM Kids lacked standing to enforce the old settlement agreement with Google.

Today, the appeals court reverses.

"We do not agree that the validity of the assignment was a question of Article III standing," states the opinion. "Instead, the question was one of contractual standing, which asks a different question: whether a party has the right to enforce a contract. Contractual standing is distinct from Article III standing and does not implicate subject-matter jurisdiction. Article III standing speaks to the power of a court to adjudicate a controversy; contractual standing speaks to a party’s right to relief for breach of contract. Although the question of whether Google breached a contract with SM Kids depends on whether SM Kids enjoyed a contractual relationship with Google, the existence of such a relationship is not a prerequisite to a court’s power to adjudicate a breach-of-contract claim."

The opinion notes that Google may pursue defenses based on trademark and contract law, but that SM Kids at least is in a position to assert its claims in court. Writing for the 2nd Circuit, Judge Barrington Parker adds that Google's approach would mean no jurisdiction unless plaintiffs proved the existence of a contract. He concludes, "Suffice it to say, we do not speculate about what results procedures not followed might have yielded. Nor do we reach the questions of validity of the assignment of the Googles mark and whether SM Kids possesses contractual standing. Instead, we remand to the district court."