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THE NINTH CIRCUIT WEIGHS IN ON ALLEGED TRADEMARK INFRINGEMENT BY AMAZON.COM’S SEARCH FUNCTIONALITY

On July 6, 2015 the Ninth Circuit Court of Appeals reversed and remanded a decision from the United States District Court, Central District of California (Western Division) granting summary judgment in favor of Amazon.com and against the trademark infringement claims of Plaintiff, Multi Time Machine, Inc. (“MTM”).  Multi Time Machine Inc. v. Amazon.com et al., No. CV 11-09076, 2013 WL 638888 (C.D. Cal. Feb. 20, 2013). This case poses important trademark issues in the e-commerce context where websites present users with an array of competing trademarked products based on a search query, user preferences or other criteria.

MTM brought an action against Amazon.com and Amazon Services, LLC (collectively, “Amazon”) for injunctive relief and damages for violation of the Lanham Act, 15 U.S.C. §§ 1051 et seq. contending that Amazon’s listing of similar watches as a result of a consumer’s search for MTM’s trademarked products was misleading and therefore infringed those marks.   MTM produces high-end military style watches, branded and marketed as “MTM Special Ops.”  Amazon did not carry these watches. Upon submitting a query for “MTM Special Ops watch” in Amazon’s search box, the user would be presented with similar watches from competing brands. While the search results page included the term “MTM Special Ops watch” in the search field, immediately below the search field, and again in the heading “Related Searches: MTM special ops watch” before displaying the search results, it did not state that Amazon did not offer the authentic MTM-branded watches for sale on its website. MTM asserted that an online shopper may be confused into thinking that the displayed brands were somehow related to MTM, i.e. an initial interest” confusion,  that may lead to the purchase of those other brands.

Finding there was “no likelihood of confusion in Amazon’s use of MTM’s trademarks in its search engine or display of search results, ”the lower court granted Amazon’s motion for summary judgment on Plaintiffs’ trademark infringement claim. See Id. at 1141-42. Regarding the operation of Amazon’s search function, the district court found “Amazon is not selling trademarks to competitors but instead is using behavior-based search technologies that result in competitors’ products appearing when a trademarked search term is entered.” Id. at 1136. On appeal, the Ninth Circuit reversed the decision based on its rationale that a jury could very well find that Amazon created the “likelihood of confusion.”

In evaluating the likelihood of consumer confusion, the Court considered the non-exhaustive Sleekcraft factors: (1) strength of the mark(s); (2) proximity or relatedness of the goods; (3) similarity of the marks; (4) evidence of actual confusion; (5) marketing channels; (6) degree of consumer care; (7) the defendant’s intent; and (8) likelihood of expansion.   AMF, Inc. v. Sleekcraft Boats, 599 F.2d 341, 348–49 (9th Cir. 1979).   In Network Automation, the court held that in the context of internet commerce, clear labeling “might eliminate the likelihood of confusion” where “consumers saw banner advertisements that were confusingly labeled or not labeled at all.” Network Automation, Inc. v. Advanced Sys. Concepts, Inc., 638 F.3d 1137, 1145 (9th Cir. 2011). The Network Automation Court also held that use of a trademark as a search engine keyword that triggers the display of a competitor’s advertisement is a “use in commerce” under the Lanham Act. Network Automation at 1152. In addition to its position that there was no likelihood of confusion, Amazon argued that customer-generated use of a trademark in the retail search context was not a “use in commerce,” and that Network Automation could be distinguished on the grounds that it involved the sale of trademarked keywords, which Amazon did not do. The Ninth Circuit disagreed, finding that Amazon’s purpose was “not less commercial just because it is selling wares, not advertising space.” See Multi Time Machine Inc. at 21.

The Court noted that on summary judgment, it had discretion to consider whether any of the Sleekcraft factors give rise to a genuine issue of material fact, which would in turn make it likely that there is a genuine issue of material fact as to the likelihood of consumer confusion. The Court was guided by Fortune Dynamic, Inc. v. Victoria’s Secret Stores Brand Mgmt., Inc., 618 F.3d 1025 (9th Cir. 2010) and quotes the decision almost verbatim, stating, ““[a] court may be far from certain that consumers were likely to be confused [and still be] confident that the question is close enough that it should be answered as a matter of fact by a jury, not as a matter of law by a court.” See Multi Time Machine Inc. at 13.   With respect to Amazon’s use of MTM’s mark, the Court found that there was a genuine issue of material fact as to three of the Sleekcraft factors: [1] strength of the mark; [2] similarity of the goods; and [3] the defendant’s intent.

The presence of the search term “MTM Special Ops watch” in three places on the search results page, and lack of a statement that authentic MTM products were not available, appeared instrumental in the Court’s finding that there could be a genuine issue of material fact as to “initial interest” confusion. The Court noted that other e-commerce websites (e.g. Buy.com and Overstock.com) did clearly state that the queried product was not found before listing comparable results. However, the Court acknowledged that the user cannot purchase products directly from the search results page, but must first click on the product and navigate to the “product details” page, which indicates the product and brand names. Thus, while “ultimate confusion” was unlikely, the Court felt that a finding of “initial confusion” was a possibility that should not be precluded via summary judgment. The Court also recognized that Amazon does not program the terms of its search algorithm, but rather, it responds to customer behavior using a behavior-based search technology (“BBS”) that utilizes data on what customers often view and purchase after searching certain search terms.

In conclusion, the Ninth Circuit held that while it was uncertain whether MTM would be able to show a likelihood of confusion under an “initial interest” confusion theory, it was confident that the matter required the resolution of genuine issues of material fact by a jury.   One take away from the decision is that, while the standard for confusion remains in flux for trademarked keywords in the ecommerce context, it is a very fact-specific inquiry that focuses on the user experience based on the layout, content, and functionality of the website. Ecommerce websites can certainly take steps to minimize potential consumer confusion, particularly initial interest confusion, by adding clarifying language before presenting the user with alternative products, and minimizing the usage or prominence of the trademarked words or logos.

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