Can an online retailer use brand name searches for products it doesn’t carry?

When a consumer is shopping online, online retailers (such as Amazon.com) sometimes receive search requests for brands of products the retailer doesn’t carry.  When receiving such a request, can the online retailer be held liable for trademark infringement when it displays the searched for brand name as part of “search results” that include competitors’ products and doesn’t state that the searched for brand name is not available?  This is the question a divided Ninth Circuit panel sought to resolve in a hotly contested case captioned Multi Time Machine, Inc. v. Amazon.com, Inc., 804 F.3d 930 (9th Cir. 2015).

The facts are relatively straightforward.  Plaintiff Multi Time Machine, Inc. (“MTM”) makes specialty military style watches that it sells under various brand names including MTM, MTM SPECIAL OPS and MTM MILITARY OPS.  To promote its products as “high-end,” MTM sells its watches directly to consumers and through select retailers, which do not include Defendant e-commerce giant Amazon.com.

Consumers who visit Amazon.com and search for the term ”mtm special ops” are directed to a search results page that displays the MTM brand name forming the search above a list of watches from competitors.   MTM brought suit alleging that Amazon.com’s search results is trademark infringement in violation of the Lanham Act by creating a likelihood of initial interest confusion in competitors’ products.

Amazon.com mtm special ops

 

On panel rehearing, the Ninth Circuit panel concluded with a rare reversal of its own position in the case reached just three months prior.  A Ninth Circuit majority including Judge Barry Silverman and Judge Gordon Quist from the Western District of Michigan, sitting by designation, affirmed the District Court’s grant of summary judgment of non-infringement in favor of Amazon.com.  In reaching its decision, the majority distinguished the applicability of the traditional eight factor Sleekcraft test for analyzing likelihood of confusion, stating that it was developed for a different problem–namely whether two competing brands’ marks are sufficiently similar to cause a likelihood of confusion.  In online situations, such as keyword advertising in search results, the Ninth Circuit according to the majority focuses on “what the consumer saw on the screen and reasonably believed, given the context.”   Because the watches sell for hundreds of dollars, the court found the relevant consumer to be a reasonably prudent consumer accustomed to shopping online.  Applying this standard, the majority found that there could be no likelihood of confusion, including initial interest confusion, by a reasonably prudent consumer, because Amazon.com clearly labeled the resulting watches under the search request with the name of the competing manufacturer, and displayed photographs of the competing products.

In a sharply worded dissent, Judge Carlos Bea took the majority to task for affirming summary judgment based on a “clear labeling” test that he believes guts the initial interest confusion doctrine.  Judge Bea distinguished online retailers such as buy.com and overstock.com, both of which have the practice of clearly stating they do not carry the searched for brand before listing competitors’ products.   According to Judge Bea, a reasonable consumer on the Amazon.com site could be confused as to whether searched for and displayed products of different names are somehow related, given that that there is no statement that Amazon.com does not carry the searched for product.  More troubling, according to Judge Bea, the majority usurped the role of the fact finding jury in affirming summary judgment.

This case exemplifies the continuing struggles of the judiciary regarding the application of the likelihood of confusion doctrine in the online context.  In the panel’s initial ruling, Judge Quist sided with Judge Bea in favor of MTM as part of a majority decision reversing the summary judgment ruling.  On request for rehearing, Judge Quist changed his position and sided with Judge Silverman, leading to the withdrawal of the earlier decision in favor of the current superseding decision.  Commentators have been highly critical of the application of initial interest confusion in the context of the Internet, including several amici briefs filed questioning the doctrine’s validity.  Realizing that this new decision may not pronounce the final say as to these issues, the panel in the current decision openly invited the filing of petitions for further panel rehearing or rehearing en banc.   Instead of seeking yet another round in front of the Ninth Circuit, MTM filed a petition for a writ of certiorari to the U.S. Supreme Court, which petition was recently denied.   It should be interesting to continue to see how the courts tackle these and other trademark infringement issues in the online context.

Authors: Art Hasan & Mike Koplow

Image Courtesy of: Guy Sle Used under Creative Commons license.