United States: Ninth Circuit Court Of Appeals: Online Retailer's Display Of Similar Competing Goods In Search Results Not Trademark Infringement

Multi Time Machine, Inc. v. Amazon.com, Inc., ___ F.3d ___, No.13-55575, 2015 WL 6161600 (9th Cir. Oct. 21, 2015)

The Court of Appeals for the Ninth Circuit recently upheld a decision on summary judgment that Amazon.com, Inc. ("Amazon") did not violate high-end watch maker Multi Time Machine, Inc.'s ("MTM") trademark rights by displaying similar products in search results for MTM watches without including an explicit notice that MTM's watches are not sold on Amazon's site.  In so doing, the Ninth Circuit overturned its own prior ruling that the case should go to a jury trial.

Although MTM watches are not sold on Amazon's website, if consumers search for MTM products on Amazon, they will receive a list of search results, including similar watches made by other manufacturers.  The initial search term—for instance, "mtm special ops," the name of a particular MTM watch—is displayed twice:  once in the search query box and once directly beneath the search query box in quotation marks.  It is also included in a field entitled "Related Searches," which suggests alternative searches consumers might run if this search did not yield the results they were seeking.  Nowhere on the page is there a notice stating that MTM watches are not available on Amazon. 

MTM filed suit against Amazon for federal trademark infringement, arguing that consumers were likely to believe there was an association between MTM and the products displayed in the search results.  Amazon moved for summary judgment, arguing that (1) it was not using MTM's mark in commerce, and (2) there was no likelihood of consumer confusion.  The district court did not decide the question of whether Amazon was using MTM's marks in commerce, but found that there was no likelihood of confusion and so granted Amazon's motion.  MTM appealed. 

The Ninth Circuit originally overturned the district court's decision, finding that Amazon's practice could create a likelihood of initial interest confusion, causing consumers to investigate the products of competitors due to a mistaken belief that there was an association or affiliation between MTM and the products of its competitors listed in the search results.  Even if that belief were dispelled through subsequent research, those consumers might nevertheless purchase a competitor's product, when they otherwise would have immediately proceeded to an authorized MTM retailer.  The dissent vigorously argued that because Amazon's search results clearly displayed the brand name of each product in the search results, no reasonably prudent consumer who was accustomed to shopping online would be confused as to the source or origin of the products.

In an unusual move, the Ninth Circuit reversed itself three months later, adopting the dissent's reasoning and finding that Amazon's search results did not create a likelihood of confusion.  The majority relied heavily on Network Automation, Inc. v. Advanced Systems Concepts, Inc., a keyword advertising case in which the Ninth Circuit vacated a preliminary injunction prohibiting use of the plaintiff's trademark as a keyword triggering display of the defendant's website in Internet search results.  In Network Automation, the Ninth Circuit stated that the Sleekcraft factors, employed by federal courts in that circuit to evaluate likelihood of confusion, are not exhaustive, and that depending on context, other factors may come into play.  Network Automation, Inc. v. Advanced Systems Concepts, Inc., 638 F.3d 1137, 1145 (9th Cir. 2011).  The need to consider other factors, the MTM majority said, is particularly true in the Internet context.  The court reasoned that in the MTM case, the Sleekcraft test was not particularly apt, as it was designed to analyze whether two competitors' marks may cause consumer confusion, and instead found that "the case will turn on the answers to the following two questions: (1) Who is the relevant reasonable consumer?; and (2) What would he reasonably believe based on what he saw on the screen?"  Multi Time Machine, Inc. v. Amazon.com, Inc., No. 13-55575, 2015 WL 6161600, at *4 (9th Cir. Oct. 21, 2015). 

In answer to the first question, the court found that because MTM's watches are expensive, costing several hundred dollars, the relevant consumer "is a reasonably prudent consumer accustomed to shopping online."  Id. at *5.  Regarding the second question, the court found that "the labeling and appearance of the products for sale on Amazon's web page is the most important factor in this case" because "clear labeling can eliminate the likelihood of initial interest confusion in cases involving Internet search terms."  Id.  The court then concluded that, as a matter of law, Amazon labels its products sufficiently clearly that a reasonably prudent consumer accustomed to online shopping would not likely experience initial interest confusion.  The court explained that "[t]he search results page makes clear to anyone who can read English that Amazon carries only the brands that are clearly and explicitly listed on the webpage."  Id. at *6.  It found that summary judgment was appropriate in a case such as this, where the court could conclude "simply by reviewing the product listing/advertisement at issue" that "consumer confusion . . . is highly unlikely."  Id.

The revised majority opinion provoked a strong dissent from the author of the original opinion, who argued that the majority (1) sub silentio overruled the doctrine of initial interest confusion, and (2) improperly usurped the role of the jury, as likelihood of confusion is a question of fact that the court lacks the authority to determine. 

This decision illustrates that in the context of Internet advertising and sales, courts are increasingly likely to assume that consumers are sophisticated, particularly where the goods at issue are costly.  It also underscores that clear labeling of products is likely to significantly lessen, if not eliminate altogether, a likelihood of consumer confusion.  Finally, it may indicate that going forward, courts in the Ninth Circuit will be more willing to dismiss trademark infringement cases on summary judgment, or even at the pleading stage, rather than requiring jury trials. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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