Search engines have become an indispensable tool for online shopping. In turn, they’ve spawned litigation over the use of trademarks in searches. Most of the lawsuits to this point have involved keyword advertising, where a company buys ads triggered by searches for a competitor’s trademarked good or service.
But can a customer’s search results lead to trademark liability for a merchandiser — even in the absence of keyword advertising? That was the question addressed by the U.S. Court of Appeals for the Ninth Circuit in Multi Time Machine, Inc. v. Amazon.com, Inc.
Multi Time Machine, Inc., manufactures MTM Special Ops military-style watches. With an eye toward cultivating and maintaining an image as a high-end, exclusive brand, MTM doesn’t sell its watches to Amazon for resale, nor does it authorize its distributors to sell its watches on the online shopping website.
If an Amazon user enters “MTM Special Ops” in its search tool, Amazon returns a page of results showing the search term in the search field. Immediately below the search field, the page displays the phrase “Related Searches: MTM special ops watch” and then states “Showing 10 Results.” The page doesn’t indicate that Amazon doesn’t sell MTM products. Rather, it displays aesthetically similar, multifunction watches made by MTM’s competitors, such as Luminox.
In contrast, Amazon’s competitors — Buy.com and Overstock.com — clearly announce that no search results match the “MTM Special Ops” query. They don’t route the visitor to a page with MTM’s trademark repeatedly at the top and competitors’ watches below.
MTM sued Amazon, asserting that a shopper might be confused into thinking a relationship exists between Luminox and MTM. As a result of this “initial confusion,” MTM said, the shopper might look into buying a Luminox watch instead of seeking an MTM watch elsewhere.
The trial court dismissed the case, finding that Amazon’s use of MTM’s trademark created no likelihood of confusion as “a matter of law” — meaning that a jury couldn’t possibly come to a contrary conclusion. MTM appealed to the Ninth Circuit.
Likelihood of confusion
As the appellate court explained, a defendant who creates a likelihood of confusion by using another mark has infringed the mark. A defendant can create such confusion through initial interest confusion. Initial interest confusion doesn’t occur when a customer is confused about the source of a product at the time of purchase. Rather, it happens earlier in the shopping process if confusion creates initial interest in a competitor’s product — even if that confusion is dispelled before an actual sale occurs.
To determine whether a trademark use gives rise to a likelihood of confusion, the Ninth Circuit considers eight nonexclusive factors known as the Sleekcraft factors. (The name refers to the 1979 case of AMF Inc. v. Sleekcraft Boats.) In this case, the court analyzed the five factors it deemed relevant to whether the case should be dismissed before trial:
- Strength of the mark,
- Similarity of the goods,
- Evidence of actual confusion,
- Defendant’s intent, and
- Degree of care exercised by purchasers.
The appellate court found that the strength of the mark, similarity of the goods and defendant’s intent appeared to weigh in favor of a finding of likelihood of confusion. The remaining two factors weighed in favor of Amazon. The court ultimately held that it was up to a jury to determine how heavily each of the factors should weigh.
The appeals court also addressed Amazon’s contention that the user-generated search term “MTM Special Ops” doesn’t constitute a “use in commerce” as required for infringement liability under the Lanham Act, the federal trademark law.
The Ninth Circuit had previously held that the use of a trademark as a search engine keyword that triggers display of a competitor’s ad is a use in commerce. And it held here that the customer-generated use of a trademark in the retail search context is also a use in commerce.
Not a done deal
Notably, the appeals court cautioned that it was “by no means certain that MTM will be able to prove likelihood of confusion.” It’s possible that MTM’s failure to introduce evidence of actual confusion, paired with the high degree of care likely exercised by purchasers of high-end watches, could end up precluding infringement liability. Nonetheless, this case represents an important development at the intersection of online commerce and trademark law.