Wednesday, April 22, 2015

Amazon doesn't want you to know how to apply 1-800's IIC rule

SanMedica Int’l, LLC v., Inc., No. 13-cv-00169 (D. Utah filed publicly Apr. 15, 2015)

The parties agreed to dismiss the case with prejudice on the day the redacted version of the opinion was released, so we won’t get more. I'll have more to say later, but: Amazon continued to run ads saying "buy SeroVital [SanMedica's supplement product] at Amazon" in response to keyword searches on Google etc. even after it removed SeroVital from Amazon due to policy violations.  The court declined to grant summary judgment on initial interest confusion, finding that
It is undisputed that during the Advertising Period, approximately [redacted] sponsored ads were generated. Out of those, there were approximately [redacted] clicks on the sponsored ads. The click to impression rate of the sponsored ads is approximately [redacted] percent. This rate sets the "upper limit on how often consumers really were lured in such a fashion." Amazon contends that of the [redacted] users that clicked on the ads for SeroVital, only [redacted] made any purchase at, a measly [redacted] percent." Although consumer purchases constitute [redacted] percent, the focus is not on the purchase rate but instead on the [redacted] percent rate that consumers were lured to Amazon's website. [Redacted]-percent, although a relative small number, is not so insufficient to suggest that there was no likelihood of confusion.
I do not think it is consistent with the rule of law to leave us to guess at the meaning of this.  In the Tenth Circuit, 1-800 governs the IIC analysis, and we know from that case that 1.5% clickthrough isn't sufficient to make confusion likely; we also know that 7% confusion is usually not enough.  But what is enough? Is this one of the unusual cases where 7% is enough?  These redactions make it impossible to put this case in its proper context.

Separately, the court rejects SanMedica's 43(a) false advertising claim for failure to show materiality.  SanMedica argued that the ads were literally false so that it didn't need to show materiality separately, but the court disagreed:
Amazon's misrepresentation was that consumers could purchase SeroVital on But when consumers clicked on the sponsored ads, they were taken to a landing page that did not contain for sale any SeroVital products. Amazon's misrepresentation thus related to the marketing of the product, that is, the channel through which a consumer may purchase the product. Amazon's misrepresentation did not discuss the quality or characteristics of SeroVital which could potentially affect consumers' purchasing decisions. Under the undisputed facts on this motion, no reasonable jury could find that Amazon's misrepresentation likely influenced a consumer's purchasing decision.
This seems ... wrong.  Bait and switch is false advertising, too (something the court acknowledges in its analysis of state law).  The misrepresentation that they could buy that particular product at Amazon was material to the people who clicked--that's the theory of trademark infringement!  Alternatively, I suppose we could read the court as saying that we don’t know whether consumers cared at all whether they were buying SeroVital—that is, whether they cared about the source/producer—but there can still be trademark infringement, because trademark doesn’t have a materiality requirement. Why is this sensible?

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