Thursday, January 21, 2016

SanMedica v. Amazon: how many clickthroughs make likely confusion plausible?

In SanMedica v. Amazon, the court initiallyfound enough evidence of confusion from Amazon’s continued use of a trademark in keyword ads (after it had kicked the seller off its platform, but continued to offer competing brands) to deny summary judgment.  However, the court’s initial opinion redacted the percentage of consumers who saw the Amazon ads and clicked through, and the percentage who bought something after clicking through, which meant that it was impossible to understand how the court had applied the governing 1-800 standard, which holds that clickthroughs provide an upper bound on possible confusion.  With the able assistance of Public Citizen, I intervened, and we ultimately agreed to remove a significant amount of the redactions in the opinion and the underlying documents.  I’m pleased to be able to bring you the crucial paragraph in the opinion:
In the present case, there is similar evidence setting an upper limit on how often consumers were lured to Amazon’s website by clicking on the sponsored ads. It is undisputed that during the Advertising Period, approximately 319,000 sponsored ads were generated. Out of those, there were approximately 35,000 clicks on the sponsored ads. The click to impression rate of the sponsored ads is approximately 11 percent. This rate sets the “upper limit on how often consumers really were lured in such a fashion.” Amazon contends that of the “35,253 users that clicked on the ads for SeroVital, only 984 made any purchase at, a measly 3 percent.” Although consumer purchases constitute three percent, the focus is not on the purchase rate but instead on the 11 percent rate that consumers were lured to Amazon’s website. Eleven percent, although a relative small number, is not so insufficient to suggest that there was no likelihood of confusion.
Trademark law takeaway: not great from a traditional perspective—11% as an upper bound is really low, when 15% is a more normal breakpoint.  However, given what’s known about clickthrough rates, most non-Amazon keyword advertisers can probably breathe a little easier.

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