MTM sells “military style” watches under the marks MTM
Special Ops and MTM Military Ops through its website and authorized
distributors. It doesn’t sell or allow
its distributors to sell watches on Amazon.
Amazon’s search function nonetheless provides results for a search on “mtm
watch” or similar queries, offering other product listings—here, watches made
by MTM competitors.
When a user searches on Amazon, the user’s search term will
appear twice on the search results page: once in the search query box and
directly below, in what Amazon calls the “breadcrumb.” The breadcrumb “displays the original query
in quotation marks to provide a trail for the consumer to follow back to the
original search.” Below that, Amazon provides “Related Searches,” here
including “mtm special ops watch.” A
gray bar separates these three instances from the product listings. For the “mtm
special ops” search, one of the “Sponsored Links” results included a link for “Tactical
Watches By MTM,” with the description “MTM Tactical Watches Worn By Military,
Police, Sportsmen,” and another link to MTM's website.
You can’t buy from the search results page, only from a product detail page, which includes “a large image of the product, a hyperlink identifying the brand of the product, and a title identifying the product in larger font.” Thus, the Luminox search results for a “mtm special ops” search include large brand identifiers. On that product detail page, your original search query—here “mtm special ops”—still appears in the search query box, and there are also links suggested uner “Customers Viewing This Page May Be Interested in These Sponsored Links,” which in this case displayed sponsored hyperlinks labeled “MTM Watches,” with a link to Yahoo, and “Military Watches Sale,” which went to some sort of shopping site.
The court found this situation to squarely present the
question posed by Judge Berzon in her Playboy
concurrence:
I walk into Macy's and ask for the
Calvin Klein section and am directed upstairs to the second floor. Once I get
to the second floor, on my way to the Calvin Klein section, I notice a more
prominently displayed line of Charter Club clothes, Macy's own brand, designed
to appeal to the same people attracted by the style of Calvin Klein's latest
line of clothes. Let's say I get diverted from my goal of reaching the Calvin
Klein section, the Charter Club stuff looks good enough to me, and I purchase
some Charter Club shirts instead. Has Charter Club or Macy's infringed Calvin
Klein's trademark, simply by having another product more prominently displayed
before one reaches the Klein line? Certainly not....
... If I went to Macy's website and
did a search for a Calvin Klein shirt, would Macy's violate Calvin Klein's
trademark if it responded (as does Amazon.com, for example) with the requested
shirt and pictures of other shirts I might like to consider as well? I very much
doubt it.
MTM’s argument was that, to avoid confusing consumers,
Amazon was “obliged to inform the consumer that Amazon does not carry any
products with that brand before offering products from other brands.” Amazon responded that, so long as it labeled
its results clearly to indicate their brands, consumers get what they want
without infringement. Amazon wins.
The court began with Network
Automation, Inc. v. Advanced Systems Concepts, Inc., 638 F.3d 1137 (9th
Cir. 2011). Because it found no
likelihood of confusion, it didn’t reach the question of whether Amazon’s
internal use of a term as part of its behavior-based search technologies
constituted “use in commerce,” though given the breadth of that term the court
indicated that it would likely have found use in commerce.
Though likely confusion is fact-intensive, and rarely
appropriate for summary judgment, it was so here. MTM argued that Amazon was engaged in passing
off, like serving customers Pepsi when they asked for Coke. In Coca-Cola Co. v.
Overland, Inc., 692 F.2d 1250, 1252 (9th Cir. 1982), the court found that menus
and posted signs indicating that Pepsi-Cola was the only beverage served in the
restaurant were not “sufficiently conspicuous” to avoid liability. But that’s a
question about confusion, and Sleekcraft
still provides the basic test for confusion. Anyway, this case was different:
It is akin to the consumer asking
for a Coca–Cola and receiving a tray with unopened, labeled, authentic cans of
Pepsi–Cola, RC Cola, Blue Sky Cola, Dr. Pepper, and Sprecher Root Beer, and a
copy of Coca Kola: The Baddest Chick, by Nisa Santiago. This is a substitution,
but given the context it is not infringing because it is not likely to confuse.
In the internet context, the confusion factors should be
applied flexibly. Network Automation
said that the most important factors in a keyword search case were (1) strength
of the mark, (2) actual confusion, (3) type of goods/degree of care, and (4) labeling
and appearance of the ads and the surrounding context on the screen displaying
the results page. This was a good
starting point.
Among other things, the similarity of goods (note that this
isn’t the similarity of the parties’
goods, but we’ve all agreed to ignore that usual requirement) was less
important if ads are clearly labeled or consumers exercise a high degree of
care. A consumer may well type in a term
identical to MTM’s mark, but that too only matters if the consumer ends up
confused. Though both Amazon and MTM
sell watches, “this is misleading only if the consumer is confused, not if the
consumer simply has clearly marked options.”
The fact that both Amazon and MTM sell watches on the internet is “too
commonplace” to matter in the likelihood of confusion analysis. (There are some interesting assumptions about
consumer behavior encoded here—we could’ve decided that convergent marketing
channels just increased the risk of confusion generally and thus always weighed
against a defendant, but instead we’ve expected consumers to adapt to the
internet as a marketing channel—paging Fred
Yen.) Intent also needed to be
considered in the context of the clarity of labeling.
Looking at the strength of the marks at issue, the court
didn’t find them especially strong. “MTM
Special Ops” and “Military Ops” referred to watches designed for members of the
armed forces involved in special military operations. MTM advertised “Special Ops Watches worn by
Special Ops and Special Forces worldwide,” though to the PTO MTM’s attorney
said, “The term Special Ops is nothing more tha[n] a suggestive reference to
military type watches.” (MTM claimed it
had two other marks at issue—“American Watch” and “Pro Ops.” American Watch was used for a company that
sells promotional watches that can be inscribed with company names; no watches
were branded American Watch. While those
two, and Military Ops, were “arguably distinctive enough” to be protected, they
were also phrases that could be used to search for other products unconnected
with MTM, and weaker than “MTM Special Ops”; thus the court’s analysis applied
equally to them.)
The marks were not conceptually strong—at best suggestive
and more likely descriptive. The
addition of “MTM” might make them protectable, but didn’t neutralize their
descriptive connection to the product. Thus, this factor favored Amazon. (This discussion makes no sense in the context
of product search. Weak or strong, the
question is whether it’s clear you’re being offered an alternative. Compare a search for Xerox that offers Canon
products as alternatives.)
There wasn’t admissible evidence about MTM’s market share,
rendering evidence of its sales and ad expenditures of little significance; MTM
didn’t show evidence of brand recognition. This factor was neutral because,
though it was MTM’s burden to show likely confusion, it didn’t need to prevail
on each Sleekcraft factor and neither
party presented evidence of commercial strength. Overall, given the conceptual weakness and
absence of other evidence, strength favored Amazon.
Amazon argued that there was evidence of a lack of
confusion, coming from its retained data about how often a consumer's search
for “mtm special ops” or “mtm special ops watch” results in the consumer
placing a product in a shopping cart or in a purchase. Amazon compared the same data for queries for “luminox”
or “luminox watch.” Since consumers were
21 times more likely to buy a product after searching for Luminox than after
searching for MTM Special Ops, Amazon argued that there was no confusion: if
they were confused, one would expect a substantial conversion of MTM searchers
into Luminox buyers. MTM argued that
Amazon’s data registered only sales/selections made on the same day of the
search, whereas consumers might put a product into a cart but buy it
later. Amazon rejoined, persuasively,
that there was no reason to think that such behavior differed for Luminox v.
MTM searchers. The court agreed that
this was evidence of no actual confusion.
In addition, queries for “mtm” were much more common than
for “mtm special ops,” and the average price of units sold based on a “mtm”
search was dramatically lower than the price of MTM’s competitors’
watches. Thus, this wasn’t evidence of
confusion. (The court didn’t say so, but I think what this means is that there
are other kinds of “MTM” products—ammo cans turned up high in my Amazon search—that
aren’t watches and that, for all that appears, aren’t sold by plaintiff.)
MTM’s president testified that there was actual confusion,
but couldn’t present specific instances or records; his testimony was too vague
to count.
MTM’s watches start in the several-hundred-dollar range and
go up; its competitors’ products are likewise relatively expensive, triggering
a high degree of care. MTM argued that
watches in general could be pretty cheap, but not so with the least expensive
watch resulting from a “mtm special ops” search, which was $145 (the first five
results are more expensive than that). “[T]he
relatively high price of the goods in question, combined with the increased
degree of care used in Internet purchases, mean that consumers are presumed to
use a high degree of care in such purchases.”
As for the key question of labeling and context, this too
favored Amazon. MTM offered an expert report concluding that the search results
were “ambiguous, misleading, and confusing.” MTM’s expert conducted no
study. At most, he could say that
consumers might be confused about how the site functions, but not about the
source of the products. “A consumer
could, for instance, puzzle over why the search query ‘mtm special ops produced
a results page listing ten watches but none of them with the MTM brand without
also being confused as to the source of the watches presented on the results
page.” While not ruling out the possibility that a survey could show confusion in a case like this, the court found that
there was no such evidence. The court
also noted that confusion might result if the products resulting from the search
had substantially similar marks, which they didn’t here.
No confusion; no liability.
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