Friday, April 05, 2013

Rack and ruin: search queries no aid to Nordstrom

Nordstrom, Inc. v. 7525419 Canada Inc., No. C12-1387 (W.D. Wash. Dec. 27, 2012)

Older case, but of interest because of its interpretation of search engine results.  The district court found that “Beyond the Rack,” which does online short-term sales for members only, was not likely to cause confusion with Nordstrom Rack, despite Nordstrom’s registrations for RACK and THE RACK.  In practice, the district court found, RACK and THE RACK were always presented in close connection with the Nordstrom mark (does that mean the registration should be invalidated?), and BTR’s uses were not likely to cause confusion.

Analyzing search traffic over “various periods” during 18 months, about 117 people arrived at by typing “beyond” and “rack” into a search engine.  About a third also included some permutation of Nordstrom, such as “norstrom,” “nostram,” “nordstron,” “nordstrum,” “northstrom,” or “nordstrm.”  During another, more recent period, Nordstrom was able to identify 47 visits to from similar searches, with 27 also including a variation of Nordstrom.  The court stated: “To the extent that this evidence shows actual confusion, which is debatable, it indicates that any confusion probably benefits Nordstrom; the majority of Nordstrom website ‘hits’ … resulted from the input of only ‘beyond’ and ‘rack,’ the main words in BTR’s mark, and the conclusion follows that some of these consumers were actually looking for BTR, but were instead lured to Nordstrom’s website.”  (The court nonetheless rejected a reverse confusion theory, as there is no chance that BTR’s mark will overwhelm Nordstrom’s.)  If consumers were inquiring about the relationshp between the parties, that was too ambiguous to demonstrate confusion.

As for social media, for a 20-month period, Nordstrom offered only six examples of alleged confusion.  At least one indicated “the opposite of confusion”: comparison, not association.  “Just like Nordstrom’s Rack but online. It is free to sign up and when you do, you get a $10 first time credit!” Another post used metaphoric language: “just ordered a bunch of stuff I probably don’t need from beyond the rack. think online nordstrom rack.” A third “has been so stripped of context that its meaning is unclear: “nordstrom rack even cheaper. Beyond the Rack.”

Three of the examples did indicate confusion: “Just received email from Nordstrom Beyond the Rack - Tom Ford sunglasses on sale”; “NORDSTROM bought BeyondTheRack . . . .”; and “If you didn’t know . . . @BeyondTheRack is owned by @Nordstrom but w/o coupons & returns differ. BTR sells off leftover & reject inventory.”

The court considered these examples de minimis given the extended period of coexistence, and also held that they didn’t manifest confusion affecting a purchasing decision, as opposed to confusion in the abstract.  The last one made very clear that the parties’ policies differed.  The court was more impressed that Nordstrom had received no customer complaints in any form.  “If, over the course of the past three years, consumers had purchased from BTR under the mistaken belief they were dealing with Nordstrom, only to learn they could not take advantage of Nordstrom’s generous return policy, or forming some other reason for dissatisfaction, Nordstrom would have presumably received at least one call, e-mail, or letter, or could have discovered at least one social media post or blog entry to that effect.” Nordstrom’s failure to proffer such evidence belied its assertion of confusion.

The court then proceeded to wildly overestimate consumer privacy consciousness in its discussion of consumer sophistication: “Although the goods at issue might be considered inexpensive, a consumer desiring to purchase items from BTR must become a member and provide personal information, including an e-mail address. Because a relationship is formed between BTR and its members as a prerequisite to any transaction, the Court cannot focus solely on the price of the items being offered and sold.”  Instead, “a reasonably prudent consumer would exercise a higher degree of care in dealing with BTR than he or she would in making cash purchases at Nordstrom Rack’s or its competitors’ brick-and-mortar stores.”

Overall, given the weakness of Nordstrom’s marks, a crowded field of similar uses of “Rack,” and the level of care exercised by “flash sale” customers, the court wasn’t willing to find a likelihood of success in the absence of strong evidence of actual confusion.

Turning to the remaining factors, the court joined the courts holding that eBay abrogated the earlier rule that a presumption of irreparable harm arises from a showing of likely success on the merits of an infringement claim, contra McCarthy. “[F]or purposes of securing either a preliminary or a permanent injunction, irreparable harm may not be presumed in the context of a trademark infringement claim.”  And Nordstrom didn’t offer much evidence of irreparable harm: “no customer complaints, no indication that BTR sells inferior products or offers poor customer service, and no record of lost sales or of misdirection from Internet search engines.”  Plus, though the court didn’t hold Nordstrom’s extensive delay (about 2 years) dispositively against it because Nordstrom was busy fending off a challenge to the validity of the RACK mark, it was relevant that Nordstrom did express willingness to coexist with BTR before negotiations broke down over whether BTR could expand beyond “flash sales,” and that BTR’s business had stayed basically the same as it was during the negotiations.

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