Tuesday, January 31, 2017

Amazon escapes liability for ads & emails touting vendors' infringing products

Lasoff v. Amazon.com Inc, 2017 WL 372948, No. C16-151 (W.D. Wash. Jan. 26, 2017)

Lasoff owns Ingrass, which sells artificial turf and related products.  He sold through Amazon, but in 2013 his sales allegedly began to plummet, both on his own website and on Amazon.  He alleged that third-party sellers were offering cheaper, counterfeit “Ingrass” products for sale on Amazon.com. When potential online consumers would click on links advertising “Ingrass” products in Defendant’s promotional emails or in “sponsored link” advertisements on third-party search engines, they were allegedly directed “to competing listings which falsely advertised products as ‘Ingrass’ products at a substantially discounted price.”

Amazon’s emails and its “sponsored link” ads on third-party search engines are created automatically based on information retained from that customer’s browsing sessions on Amazon; the content of the ads come from vendors, who represent to Amazon that they have the right to license Amazon to display that content. Likewise, Amazon automatically generates “keywords” (words or phrases related to products or product names) based on consumer searches on its websites, then an algorithm determines what keywords it chooses.

Lasoff alleged that Amazon misappropriated the Ingrass trademark and domain name by buying the keywords ‘Ingrass’ and/or ‘Ingrass.com’ on search engines.

The CDA applied to his state-law claims, including state-law trademark infringement.  Lasoff argued that the emails and online ads weren’t provided by another information content provider, because that was done by Amazon’s creation of the algorithm that sends the emails/purchases of the keywords.  The court disagreed; based on existing precedent, to allow this claim “would place liability on [Defendant] for simply compiling false and/or misleading content created by the individual defendants and other coconspirators.”  Amazon didn’t develop the underlying information that Lasoff alleged harmed him.

The court found that “Ingrass” was suggestive (Lasoff testified that it was short for “It’s Not Grass”) because it required imagination to go from the product name to the product.   “While the Court cannot imagine an average consumer instantly understanding what Plaintiff’s product is based on the name, it is not difficult to imagine that same consumer saying something like ‘Oh, I get it’ upon seeing the product to which the mark is attached.”  [Sigh.  I am increasingly convinced that we need to dump suggestiveness, especially if it’s going to be interpreted this way—consider that “Gold Medal” and “Best” are suggestive based on this test.]

Amazon argued that it couldn’t be held directly liable for trademark infringement. The court found the swap meet cases inapposite because, among other things, “there is no evidence that the swap meet operators generated promotional messages advertising the counterfeit goods.” Network Automation found use in commerce, and the court found Amazon’s purported distinction between “the ‘deliberate’ selection of Advanced’s trademark by Network and the Amazon algorithm which automatically selects keywords” to be meaningless for purposes of deciding whether Amazon was “using” the mark.  Although Network Automation and Rescuecom, cited with approval by the Ninth Circuit, precluded summary judgment on the use in commerce issue, the court found “critical factual differences” here.  Unlike Network Automation, Amazon wasn’t a competitor of the plaintiff; unlike Google, Amazon was buying, not selling, the use of Lasoff’s mark.  Calling this a direct infringement situation was trying to fit a square peg into a round hole—when we have a square hole that will do just fine.

Even assuming that Amazon’s keyword buy was a use in commerce, Tiffany v. eBay showed that Amazon was entitled to summary judgment on direct liability.  Tiffany held that “a defendant may lawfully use a plaintiff’s trademark where doing so is necessary to describe the plaintiff’s product and does not imply a false affiliation or endorsement by the plaintiff of the defendant.” eBay, and likewise Amazon, need not be the guarantor of the genuineness of all of the products offered on its website, given that to do so would “unduly inhibit” its right to lawfully offer genuine goods.

The Lanham Act false advertising claim failed because of the CDA.  “[L]iability lies with the vendors who created the misleading content, not the service providers who transmit that content.”

The court also dismissed a Sherman Act monopoly claim because, among other things, search engine ads are interchangeable with the larger market of all internet ads, so there was no monopsonized relevant market, and there were multiple competing purchasers. 

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