Wednesday, March 20, 2019

court, while uncomfy with some Amazon techniques, declines to grant PI

Comphy Co. v., Inc., NO. C18-1460RSM (W.D. Wash. Mar. 12, 2019)

The Comphy Company markets itself as a luxury company, historically supplying its linens to luxury spas. Ultimately, Plaintiff decided to start retailing its products online through its own website, though it doesn’t market directly to customers and instead relies upon word of mouth and first-hand exposure at hotels, spas, and bed and breakfasts utilizing its products.

Amazon solicited Comphy several times to sell its products on Amazon’s platforms, but Comphy declined based on its luxury strategy. Nonetheless, Amazon bought keyword advertising utilizing keywords including COMPHY from several search engines, resulting in ads for, e.g., “Comfy Sheets Queen”; “Shop Comfy Sheets” “Comphy Co Sheets”; and “Comphy Company Sheets at Amazon.” Likewise, if consumers use Amazon’s own-site search and start typing “comph,” Amazon’s search bar provides possible searches including for “comphy sheets,” “comphy company sheets,” and “comphysheets” along with seven other unrelated possible searches. Because Comphy’s products are not available through Amazon, a search for “comphy sheets” provides products similar to Plaintiff’s products, including bedding offered for sale by “Comfy.” On one product advertised in response to a search for “comphy sheets,” Amazon prominently displayed “Amazon’s Choice for ‘comphy sheets,’” though Amazon represented that it had stopped doing that specifically (but didn’t agree to an injunction requiring that cessation).

Comphy projected a significant increase in its online sales in 2018 but hadn’t met that growth rate. It requested an injunction against Amazon’s allowing third parties’ unauthorized use of COMPHY or highly similar terms such as COMFY to promote bedding, sheets, pillows and related products; selling merchandise under the COMPHY COMPANY, COMPHY SHEETS or COMFY SHEETS storefront in connection with those products; using “Comphy Company Sheets”, “Comphy” (either alone or with other words), or “Comfy” applied to allegedly infringing products (either alone or with other words) to display “infringing and unlabeled third-party sheets”; autosuggesting searches for “Comphy”, “Comphy Sheets”, “Comphy Company” and “Comfy Sheets” when users begin to type the first few letters; using “Comphy” on product search result pages in phrases like “Amazon’s Choice for Comphy Sheets”; and using COMPHY or COMFY SHEETS as keywords with online advertising networks. The breadth of Comphy’s claims and its failure to segregate particularly disturbing uses from the other behavior it challenged doomed its request for injunctive relief.

Comphy’s failure to disaggregate Amazon’s uses made it unlikely to succeed on the merits overall.

First, it wasn’t clear whether or to what extent Comphy had a valid mark in “Comphy” alone. Its registrations were for stylized versions of its name. The presumptive validity of the registration was rebutted for these purposes because, first, the registration was for goods other than those at issue here, specifically: “Linens and bedding for health spas, namely, towels, pads in the nature of bed pads, mattress pads and table pads, sheets, duvets, comforters, pillow cases, pillow shams, and table skirts.” That didn’t cover the consumer bedding at issue here; Amazon wasn’t alleged to infringe on the spa market. Second, the registration didn’t cover the “bare” word mark, which matters because “comphy” is a mere misspelling of the descriptive-for-linens term “comfy.” Comphy itself testified that it consistently used the design/logo.

The registered marks

Comphy didn’t succeed in establishing rights in “comphy” as a text mark. Plaintiff may not “remove a common descriptive word from the public domain by investing his goods with an additional quality, thus gaining the exclusive right to call his wine ‘rose,’ his whisky ‘blended,’ or his bread ‘white.’” “Similarly, Plaintiff does not have the exclusive right to call its goods ‘comfy.’” Comphy didn’t establish commercial strength; it argued that it was the “brand standard” for luxury hotels, spas, and bed and breakfasts and that it has “expended extensive sums annually since 2003 on advertising to promote its Comphy brand and branded products, via trade shows and other advertising and marketing in industry publications targeting bed and breakfasts.” But that all involved use of the stylized “C” mark, “which lends distinctiveness to the mark.” Nor did strength in the luxury spa market indicate strength in the consumer retail market, especially since Comphy doesn’t market to consumers but relies on personal exposure and word of mouth.

Nor was Amazon’s use clearly confusingly similar. Whether the use was confusingly similar depended, in part, on the strength of the mark. Network Automation thought that having an inherently distinctive mark could lead to an inference that a consumer who uses the mark is searching only for that particular source (an assumption that is itself often unwarranted), but that reasoning didn’t apply here. Amazon argued that COMPHY is a common misspelling of “comfy”: within Amazon reviews, COMPHY is used in reference to bedding only 9% of the time and used in reference to Comphy’s goods only slightly more than 1% of the time. The court agreed that use of “comphy” as a search term didn’t necessarily indicate an intent to search for Comphy’s products, even when it was used in reference to bedding. Amazon’s survey also determined that 13% of consumers regarded COMPHY as referring to a particular source for bedding, but that more than 12% of those consumers also regarded “comfort”—a non-existent control—as also referring to a particular source for bedding. [Clever control, since there are “comfort + other word” marks out there.]

Proximity of goods and similarity of marks did weigh in Comphy’s favor. In a footnote, the court indicated that its analysis might differ “profoundly” if Comphy had focused only on Amazon’s search engine ads for “Comphy Co Sheets” at Amazon, which makes sense to me, or on Amazon’s use of the search term “comphy sheets” within its own website to offer consumers “comfy” brand sheets or other sheets marketed as comfy or comfortable, which as stated doesn’t—if the sheets are plausibly comfy, then descriptive use should be just fine. (Though admittedly that isn’t easy to show in the Ninth Circuit, given its defiance of the Supreme Court’s view in KP Permanent.) Anyway, Comphy “elected to lump the contexts and uses together, and the Court declines the invitation to scour the limited record to craft a legally defensible injunction.” In particular, only uses of “comphy” by an Amazon customer who perceived that word as a mark but who confusedly bought “comfy” sheets instead would involve confusion; other scenarios involved no confusion at all, or at most diversion. “And, the Court can only determine whether a customer knows of Plaintiff’s sheets based upon the strength of the mark.”

There was evidence of actual confusion, including Amazon reviews referring to Comphy and a declaration from an Amazon consumer who intended to purchase Comphy sheets, bought “Comfy Sheets” on Amazon, realized his mistake when the sheets arrived, and returned the Comfy Sheets. The court found the evidence of actual confusion “often compelling,” but this was only a small percentage, and Amazon pointed out that people who pick descriptive terms invite a certain amount of confusion. “The Court agrees that some actual confusion may exist even if a reasonably prudent consumer would not be confused.”

Marketing channels: favored Comphy. Degree of care: Comphy’s self-positioning as a luxury company meant its consumers weren’t “wholly unsophisticated”; neutral.

Amazon’s intent: Amazon’s prior solicitation of Comphy’s business didn’t indicate a bad intent; there was no evidence that the prior business inquiries were related to Amazon’s current actions. Intent was “essentially neutral.”

Balancing the factors, there wasn’t a likelihood of success on the merits.

Separately, Comphy didn’t show irreparable harm. Sales growth short of Comphy’s ambitions wasn’t irreparable harm, nor did Comphy adequately tie its lower-than-desired rate of increase to Amazon’s actions. Nor would money damages be inadequate to remedy this “mainly financial” harm.

Lost control over reputation: “misuse of a trademark no longer results in a presumption of irreparable harm.” Comphy showed evidence of consumer confusion and dissatisfaction, but dissatisfaction with Amazon’s offerings in the absence of confusion wasn’t relevant. Only if dissatisfaction were attributed to Comphy would there be harm to its brand, and there wasn’t evidence of that. Nor did Comphy explain why final remedies wouldn’t be adequate. “Indeed, this case appears quite distinct from prior cases where interaction with confused consumers cannot be remedied because those consumers are unknown to the parties. Here, there seems to be a much higher chance that, if liable, Defendant could contact almost every purchaser of the allegedly inferior products and seek to repair any damage that may have been done to Plaintiff’s brand.”

In conclusion, the court suggested that Amazon was very close to (and perhaps even over) the legal line in some of its acts (“Comphy Co.” in keyword-triggered ad text!), but still declined to grant relief on this record.

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