properly labeled keyword advertising isn't confusing, court rules

Sen v. Amazon.com, Inc., No. 16cv1486-JAH (JLB), 2020 WL 4582678 (S.D. Cal. Aug. 10, 2020)

Keyword advertising with proper labeling doesn’t infringe trademarks, dooming this lawsuit even if a prior agreement hadn’t applied. Of note: from the court's description, it sounds like the results page on Amazon includes both the trademark owner's products and alternatives, though the court barely mentions this in passing because the ads themselves are properly labeled as ads coming from Amazon.

Sen owns the trademark Baiden for skin-exfoliation products. Amazon bought the keyword “Baiden” through Google’s AdWords program and on similar programs offered by Bing and Yahoo! In 2012, Sen sued Amazon for trademark infringement and unfair competition based on Amazon’s use of “Baiden” in online pay-per-click campaigns and keyword advertising on various search engines. In 2013, the parties reached a settlement agreement and executed a Settlement Memorandum of Understanding, though they were unable to agree to the terms of a long form agreement; the court there ultimately granted Amazon’s motion to enforce the settlement on the terms set forth in the MOU. The court here determined that the current claims had been released.

But regardless, Sen failed to show likely confusion. Comment: The analysis here makes clear, as is often the case, how keyword ad claims are not really about trademark infringement, but unfair competition—note that there is no analysis at all of the similarity of the marks, because to analyze that would force the court to talk about the parties’ differing use of/use as marks. The district court is of course just doing what the court of appeals said, so this isn’t a criticism.

Network Automation says the most important factors in a keyword case are: “(1) the strength of the mark; (2) the evidence of actual confusion; (3) the type of goods and degree of care likely to be exercised by the purchaser; and (4) the labeling and appearance of the advertisements and the surrounding context on the screen displaying the results page.”

Strength:  the court bungles conceptual strength (conflating suggestive and descriptive), but it doesn’t matter because (a) there’s not much evidence of marketplace strength and (b) it doesn’t matter anyway because this is a labeling case [the court doesn’t say (b) outright but it’s true].

Actual confusion: Sen argued that someone returned a competitor’s product to Sen, evidencing actual confusion. The evidence was a single email message, but it appeared to be one between two Baiden representatives using terms such as “we” and “us.” The discussion is of a returned package containing a product of both plaintiff and a competitor. But Amazon could have mistakenly placed a competitor’s product in plaintiff’s packaging before the return, or a customer could have returned a different type of a competitor’s exfoliating product, which was “markedly different,” in plaintiff’s packaging “for what could have been for a number of reasons other than confusion.” Even assuming the customer was confused, it was speculative to think that Amazon was liable for the customer’s confusion. Since Amazon wasn’t involved in making or packaging the product, all this would show was post-purchase confusion anyway, and that wasn’t relevant confusion. At best, one confused consumer was de minimis

Type of goods/purchaser care: Disputed. Although plaintiff’s products appeared inexpensive, they were above market price on Amazon, e.g. the Baiden Mitten retails on Amazon for $48.00, while a competitor’s Korn Exfoliating Bath Washcloth retails on Amazon for $4.49. Consumers would likely be more careful with Baiden’s more expensive products, and “a reasonably prudent consumer is likely to exercise a high degree of care when purchasing facial and body products. Specifically, to avoid a potential outbreak or allergic reaction.”

Labeling/appearance of the ads: “the parties both agree that the labeling and appearance of Amazon’s keyword advertisements are clear.”

Tortious interference: the alleged conduct (the keyword ad campaign) was not a wrongful act independent of the alleged interference itself. “Interference that is based on lawful competition is not actionable.”