comparison charts could infringe, but properly labeled internal search didn't

Penn Engineering & Manufacturing Corp. v. Peninsula Components, Inc., 2023 WL 9051998, No. 19-513 (E.D. Pa. Dec. 28, 2023)

Penn Engineering designs and manufactures various types of fasteners sold under various trademarks, and alleged that Peninsula sold identical fasteners while infringing on Penn Engineering’s marks.

The court grants partial summary judgment on trademark claims but reserves some, and a false advertising claim, for trial. There’s a factual dispute over whether Peninsula’s use of Penn Engineering’s trademarks in its “PEM Family of Marks” (based on the name of its holding company) in Google search advertisements stemming from three ad vendors constituted an intent to confuse. But claims based on Peninsula’s website search tool were dismissed. “Like a person searching for Domino’s Pizza on Pizza Hut’s website could not be confused that they are purchasing Domino’s Pizza when being presented with Pizza Hut options, a customer searching for Penn Engineering products on Peninsula’s website that presents Peninsula products could not be confused into thinking he or she is buying Penn Engineering products.” However, there was a factual dispute over the extent to which Peninsula’s use of sales drawings constituted advertising.

In a previous round of summary judgment, the Court rejected claims based on “Keyword Conquesting” (which seems to be just keyword advertising) and “Unlawful Gray Market sale of authentic Penn Engineering fasteners.”

Search engine ads: Penn Engineering argued that Peninsula has “continue[d] to intentionally use PEM’s famous mark PEM in [Peninsula’s] online display ads and that such use was not a ‘vendor mistake’ as [Peninsula] has alleged.” An August 2023 for “pem standoff” produced a sponsored search result for “Pem Standoff – Clinch Standoffs” underneath a URL directing the user to Peninsula’s website.

 

screenshot showing sponsored "Pem Standoff - Clinch Standoffs" ad

But there was still a genuine factual dispute about whether this was intentionally confusing.

Things were easier for Peninsula’s internal website search. A user couldn’t place an order from Peninsula’s website without directly interacting with Peninsula sales staff. The court first reasoned that a customer’s use of Penn Engineering’s marks to search constituted “use” of those marks because of Peninsula’s internal metatags, which provided Peninsula with an opportunity to reach consumers apparently the court means that the site redirects searches for Penn Engineering marks to coordinate Peninsula products. (Abitron could seem to put this in question). Nonetheless, the court still granted summary judgment to Peninsula on this activity. Although “initial interest confusion is probative of a Lanham Act violation” as a type of bait and switch, keyword-generated ads that don’t use Penn Engineering’s marks in text were not actionable because the results were “clearly labeled as belonging to Peninsula and there is no likelihood of confusion where the use of trademarks as trigger words is hidden from the consumer.” The same reasoning applied here. (For some reason, the court doesn’t cite the Amazon/MTM case.) Initial interest confusion depends on wrongful diversion, but there could be no wrongful diversion when consumers were already on Peninsula’s website. Penn Engineering argued that the consumers might have come from infringing search ads, but “there cannot be two points of initial interest for a customer.” Penn Engineering, much like MTM, argued that the search results provided “no indication or disclaimer that these products are not PEM products,” such that Peninsula’s website might believe that the site is “under the guise of some affiliation or sponsorship” with Penn Engineering or believe that Peninsula is a “dealer, authorized distributor, or otherwise affiliated with PEM” and thus confuse the customer. But there was no evidence supporting this theory, and summary judgment was thus appropriate. 

screenshot: search results for CLS-0420-2, showing results with different names

As a matter of law, no reasonable jury could find the display confusing (apparently Penn Engineering claims the product number as a trademark), since the results were clearly labeled, as in a Google search. (I always note when courts are blessing Google’s business model as a reference point!)

 

super blurry Google screenshot with targeted ads that don't use plaintiff's marks

The same would be true if one got results on Samsung’s website by searching “Apple iPhone,” or on Toyota’s website by searching “Honda Civic.” “A customer could not be confused that a part name, wholly different from the part name entered in the website search tool, is in fact that same part name, and Penn Engineering has presented no evidence that any consumer has even searched for Penn Engineering products on Peninsula’s website, let alone a customer who believes that he or she is purchasing Penn Engineering products when presented with Peninsula products.” As a matter of policy, businesses shouldn’t be forced to use disclaimers in this situation; the court noted the prospect that, under Penn Engineering’s argument, businesses would have to disclaim affiliation with every possible competitor in every search result.

Website search was distinguishable from Peninsula’s cross-reference charts that listed Penn Engineering marks alongside Peninsula substitutes on Peninsula’s website, “because whether the charts led to consumer confusion depended on the factual question of whether consumers might infer a business relationship between Peninsula and Penn Engineering by seeing Penn Engineering’s marks on Peninsula’s website.” There was a factual dispute over whether the charts that listed the Penn Engineering product side-by-side with the Peninsula product demonstrated “a manufacturer-distributor relationship, or that Peninsula is a division of Penn[ ]Engineering or a division of a common parent.” (That … isn’t really how manufacturer-distributor/divisional relationships are presented to consumers, as far as I know; it seems like this theory should have required actual evidence too.) But for the website search, none of Penn Engineering’s information or marks were side-by-side with the corresponding Peninsula product.

Indeed, the court was open to the general theory: “had Penn Engineering presented evidence of customers consistently searching for its products on Peninsula’s websites and then believing that the search results yielded Penn Engineering products, that would likely be enough for such claims to survive summary judgment.” (Note here that this is describing pure source confusion, not the weird, unprovable, immaterial affiliation confusion theories that plaintiffs like to assert.) Likewise, false claims to offer a competitor’s products/labeling the seller’s product as the competitor’s would obviously be actionable.

Penn Engineering also made false advertising claims based on Peninsula’s use of sales drawings. Here the issue was “commercial advertising or promotion”; Peninsula argued that it would provide a single drawing of a single product to a single customer only when the customer requested that sales drawing. In response,

Penn Engineering argues that Peninsula has created over 2,000 sales drawings that Peninsula has distributed to hundreds of customers over a period of time spanning more than 25 years. For example, Penn Engineering relies on a letter from Peninsula in which Peninsula admitted that it created 199 new sales from the sales drawings and provided one of those drawings approximately 60 times to 30 different customers over approximately two years. Peninsula’s Chief Operating Officer also testified at his deposition that the sales drawings are “generally available” to Peninsula’s customers. At oral argument, Peninsula did not dispute these facts.

Even if the sales drawings were not published but sent only on request, person to person, they could still constitute commercial advertising or promotion if they were sufficiently disseminated to the relevant purchasing public, which was a question of fact. Approximately 2.5% of Peninsula’s customers over that two-year span received such sales drawings, which could show that they were “part of an organized campaign to penetrate the relevant market.”