Ninth Circuit Does an About-Face in Military Watch Trademark Dispute - Multi Time Machine, Inc. v., Inc.

by McDermott Will & Emery

The U.S. Court of Appeals for the Ninth Circuit previously found that a jury could potentially find that online retailer created a likelihood of consumer confusion with the format of its product search returns when a customer searches for a branded wristwatch that is not sold through Amazon (Multi Time Machine, Inc. v., Inc.; IP Update, Vol. 18, No. 8). In view of that controversial decision, other online retailers, search engines and technology companies, as well as intellectual property professionals, petitioned the court for a rehearing to reconsider the issue in view of modern approaches to Internet keyword search techniques. On panel rehearing, the 9th Circuit withdrew its opinion and issued a superseding opinion and dissent, holding that no rational trier of fact could find that a reasonably prudent consumer accustomed to shopping online would likely be confused by Amazon’s search results. Multi Time Machine, Inc. v., Inc. Case No. 13-55575 (9th Cir., Oct. 21, 2015) (Silverman, J.) (Bea, J., dissenting).

Judge Silverman, who issued the dissent in the court’s original opinion, authored the rehearing opinion, and explained that the court’s Sleekcraft eight-factor test for likelihood of confusion is “not particularly apt” for this case, since the court is not comparing two similar trademarks, but is instead looking at the potential for confusion that may be caused by the design of Amazon’s search results page. In particular, Multi Time Machine (MTM) alleges that Amazon’s search results for the “MTM Special Ops” watches creates a likelihood of initial interest confusion, which may occur when the use of one party’s trademark causes consumer confusion that creates interest in a competitor’s product.

MTM argued that initial interest confusion may occur because Amazon keeps the “MTM Special Ops” search term displayed at least three times at the top of the page, which may cause consumers to believe that the resulting list of competitors’ watches are types of MTM watches. MTM also argued that in order to eliminate the likelihood of confusion, Amazon should expressly state that it does not offer MTM watches for sale before suggesting the alternative competing brands.

The Court explained that the ultimate test for determining likelihood of confusion is whether a “reasonably prudent consumer” in the marketplace is likely to be confused as to the source of the goods. The rehearing panel concluded that the current dispute could be resolved through an evaluation of the Amazon search results display and an objective evaluation of the relevant consumer. Citing the court’s decision in Network Automation, which dealt with the use of trademarks in the context of keyword advertising, Judge Silverman outlined two key questions: who is the relevant consumer and what would he believe based on what he saw on the screen?

In answering to the first question, the court found that, in view of the expensive price of the military-style wristwatch at issue, as well as the commonplace nature of online commerce, the relevant consumer is a “reasonably prudent customer accustomed to shopping online.” As regard to the second question, the court explained that the labeling and appearance of the products for sale on Amazon’s search return page is the most important factor, since the court’s decisions in Brookfield Communications, Playboy, and Network Automation have established that clear labeling can eliminate the likelihood of initial interest confusion. Examining Amazon’s search returns for “MTM Special Ops,” the court found that Amazon clearly labels each of the competing products for sale by brand name and model number, and that the screen returns are also accompanied by a photograph of the goods.

The court conceded that it is possible that “someone, somewhere might be confused by the search results page,” but reiterated that the unreasonable, imprudent and inexperienced web shopper is not relevant to the analysis. Instead, the court determined that Amazon’s “clear labeling” of its available watches with brand names and photos is unambiguous. Judge Silverman quoting from his previous dissent, opined that the Amazon search results are “not unlike when someone walks into a diner, asks for a Coke, and is told ‘No Coke. Pepsi.’”

Notwithstanding that the likelihood of confusion is often a question of fact, the court confirmed that summary judgment is appropriate in cases where a court can conclude that the alleged consumer confusion is highly unlikely by reviewing the product listing at issue. Accordingly, in light of Amazon’s “clear labeling of the products it carries,” the panel held that no rational trier of fact could find that a reasonably prudent consumer accustomed to shopping online would be confused by the Amazon results and affirmed summary judgment for Amazon.

Judge Bea, who authored the court’s now-withdrawn opinion, dissented, arguing that the panel departed from summary judgment jurisprudence and from the court’s own precedent in Brookfield Communications. Judge Bea believes that the issue of whether the Amazon search results are “clearly labeled,” and thus unlikely to cause initial interest confusion, is one for a jury, not the court.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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