California court: search results on retail site do not infringe trademark rights

The recent decision on summary judgment in Multi Time Machine Inc v Amazon.com has applied existing Ninth Circuit 'likelihood of confusion' analysis to the undisputed facts and held that a retailer’s search results do not infringe trademark rights when the results are not misleadingly identified.

Plaintiff Multi Time Machine Inc (MTM) has sold in commerce in the United States military and tactical watches under the marks MTM MILITARY OPS and MTM SPECIAL OPS since around 1995. MTM’s watches are offered through tightly controlled distribution channels – its own site and limited authorised distributors. MTM did not sell on, or allow for its distributors to sell on, Amazon.com. 

Thus, when Amazon users searched on Amazon’s internal search engine for MTM SPECIAL OPS or MTM MILITARY OPS, the search results showed only watches of other companies and links labelled 'Sponsored Links'. As a result of this listing of third-party watches, MTM sued Amazon.com in November 2011 for trademark infringement. 

In December 2012 Amazon.com moved for summary judgment on the grounds that, as a matter of law, it had not infringed MTM’s trademarks. Amazon argued that it did what retailers nationwide do offline every day when asked for a specific product they do not carry - suggest an alternative.

Without deciding whether Amazon actually “used in commerce” any of MTM’s trademarks, the District Court of the Central District of California found no likelihood of confusion as a matter of law. After review of the evidence presented on relevant likelihood of confusion factors - (1) the strength of the MTM marks, (2) evidence of actual confusion, (3) the care and sophistication of likely purchasers, and (4) labelling and context - the district court found these factors to weigh in Amazon’s favour. 

The court gave MTM’s trademark registrations some effect, but found the marks not “distinctive enough to neutralise entirely the rest of the mark’s descriptive connection to the product”. Thus, as to conceptual strength, the factor weighed in favour of Amazon. As to commercial strength, the court found that MTM presented no evidence of brand recognition or market share. Thus, given the registrations, but no other market share or other supporting evidence, commercial strength was found neutral. That said, the court found the record overall favoured Amazon as to the lack of strength of the marks at issue.

As to actual confusion, the court properly noted that it is not necessary to make a finding of likelihood of confusion. Nonetheless, the court found that MTM provided no admissible evidence of actual confusion, relying only on vague references found not to be persuasive and “too vague to constitute evidence….”. Amazon, however, presented evidence that users searching for one of MTM’s watches were not likely to buy a competitor’s product. The court found this evidence determinative of no actual confusion.

With regards to the third factor, degree of care and type of product, the court found the watches to be expensive and that consumers necessarily exercised greater care given the relatively high price of the goods.   In the same context, the court heavily relied on what consumers saw on the screen. Although MTM presented expert testimony, the court specifically noted that MTM did not present a survey or study on which to base any conclusions as to likelihood of consumer confusion based on what was on the screen. Thus, the court found this factor, too, weighed in Amazon’s favour as a matter of law.

As the court noted, this case does not appear to be a case of "palming off in the traditional sense. It is akin to the consumer asking for a Coca-Cola and receiving a tray with unopened, labelled authentic cans of Pepsi-Cola, RC Cola... This is substitution, but given the context it is not infringing because it is not likely to confuse.”

While this case does not immunise all search results, it does provide guidance as to how non-misleading labelling of search results can prevent actual confusion and a finding of likelihood of confusion.

Rochelle D Alpert, Morgan Lewis & Bockius LLP, San Francisco