Ninth Circuit hands victory to eBay over use of Smart Search

In Applied Information Sciences Corp v eBay Inc (05-56123, 05-56549, December 28 2007), the US Court of Appeals for the Ninth Circuit has affirmed the district court's grant of summary judgment in favour of eBay Inc, finding that although the plaintiff had discharged its burden of establishing that it had a valid, protectable interest in its SMARTSEARCH mark, it had failed to produce any admissible evidence tending to show a likelihood of confusion. The decision highlights the distinction between the protectable interest flowing from a federal trademark registration and the factors considered in determining whether that protectable interest has been infringed.

Applied Information Services (AIS) owns a federal registration for SMARTSEARCH in respect of the following goods:

"computer software and instruction manuals sold together which allow the user to retrieve information from online services via phone line in the fields of agriculture and nutrition, books, chemistry, computers and electronics, education, law medicine and biosciences, news, science and technology, social sciences and humanities."

AIS started marketing these products in 1995. In 2000 eBay, the online auction company, started using the name Smart Search as a link on its homepage. When the link was clicked, the user was taken to a separate page with advanced search options. After eBay refused to stop using the term or take a licence from AIS, AIS brought an action in 2004.

Both parties filed motions for summary judgment with the district court, which granted eBay's motion. eBay had urged the district court to hold that AIS was required to prove that eBay had used the SMARTSEARCH mark on the same goods specified in the AIS registration in order to make the threshold showing of a valid, protectable interest. The lower court accepted this motion and found that AIS's registration was limited to the goods specified in the registration. As the description of the goods did not include eBay's use of Smart Search as a hyperlink, AIS's infringement action failed. This strained interpretation of the statutory impact of a federal registration prompted an appeal from AIS.

In support of its ruling, the district court had relied on the decision in Levi Strauss & Co v Blue Bell Inc (778 F2d 1352), in which the Ninth Circuit held that:

"Strauss cannot simply rely on the federal registration of certain tabs, most notably of those on pants, to establish a protected interest in a pocket tab on garments generally, because registration constitutes prima facie evidence of a protected interest with respect to the goods specified in the registration only."

The registration at issue covered a specific tab on specific goods (ie, trousers). In the Smart Search Case, the Court of Appeals found implicitly that the district court's interpretation of Levi Strauss was mistaken, explaining that the problem was that Strauss was attempting to extend its own use of its registered mark to goods not specified in its federal registration. Its federal registered trademark was limited to trouser pocket tabs, but its trademark infringement claim was based on its alleged trademark rights in clothing pocket tabs generally.

This was not the situation in the present case. AIS asserted rights in the SMARTSEARCH mark with respect to the very same software and manuals covered by its registration. AIS also argued that eBay's use of the same term in connection with eBay's services was likely to cause confusion. The appellate court held that once AIS introduced its federal registration in evidence, it had "discharged its burden of establishing the validity of the SMARTSEARCH mark in connection with those goods listed in the registration". The court observed that it was unnecessary to determine whether the district court misinterpreted Levi Strauss because in its opposition to eBay's summary judgment motion, AIS had failed to produce any admissible evidence showing any tendency toward likelihood of confusion under the Sleekcraft factors.

In short, the Ninth Circuit found that on the "basis of its federal registration alone, [AIS] established its rights in the SMARTSEARCH mark". The federal registration constituted prima facie evidence that AIS held a "valid, protectable interest in the use of the SMARTSEARCH mark in connection with the goods listed in the registration". However, as AIS had failed to prove a likelihood of confusion, the Ninth Circuit affirmed the lower court's decision to grant eBay's motion for summary judgment.

Russell Falconer, Baker Botts LLP, New York