Yahoo! sued for trademark infringement in email advertisements

On July 6 2009 Mary Kay Inc filed a trademark infringement action in the US District Court for the Northern District of Texas against Yahoo! Inc based on the Yahoo! Shortcuts feature.

 

Mary Kay is a manufacturer and wholesale distributor of cosmetic, skin care and related products. The company was founded in 1963 and is now one of the largest direct sellers of skin care products and cosmetics in the United States, with almost 1.8 million independent consultants worldwide. Global annual sales are over $2.4 billion. Mary Kay sells its products directly to independent beauty consultants who, in turn, sell to their customers. These are the only authorized sales of MARY KAY-branded goods. Each independent beauty consultant enters into an agreement with Mary Kay that governs use of Mary Kay's name and trademarks. Under the terms of the agreement, any advertising that uses Mary Kay's marks or name must be approved in writing by Mary Kay.

 

All authorized sales of Mary Kay products are backed by a satisfaction guarantee. The guarantee does not extend to products purchased from other sources. Mary Kay controls its product distribution through the independent beauty consultant agreement, which prohibits sales in public, retail or service establishments. This includes internet sales. 

 

Independent beauty consultants promote MARY KAY-branded products through various ways, including face-to-face meetings, telephone calls and emails. According to Mary Kay, all authorized Mary Kay product sales involve personal contact or interaction with an independent beauty consultant.

 

As one of the world’s largest internet service providers, Yahoo! offers a variety of services including email. Yahoo! provides over 250 million users with email services. One of Yahoo!’s new email services is a feature called Yahoo! Shortcuts. Through this feature, hyperlinks and associated pop-up advertisements appear in email messages without the sender’s knowledge. In the case of Mary Kay, an independent beauty consultant sends an email to a customer - within the email may be a hyperlink or pop-up advertisement that includes Mary Kay's trademarks and links to unauthorized resellers of Mary Kay products or to sellers of competing cosmetic products.

 

In its complaint, Mary Kay alleges that Yahoo!’s Shortcuts infringed, diluted, competed unfairly with and misappropriated Mary Kay’s well-known MARY KAY marks. According to the complaint, recipients of emails sent by independent beauty consultants were likely to be confused by the use of these hyperlinks and pop-up advertisements, and believe that they were approved/sponsored by Mary Kay or the independent beauty consultant. Moreover, consumers who click on the hyperlinks or pop-up advertisements and visit the third-party sites were likely to stay at those sites and make a purchase. If the consumer is later unhappy with Mary Kay products purchased at such sites, he/she may contact Mary Kay under the satisfaction guarantee programme. Since Mary Kay does not guarantee the sale of unauthorized products, consumers who are unable to return or exchange an unauthorized item will become dissatisfied and are likely to avoid purchasing Mary Kay products in the future, all to the detriment of Mary Kay.