Welcome back to Legal Geek. This week, we take a look at a recent Ninth Circuit Court of Appeals Decision that may change the way online retailers do business, all in the name of a stronger trademark law.
https://archive.org/details/LegalGeekEp49
The case was Multi Time Machine vs Amazon, and the decision was handed down earlier this month. Multi Time Machine makes high end military style watches under certain brand names and trademarks like MTM Special Ops. Because MTM closely controls its own distribution, these watches are not available at places like Amazon.
However, when consumers type in MTM Special Ops Watch or similar searches into Amazon's search system, the internal search engine returns a list of other multi-function watches from MTM's competitors, but no statement is made that Amazon does not carry MTM watches. In other words, Amazon tries to be helpful for consumers looking for a type of goods. The only difference from other online retailers is that Amazon does not explicitly respond first with a statement that MTM watches are not available at Amazon.
When MTM sued Amazon for trademark infringement, citing consumer confusion in this process, the Federal District Court ruled in favor of Amazon. But the appeals court reversed this decision, with a 2-1 majority revitalizing a doctrine called initial interest confusion. This is a trademark doctrine that was thought dead in most jurisdictions, but the Ninth Circuit defined it as follows: "initial interest confusion occurs not at the time of purchase, but earlier in the shopping process if the customer confusion creates initial interest in a competitor's product."
If that definition sounds ridiculous, it's because it is. That would cover many other clearly legitimate and long-accepted retailing practices like selling house branded products with similar labeling adjacent to name brand products. The dissenting judge put it best when he responded that "the search results page makes clear to anyone who can read English that Amazon only carries the brands of watches that are clearly and explicitly listed on the web page, as the search results page is unambiguous."
So apparently the fluffy doctrine of initial interest consumer confusion still lives, which means this zombie doctrine could come back to bite unsuspecting litigants. What's most disappointing is that this case is better formulated as a "bait and switch" false advertising claim if anything, but the Ninth Circuit validated the trademark claim by making the law bend to the facts.
On the bright side, the opinion is limited to the Ninth Circuit along the western coast of the U.S. and is also likely limited on its face to internal search functionality of online retailers like Amazon, which makes it easy to design around. Plus, this was just a panel decision sending the case back to a jury, which could still determine that there is no actual consumer confusion here. Worst case scenario, this doctrine could still be gutted by a full en banc panel of the entire Ninth Circuit or even taken to the Supreme Court, if necessary.
Bottom Line: Trademark law serves the interests of business owners and consumers, but it has reasonable limits. When it doesn't, as in this case, it harms businesses trying to help consumers as well as consumers in the long run.
----------------------------------
Thanks for reading. Please provide feedback and legal-themed questions as segment suggestions to me on Twitter @BuckeyeFitzy
