On July 6, 2015, the United States Court of Appeals for the Ninth Circuit issued a 2-1 opinion allowing watch manufacturer Multi Time Machine (MTM) to continue pursuing its legal action against Amazon.com. The Court reversed the summary judgment order granted by the Central District Court of California and remanded for a new trial, concluding that the likelihood of confusion created by Amazon.com’s search results presented genuine issues of material fact. This case offers an interesting conflict of opinions on how trademark law applies in e-commerce scenarios.
MTM manufactures high-end, military-style watches, which are not sold on Amazon.com because MTM wants to maintain an image as a high-end exclusive brand. When consumers search for MTM watches, they see watches from other brands instead without being notified that Amazon does not sell MTM watches. Unlike Amazon.com, competitors Buy.com and Overstock.com clearly announce that no search results match the “MTM Special Ops” query before listing competitors' products. The Central District Court of California granted summary judgment to Amazon, holding that an analysis of the eight factors set forth in the 1979 case of AMF Inc. v. Sleekcraft Boats established that there was no likelihood of confusion in Amazon.com’s use of MTM’s trademark in its search engine or display of search results.
Applying the same Sleekcraft factors, the Ninth Circuit reversed and held that under the doctrine of initial interest confusion – which applies "not where a customer is confused about the source of a product at the time of purchase, but earlier in the shopping process" – triable issues of fact existed.
The decision generated a thorough dissent by Judge Silverman, who criticized the majority's overly rigid application of the Sleekcraft factors. He wrote that the Sleekcraft test, which he claims was developed "for analyzing whether two competing brands' marks are sufficiently similar," was "not particularly apt" in the current case. He argued that when considering the design of a webpage, the ultimate test for determining the likelihood of confusion is whether a “reasonably prudent consumer accustomed to shopping online” in the marketplace is likely to be confused as to the origin of the goods.
Silverman began his dissent with a reference to Saturday Night Live's recurring "Cheezborger" sketch, in which John Belushi plays a diner employee who meets customers' requests for Pepsi with a curt "No Pepsi. Coke." The dissent analogized this scenario to the one in MTM. The Volokh Conspiracy pointed out, however, that the analogy is not perfect; unlike Belushi (or Amazon's competitors), Amazon.com never explicitly points out that the requested product isn't for sale.
Writing for his Technology and Marketing Blog, Eric Goldman described the result as "atrocious." In that blog post, which had been largely written before the MTM ruling, Goldman had likened prevailing in lawsuits of a similar nature to "trying to scale a sand cliff." In an article for Forbes published after the summary judgment order issued by the District Court, Goldman analogized Amazon.com’s search results to a retailer’s store shelves, noting that trademark owners seldom challenged these practices in the offline world. He described the earlier summary judgment order as a win for pro-consumer and pro-competition interests. The differing opinions by commentators and judges show that a consensus has not yet been reached and suggests that e-commerce will continue to pose legal challenges in the intellectual property world.
Yaping Zhang is a 2L at Harvard Law School.