Rolling back the years: ‘initial interest confusion’ returns

A US appeals court has ruled in a trademark dispute concerning search results on Amazon’s website that the rarely used doctrine of ‘initial interest confusion’ may apply to the case. TBO reports.

“Live from New York! It’s Saturday night!” began Judge Barry Silverman’s dissenting opinion, referencing the opening of sketch comedy show “Saturday Night Live” (SNL). He began by re-telling the 1978 sketch starring Bill Murray, Dan Aykroyd and John Belushi working in a diner. When a customer enters and asks for a coke, Belushi replies: “No Coke. Pepsi.”

Silverman was comparing the scene to Amazon’s keyword search system, which allegedly directed users looking for MTM Special Ops military watches to products sold by Multi Time Machine’s (MTM) rivals.

MTM, which chooses not to sell its products through Amazon in order to cultivate an image of being a luxury brand, filed a lawsuit in 2013 at the US District Court for the Central District of California claiming that Amazon is liable for infringing its trademark.

The district court argued that MTM’s mark was “conceptually weak" and searches were not likely to result in initial ‘interest confusion’. But this was overturned in a 2-1 decision issued by the US Court of Appeals for the Ninth Circuit. For the majority, the case turned on the potential for ‘initial interest confusion’—when a consumer is confused at the time of interest in a product or service, even if that initial confusion is corrected by the time of purchase.

Silverman said the decision to reverse the district court’s ruling was incorrect because MTM’s claim is equivalent to a consumer asking Belushi for a product and instead being offered an alternative that the company does stock. Ultimately, Silverman argued, Amazon’s search function does not infringe MTM’s trademark rights.

But how do intellectual property specialists respond to light-hearted judgments like this? Charles Colman, a New York University law professor, is supportive of Silverman’s position but believes the SNL example “undermines” his judgement.

“I have mixed feelings about it. On the one hand, it illustrates how silly the issue is, but it also undermines the seriousness in the eyes of some readers.”

Brett Heavner, partner at law firm Finnegan, Henderson, Farabow, Garrett & Dunner, says he “finds it refreshing” to read such opinions but is not sure the analogy applies to the dissent.

“It is not a great analogy and is actually helpful for the majority. Amazon doesn’t say ‘no Coke. Pepsi’; it just hands over a Pepsi without telling the customer they don’t have Coke”.

Initial interest confusion

It was not just old comedy sketches that were revived in this case. ‘Initial interest confusion’—a seldom used area of US trademark law—was invoked by the majority opinion to rule against Amazon.

Judge Carlos Bea, writing the opinion, said Amazon customers entering ‘MTM Special Ops’ into the keyword search and being confronted with products from rival brands such as Luminox may believe a “relationship exists between Luminox and MTM”.

Amazon demonstrated evidence that users searching for ‘Luminox’ were 21 times more likely to purchase a Luminox watch than those searching for ‘MTM Special Ops’.

Bea argued that a jury could find Amazon liable for infringement on the ground of ‘initial interest confusion’, an aspect of trademark law that Colman says is “obsolete”.

“Initial interest confusion has lost a lot of credibility in the last couple of years, especially on the internet. It is based on speculation and it is a step back of 15 years in case law. Initial interest confusion is not working any more. People are not gullible as the majority suggests.”

Heavner, too, is concerned about the application of ‘initial interest confusion’ in the case.

“It has not popped up in a long time. It arose when people were not that sophisticated on the internet, but now most people do their shopping online as opposed to brick-and-mortar stores.

“It was used to address bad business practice on the internet in its early days, but now the World Intellectual Property Organization’s Uniform Domain Name Dispute Resolution Policy procedures are able to tackle this,” he adds.

Anti-competition

By not wanting to sell through Amazon but also trying to restrict search results for rival brands, Colman says MTM wants to “have its cake and eat it too”.

“MTM doesn’t want to tarnish its luxury image on Amazon. They simultaneously want to boost their brand caché and stifle competition,” he adds.

Colman is worried that the application of trademark law in this instance is being used in an anti-competitive way. He says he would like to see the ninth circuit conduct a sua sponte review, whereby it hears the case en banc without the need for an appeal by either party, to better clarify the use of trademark law in an anti-competitive manner.

“Consumer protection points are underappreciated. Trademark law has expanded to the point where it’s used in anti-competitive ways,” he says.

The majority, however, point to the examples of Rakuten.com and Overstock.com, which provide a statement at the top of a search result when something is not available in stock.

The case is now heading back to the California district court, with both Colman and Heavner baffled by how it has “gone so far”. It will ultimately be the test of a jury to determine whether “reasonably prudent customers accustomed to shopping online would likely be confused as to the source” of the products found after searching for ‘MTM Special Ops’ watches.

Silverman finished his opinion with three words: “No reversal. Affirm”, which is a re-working of Belushi’s statement, to demand a halt to this case. But there are questions that need to be resolved surrounding the role of trademark rights on an ever increasingly sophisticated internet with an ever increasingly sophisticated audience. Whether this is written in just three words or in thousands, directly or in allegorical form, it is now the task of the district court to provide clarity.