Ninth Circuit Sends Amazon back to Court to Face Trademark Infringement Claim

Posted by on Jul 13, 2015

The Court of Appeals for the Ninth Circuit found that internet-based retail giant Amazon.com could be misleading consumers by displaying a watchmaker’s competing products when users search for its watches (read the full opinion here). Multi Time Machine Inc. (“MTM”), a luxury, military style watchmaker, brought a trademark infringement claim asserting Amazon violated its trademarks by displaying a rival brand’s products when customers searched for “MTM” watches.

This case, which came on appeal after Amazon won a motion for summary judgment in the District Court, is unique in that MTM brought its trademark infringement claim based on a likelihood of initial interest confusion. Such confusion occurs where the customer becomes interested in a competitor’s product early on in the shopping process by an act of the competitor or a third party. The Court elaborated stating that even if the consumer later clarifies their initial confusion at the time of the actual sale, the initial interest confusion still constitutes trademark infringement because it “‘impermissibly capitalizes on the goodwill associated with a mark.’”

In this case, MTM outlined the following situation in which it claims Amazon created the initial interest confusion. MTM does not offer its products for resale on Amazon.com, nor does it permit its distributors to resell to Amazon. As such, if a customer were to search “MTM Special Ops” on Amazon’s website, several competing, less expensive products would be listed with no indication that Amazon does not carry any of MTM’s products. MTM argues that by displaying these competing watches and making no mention that MTM is not sold on the website, some customers may believe that the competitors are somehow associated with it.

The Court analogized the potential for confusion with less expensive brands to explain how a would-be MTM customer may be confused by Amazon’s search results. For instance, “many luxury brands with distinct marks are produced by manufactures of lower-priced, better known brands – just as Honda manufactures Acura automobiles but sells Acura automobiles under a distinct mark that it marketed to wealthier purchasers.” And, more on point with this case is Timex, which manufactures watches for luxury fashion houses like Versace and Salvatore Ferragamo.

With that, the Court found that there are genuine issues of material fact that must be resolved, and that a jury could find initial interest confusion diverting MTM customers to its competitors. The case was reversed and remanded to the District Court for further proceedings.