9th Circuit Cannot Make Up Its Mind

In a drama that certainly has not seen its curtain drop, the 9th Circuit has changed its mind twice on the same issue in the same case during a 19 month span.

This story began in 2011 when Multi Time Machine, Inc. ("MTM"), a maker of military-style watches, sued Amazon.com ("Amazon") for trademark infringement and unfair competition. MTM claimed that Amazon had "passed off" competitor's products when customers searched for MTM products.  Essentially, Amazon does not carry MTM watches, but when a customer searched for that brand, Amazon would show results for watches sold by MTM's competitors. Exacerbating the situation, MTM claimed, was that Amazon did not clearly state that it did not carry the watchmaker's products—which is something that Amazon's competitors, such as Buy.com and Overstock.com, do. Instead of allowing a jury to decide this case, the 9th Circuit has spent the last two years going back-and-forth deciding whether this case should even go before a jury.

Ruling #1: In February, 2013, U.S. District Judge Pregerson held that there was no consumer confusion, and granted summary judgment in favor of Amazon.

Ruling #2: In July, 2015, the appellate panel, in a 2-1 decision, issued an opinion that summary judgment had been granted in error. Judge Bea and Judge Quist, forming a majority, found that a jury could have reasonably inferred that consumers were being confused by Amazon's search results, even if the search results were clearly labeled with the competitor's information—therefore, this case should have gone to trial.

Dissent: By contrast, Judge Silverman, in a strongly worded dissent, claimed that the majority's position was outrageous: "In light of Amazon's clear labeling of the products it carries, by brand name and model, accompanied by a photograph of the item, no rational trier of fact could possibly find that a reasonably prudent consumer accustomed to online shopping would likely be confused by the Amazon search results."

Ruling #3: It took some time for Judge Silverman's logic to win him over, but three-months later, in October, 2015, Judge Quist switched his position. In an unusual move, the three-judge panel overturned itself, finding that consumer confusion was not likely because the Amazon results page "makes clear to anyone who can read English that Amazon carries only the brands that are clearly and explicitly listed on the Web page."

Dissent: In a role-reversal, Judge Bea penned the dissent saying: "Today the panel holds that when it comes to Internet commerce, judges, not jurors, decide what labeling may confuse shoppers."

What may be the most interesting thing about this case—besides the panel overturning itself in a matter of months—is that the October, 2015 order was specifically not decided based on the traditional likelihood of confusion factors (in the 9th Circuit, these are the Sleekcraft factors). The court explained that "the Sleekcraft test was developed for a different problem—i.e., for analyzing whether two competing brands' marks are sufficiently similar to cause consumer confusion…Here, the confusion is not caused by the design of the competitor's mark, but by the design of the web page that is displaying the competing mark and offering the competing products for sale." Therefore, the panel concluded that the analysis should focus on an evaluation of the web page at issue and whether the relevant "reasonably prudent consumer" was likely to be confused.

This case has involved more drama than either party likely anticipated, but now that we are in the middle of it, we will be watching closely to see how it resolves itself. This case presents not only an interesting new legal precedent, but an ultimate ruling in favor of MTM would surely result in a rush of lawsuits against e-commerce websites which employ a similar search results strategy.