Seattle Trademark Lawyer

Last summer, The Comphy Co. sued Amazon.com, Inc., for using its trademarks on Amazon’s store platform even though company doesn’t do business with Amazon.

Comphy alleged that Amazon’s search engine makes it look like the luxury bedding maker offers products through Amazon and then diverts potential customers to bedding providers that do.

Comphy filed a motion for preliminary injunction in the U.S. District Court for the Western District of Washington seeking to put a stop to that practice. Among other things, it sought to enjoin Amazon from “[p]romoting, supporting or allowing third parties’ unauthorized use of the COMPHY trademark (or highly similar marks such as COMFY) to promote bedding, sheets, pillows and related products not made by or under the authority of The Comphy Co.”; and “[a]utomatically suggesting searches for “Comphy”, “Comphy Sheets”, “Comphy Company” and “Comfy Sheets” when users begin to type a first few letters of those marks.”

On March 12, the court denied Comphy’s motion. In doing so, it wrote: “This is not an easy decision. Many of Defendant’s actions toe exceedingly narrow legal and equitable lines. But, on the record presented by Plaintiff, there are simply too many pitfalls for the Court to map an equitable course.”

At the outset, the court noted that Amazon had stopped doing the things that Comphy had complained about. But since Amazon did not stipulate to a preliminary injunction, the court considered the motion on the merits.

Comphy persuaded the court with its evidence of actual consumer confusion:

“There is no question that Plaintiff presents evidence of actual confusion that is often compelling, including written reviews by verified purchasers,” the court wrote. “Defendant has little retort for the fact other than to point out that the evidence is only that a small percentage of purchasers indicate they were confused.”

However, based on the limited record presented, the court found it was not clear that Comphy had a protectable trademark in its name; that Amazon had been using a confusingly similar mark; and that irreparable harm was likely. Therefore, it concluded that preliminary relief was not appropriate.

The case cite is The Comphy Company v. Amazon.com, Inc., No. 18-1460 (W.D. Wash. March 12, 2019) (Martinez, J.).

I’m not surprised, but I’m a little disappointed.

After the district court issued its flawed decision roundly supporting Google, and the Fourth Circuit sent the case back to the district court, Rosetta Stone last week settled its keyword advertising lawsuit against Google.

The first time around, the Eastern District of Virginia found Google was protected from liability by a strange application of the functionality doctrine, and seemed to ignore that the case was decided on summary judgment. In other words, the court improperly found no trademark infringement and no dilution even though Rosetta Stone had offered evidence to the contrary. Such disputed issues of fact should be decided at trial, not on summary judgment.

The Fourth Circuit’s decision helped iron out the evolving law on keyword advertising law. It told the district court where it had erred and directed it to reassess the evidence in light of the standards the appellate court clarified.

That’s all good. Still, I had been looking forward to seeing what the district court was going to do with the case in light of that direction. My predication was the result would be the same — Google would win — but this time, for the right reasons. Now we’ll never know!

Previous post on the case here.

Big keyword advertising decision today: the Fourth Circuit decided Rosetta Stone v. Google.

The court did the right thing. It vacated the district court’s exceedingly Google-friendly decision incorporating sloppy analysis and incorrect application of trademark law, and remanded for the Eastern District of Virginia to reconsider the case in light of proper standards.

In the end, I think the result will be the same — on re-examination, Google won’t be directly or indirectly liable for counterfeiters’ purchase of Rosetta Stone’s trademark as a search engine keyword. But this time, the analysis won’t be tortured and misleading. 

For example, the district court found Google wasn’t liable for selling Rosetta Stone’s trademark as a keyword because its use of the mark was functional. That finding stood the functionality doctrine on its ear. The proper place for functionality analysis is to examine the plaintiff’s trademark (or, more commonly, trade dress) for whether it serves a useful purpose. (A trademark isn’t protectable as a trademark if it serves a useful purpose other than identifying the product’s source.) The district court instead examined the defendant’s use of the trademark, which was strange, wrong, and not helpful.

The Fourth Circuit left no room for the district court to get it wrong on remand.

“The functionality doctrine simply does not apply in these circumstances. The functionality analysis below was focused on whether Rosetta Stone’s mark made Google’s more product more useful, neglecting to consider whether the mark was functional as Rosetta Stone used it. Rosetta Stone uses its registered mark as a classic source identifier in connection with its language learning products. Clearly, there is nothing functional about Rosetta Stone’s use of its own mark; use of the words ‘Rosetta Stone’ is not essential for the functioning of its language-learning products, which would operate no differently if Rosetta Stone had branded its product ‘SPHINX’ instead of ROSETTA STONE. Once it is determined that the product feature — the word mark ROSETTA STONE in this case — is not functional, then the functionality doctrine has no application, and it is irrelevant whether Google’s computer program functions better by use of Rosetta Stone’s nonfunctional mark.

“As the case progresses on remand, Google may well be able to establish that its use of Rosetta Stone’s marks in its AdWords program is not an infringing use of such marks; however, Google will not be able to do so based on the functionality doctrine. The doctrine does not apply here, and we reject it as a possible affirmative defense for Google.”

The Fourth Circuit similarly vacated the district court’s dismissal of Rosetta Stone’s claims for direct trademark infringement, contributory trademark infringement, and dilution. It affirmed the district court’s dismissal of Rosetta Stone’s claims for vicarious trademark infringement and unjust enrichment.

The decision is what I had expected, and what I had hoped for. It requires district courts to apply trademark principles with rigor and gives the non-moving party on summary judgment the benefit of the reasonable inferences that can be drawn from the evidence presented, in accordance with established summary judgment principles.

The case cite is Rosetta Stone Ltd. v .Google, Inc., No. 10-2007 (4th Cir. April 9, 2012).

Yesterday’s post was about false advertising, which got me thinking…. What are things a competitor can’t do in competing with you to make a sale?

Here’s a quick rundown:

• It can’t create a likelihood of confusion with you, if you came first. This is the essence of trademark infringement. A later-adopter can’t come into your market with a name or brand that is likely, i.e., probable, to confuse consumers into thinking that its goods or services come from you, are approved by you, or are affiliated with you. It doesn’t matter if your trademark is registered, since trademark rights automatically arise from use. It doesn’t even matter if your competitor was innocent in creating the likelihood of confusion. If its brand, company name, product name, or other marketing tool tends to mislead customers into thinking your competitor’s goods or services come from you, you may be able to put a stop to it. Caveats exist, but this is where the inquiry starts.
• It can’t misrepresent its product or your product. The right to free speech isn’t unlimited. Just like you can’t yell “fire” in a crowded theater, your competitor can’t lie about the qualities of its product or make a false comparison to your products. That means Honda can say Toyota’s cars are wimpy (in its humble opinion), but it can’t say its cars get twice the gas mileage Toyotas get when that’s not true (since it’s a statement of fact that’s provably false). 
• It can’t use your trademark in its domain name. This is cybersquatting. It means no one — regardless of whether they’re a competitor — can register your trademark (or a confusingly similar variation) as part of its domain name in the hopes of either ransoming the domain name to you or profiting from Web traffic that was meant for your site. The Lanham Act provides for statutory damages that begin at $1,000 and go up to $100,000 per infringing domain name, as well as an award of attorney’s fees. Again, there are caveats, but the Anticybersquatting Consumer Protection Act gives trademark owners a big stick to use against bad actors that hope to take wrongful advantage of your brand in their domain names.
• It can’t use your brand as a search engine keyword. Maybe. This is still up in the air. But the Central District of California last year slapped one law firm from buying its competitor’s trademark as a search engine keyword, finding its doing so constituted willful trademark infringement. The court doubled the trademark owner’s lost profits to $292k and awarded it attorney’s fees. See Binder v. Disability Group, Inc., 772 F. Supp. 2d 1172 (C.D. Cal. 2011). It’s still a gray area, but Binder might get traction. It’s certainly gotten some courts’ attention.
• Other things your competitor can’t do. If your brand is a household name, no one (competitor or not) can use it in a way that would tend to lessen the impact your brand has on consumers. That’s trademark dilution. If you manufacture goods, no one can put your trademark on goods that aren’t made by you. That’s counterfeiting. A competitor can’t say its goods — most commonly agricultural products — come from your special part of the world if they don’t. (This means a shellfish company can’t say its oysters come from pristine Penn Cove when they were grown in less favorable waters.) That’s a false designation of origin. 

This list isn’t exhaustive, and there are a lot of gray areas. But hopefully this will help you put a label on your competitor’s bad acts when you know in your gut what they’re doing isn’t fair.

Next time: You mean they can get away with that? Things competitors can say about your products and you in the course of honest competition.

Not much time to blog, as I’m preparing for my keyword panel discussion.

That said, the Ninth Circuit released a pretty juicy keyword decision Tuesday: Network Automation, Inc. v. Advanced Systems Concepts, Inc.

It holds the purchase of a competitor’s trademark constituted a “use” in commerce but didn’t infringe the trademark owner’s rights. The decision is filtered through the prism of the plaintiff’s motion for preliminary injunction, and the defendant is in a different position than Google in the recent Rosetta Stone case, but it seems to bode well for Google and other search engine providers.

The case cite is Network Automation, Inc. v. Advanced Systems Concepts, Inc., No. 10-55840 (9th Cir. March 8, 2011).