Categories: Global Tech News

Amazon Loses Federal Court Appeal Over Misleading Search Results

Amazon.com, Inc. (AMZN) will have to explain itself formally in court over claims that it’s faking search results in such a way that harms legitimate businesses.  That’s the end result of a 2-to-1 decision by the 9th U.S. Circuit Court of Appeals (CA-9) in San Francisco, Calif.

The case involves allegations that Amazon generates fake searchable results pages for products it does not sell.  According to allegations, this allows Amazon to snare search traffic and redirect customers to similar products which it sells or which are sold on its affiliate sites.

The current case was brought by Los Angeles, Calif. Multi Time Machine Inc. (MTM), a small watchmaker.  According to court documents, MTM found that when “Special Ops watch” or similar terms were searched for, Amazon landing pages were displayed prominently in the results.  The only problem?  Amazon didn’t sell the watch.

MTM’s “Special Ops” Watch is at the crux of the case.
MTM says the net result was it was losing business as customers would click the Amazon link and then frequently would pick one of the alternative watch designs suggested.  There’s several angles MTM might have attacked Amazon’s questionable advertising practice from (e.g. false advertising, etc.), but ultimately its lawyers felt the easiest approach would be to attack the practice on trademark grounds.

Here’s a quick graphic to explain what MTM is upset about.

As seen above, Amazon claims to have a “large selection of special ops watches”, yet it does not carry the actual special ops watch.  MTM claims this bait-and-switch practice for product names not actually carried by Amazon abuses trademark protections. [Image Source: Jason Mick/Global Tech News LLC]
Notice, Amazon’s page offers no indication that the product isn’t carried, while claiming to have a “large selection of special ops watch”.  Competitors’ products are displayed to clicking shoppers.

MTM’s “Special Ops” watch is protected via U.S. Trademark 86000830.  So MTM’s argument was that Amazon was violating trademark protections by using the term without permission in the context of watch-related.

Judge Dean D. Pregerson of the U.S. District Court for the Central District of California (CACD-USC) wasn’t persuaded by that claim and moved to throw the case out of court back in Feb. 2013.  

Mtm vs Amazon Cacd Usc 2-20-2013 by Jason Mick

However, the 9th Circuit Court of Appeals — the court responsible for setting appeals precedents for Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington — saw things differently.  The majority writes:
We think a jury could find that Amazon has created a likelihood of confusion.

MTM vs Amazon CA9 Decision 7-6-2015 by Jason Mick

9th Circuit Judge Barry Silverman dissented from the ruling, arguing that the customer would be able to understand Amazon wasn’t actually selling the product.  He argues the majority erred, writing:

No reasonably prudent consumer accustomed to shopping online would likely be confused as to the source of the products.
MTM’s attorney, Eric Levinrad of Wolf, Rifkin, Shapiro, Schulman & Rabkin LLP, unsurpringly agrees with the majority.  He notes in a comment to Reuters that Amazon’s results go a step beyond even other shopping portals that have landing pages for products they don’t sell, in that it gives no clear indication that the product was not found.  By contrast, other portals at least clearly display a message indicating the product is unavailable for purchase.

Amazon will now be forced to either settle with MTM or face its representatives in federal court.  While the case has flown largely under the radar, it could ultimately have some major rammifications regarding Amazon’s traffic acquisition practices.

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