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Specialty Watch Seller Loses Fight With Amazon

(CN) - Amazon does not mislead customers by providing search-result listings for a certain watch that it is not licensed to sell, a federal judge ruled.

Multi Time Machine Inc. sells military-style watches under the brand names MTM Special Ops and MTM Military Ops from its website and through a limited number of authorized distributors - but not through Amazon. In fact, MTM said it forbids its distributors from selling the watches through Amazon.

Customers who search for the watches on Amazon, however, find product listings for similar products from MTM's competitors and "sponsored links" to both MTM's website and other online retailers. MTM claimed that both infringe its trademarks and mislead potential buyers.

It said Amazon must inform consumers that it does not carry any MTM products before offering other company brands. For its part, Amazon said that as long as its search results clearly differentiate between MTM and other brands, consumers will get what they want and MTM's trademarks aren't infringed.

U.S. District Judge Dean Pregerson agreed with Amazon, noting that the 9th Circuit recently stressed the importance of labeling in search-results advertising but found little chance of consumer confusion.

"Amazon's evidence is persuasive in showing that the marks in question are not strong; they are at best suggestive, and more likely descriptive," Pregerson wrote. "MTM argues that the marks are saved from weakness by 'MTM,' but while this may be sufficiently distinctive to acquire trademark protection, it is not distinctive enough to neutralize the rest of the mark's descriptive connection to the product. Thus, this factor weighs in favor of Amazon."

Amazon's evidence that MTM holds "a miniscule fraction of the U.S. watch market in both sales and advertising expenditures" bordered on hearsay, and MTM meanwhile failed to present any evidence whatsoever regarding its brand recognition or market share - tipping the scales of trademark strength in Amazon's favor, Pregerson found.

Amazon also persuaded Pregerson that there is no consumer confusion from its search results at all since the retailer's own data shows that customers are 21 times as likely to purchase a product when searching for MTM competitor Luminox as when searching for an MTM Special Ops brand.

"MTM critiques this data for registering only those sales and selections made on the same day the search was performed, whereas, by Amazon's own account, there are reasons why a consumer might put a product into the cart but purchase it at a later date," Pregerson wrote. "Amazon persuasively responds that the value of this data is not absolute but relative; there is no reason to think that those consumers searching for Luminox would exhibit different behaviors from those searching for MTM Special Ops. Because the 'luminox' search is more than 21 times as likely to result in purchase, the court finds that Amazon has presented evidence that there is no actual confusion."

The relatively high price of MTM's watches - tipping the scales at $2,000 - results in a higher degree of consumer caution, negating the likelihood of confusion over Amazon's use of MTM's trademarks in its search-engine results, Pregerson concluded.

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