Monday, November 12, 2007

Ninth Circuit upholds eBay’s infringement victory against PerfumeBay and gives eBay a second shot at dilution claim

On November 5, 2007, the Ninth Circuit Court of Appeals issued its decision in, Inc. v. eBay Inc., No. 05-56794 (9th Cir. Nov. 5, 2007). A copy of the decision can be downloaded here. A good summary of the decision can be found on the Filewapper Blawg (link here). Another posting can be found here from the law firm that argued the case on behalf of eBay at the district court and before the Ninth Circuit.

The Ninth Circuit mostly affirmed the district court’s decision, which held that a) Perfumebay’s use of the mark “Perfumebay” was likely to cause confusion with eBay’s name; b) Perfumebay should be enjoined from using the domain names and; and c) Perfumebay’s use of "Perfume Bay" (not conjoined) was not likely to cause confusion (even though, as discussed below, it may be likely to cause dilution).

However, the Ninth Circuit reversed the district court’s decision of no likelihood of dilution under California law finding that the district court applied the applicable test for dilution too narrowly. eBay argued at the district court that online retailers using names that combine a generic word for the goods or services sold with the suffix “Bay” (CarBay, AutoBay, RentBay, JewelryBay, EventsBay, and, of course, PerfumeBay) diluted eBay’s famous mark and threatened to make the suffix "Bay" synonymous with “online marketplace.” However, in denying eBay’s dilution claim, the lower court determined that eBay’s famous mark was not “nearly identical” to “PerfumeBay.” In reversing this decision, the Ninth Circuit found that the lower court had not considered the “highly distinctive” qualities of eBay’s famous mark in determining whether the marks were “nearly identical.” The court held that there was a likelihood of dilution given a) the “distinctiveness and fame” of the eBay mark, b) the strong recognition and association of eBay’s mark with its services, c) the presence of the dominant suffix “Bay” in the PerfumeBay mark, and d) both parties use the Internet to sell similar products. To the extent that online retailers such as PerfumeBay use the ‘Bay’ suffix in it name, consumers may no longer associate the usage of the ‘Bay’ suffix with eBay’s unique services, which would dilute the uniqueness of eBay’s mark.

The owner of PerfumeBay, Jacquelyn Tran, has her own blog, MakesNoScents, where she says she will continue fighting eBay by seeking an emergency stay of injunction as well as appealing to the Supreme Court. According to PerfumeBay’s court papers, Tran’s selection of the name PerfumeBay was not meant to confuse or deceive customers into believing her company was affiliated with eBay. Rather, she chose the name because it evoked an image of “a bay filled with ships importing perfumes from all parts of the world.” But the district court noted that Tran’s website did not contain any pictures of ships or a Bay or anything suggesting perfume-filled ships. Tran even admitted that some consumers called her asking if she was affiliated with eBay.

One part of the decision that seems a little inconsistent is that the court would affirm the injunction against the domain name, but also affirm the finding of no likelihood of confusion for the name Perfume Bay (with a space between the two words). The dash in the domain name serves the same purpose as a space in the Perfume Bay name, and yet this domain name was found to be likely to confuse. To the extent that Ms. Tran should be enjoined from using this particular domain, it should probably be on grounds of dilution rather than likelihood of confusion. Of course, eBay will now get to go back to district court to make its case for dilution against PerfumeBay – an argument that the Ninth Circuit appears to have wholeheartedly endorsed.

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